II

Calendar No. 642

106TH CONGRESS

2D SESSION S. 2071

To benefit electricity consumers by promoting the reliability of the bulkpower system.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 10, 2000

Mr. GORTON (for himself, Mr. BINGAMAN, Mr. DOMENICI, Mr. FITZGERALD,

Mr. SMITH of Oregon, and Mr. BUNNING) introduced the following bill;

which was read twice and referred to the Committee on Energy and Natural Resources

JUNE 27, 2000

Reported by Mr. MURKOWSKI, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To benefit electricity consumers by promoting the reliability

of the bulk-power system.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Electric Reliability

5 2000 Act’’.
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1 SEC. 2. ELECTRIC RELIABILITY ORGANIZATION.

2 (a) IN GENERAL.—Part II of the Federal Power Act

3 (16 U.S.C. 824 et seq.) is amended by adding at the end

4 the following:

5 ‘‘SEC. 215. ELECTRIC RELIABILITY ORGANIZATION.

6 ‘‘(a) DEFINITIONS.—In this section:

7 ‘‘(1) AFFILIATED REGIONAL RELIABILITY ENTI8 TY.—The term ‘affiliated regional reliability entity’

9 means an entity delegated authority under sub10 section (h).

11 ‘‘(2) BULK-POWER SYSTEM.—

12 ‘‘(A) IN GENERAL.—The term ‘bulk-power

13 system’ means all facilities and control systems

14 necessary for operating an interconnected elec15 tric power transmission grid or any portion of

16 an interconnected transmission grid.

17 ‘‘(B) INCLUSIONS.—The term ‘bulk-power

18 system’ includes—

19 ‘‘(i) high voltage transmission lines,

20 substations, control centers, communica21 tions, data, and operations planning facili22 ties necessary for the operation of all or

23 any part of the interconnected trans24 mission grid; and
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1 ‘‘(ii) the output of generating units

2 necessary to maintain the reliability of the

3 transmission grid.

4 ‘‘(3) BULK-POWER SYSTEM USER.—The term

5 ‘bulk-power system user’ means an entity that—

6 ‘‘(A) sells, purchases, or transmits electric

7 energy over a bulk-power system; or

8 ‘‘(B) owns, operates, or maintains facilities

9 or control systems that are part of a bulk-power

10 system; or

11 ‘‘(C) is a system operator.

12 ‘‘(4) ELECTRIC RELIABILITY ORGANIZATION.—

13 The term ‘electric reliability organization’ means the

14 organization designated by the Commission under

15 subsection (d).

16 ‘‘(5) ENTITY RULE.—The term ‘entity rule’

17 means a rule adopted by an affiliated regional reli18 ability entity for a specific region and designed to

19 implement or enforce 1 or more organization stand20 ards.

21 ‘‘(6) INDEPENDENT DIRECTOR.—The term

22 ‘independent director’ means a person that—

23 ‘‘(A) is not an officer or employee of an

24 entity that would reasonably be perceived as

25 having a direct financial interest in the outcome
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1 of a decision by the board of directors of the

2 electric reliability organization; and

3 ‘‘(B) does not have a relationship that

4 would interfere with the exercise of independent

5 judgment in carrying out the responsibilities of

6 a director of the electric reliability organization.

7 ‘‘(7) INDUSTRY SECTOR.—The term ‘industry

8 sector’ means a group of bulk-power system users

9 with substantially similar commercial interests, as

10 determined by the board of directors of the electric

11 reliability organization.

12 ‘‘(8) INTERCONNECTION.—The term ‘inter13 connection’ means a geographic area in which the

14 operation of bulk-power system components is syn15 chronized so that the failure of 1 or more of the

16 components may adversely affect the ability of the

17 operators of other components within the inter18 connection to maintain safe and reliable operation of

19 the facilities within their control.

20 ‘‘(9) ORGANIZATION STANDARD.—

21 ‘‘(A) IN GENERAL.—The term ‘organiza22 tion standard’ means a policy or standard

23 adopted by the electric reliability organization

24 to provide for the reliable operation of a bulk25 power system.
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1 ‘‘(B) INCLUSIONS.—The term ‘organiza2 tion standard’ includes—

3 ‘‘(i) an entity rule approved by the

4 electric reliability organization; and

5 ‘‘(ii) a variance approved by the elec6 tric reliability organization.

7 ‘‘(10) PUBLIC INTEREST GROUP.—

8 ‘‘(A) IN GENERAL.—The term ‘public in9 terest group’ means a nonprofit private or pub10 lic organization that has an interest in the ac11 tivities of the electric reliability organization.

12 ‘‘(B) INCLUSIONS.—The term ‘public in13 terest group’ includes—

14 ‘‘(i) a ratepayer advocate;

15 ‘‘(ii) an environmental group; and

16 ‘‘(iii) a State or local government or17 ganization that regulates participants in,

18 and promulgates government policy with

19 respect to, the market for electric energy.

20 ‘‘(11) SYSTEM OPERATOR.—

21 ‘‘(A) IN GENERAL.—The term ‘system op22 erator’ means an entity that operates or is re23 sponsible for the operation of a bulk-power sys24 tem.
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1 ‘‘(B) INCLUSIONS.—The term ‘system op2 erator’ includes—

3 ‘‘(i) a control area operator;

4 ‘‘(ii) an independent system operator;

5 ‘‘(iii) a transmission company;

6 ‘‘(iv) a transmission system operator;

7 and

8 ‘‘(v) a regional security coordinator.

9 ‘‘(12) VARIANCE.—The term ‘variance’ means

10 an exception from the requirements of an organiza11 tion standard (including a proposal for an organiza12 tion standard in a case in which there is no organi13 zation standard) that is adopted by an affiliated re14 gional reliability entity and is applicable to all or a

15 part of the region for which the affiliated regional

16 reliability entity is responsible.

17 ‘‘(b) COMMISSION AUTHORITY.—

18 ‘‘(1) JURISDICTION.—Notwithstanding section

19 201(f), within the United States, the Commission

20 shall have jurisdiction over the electric reliability or21 ganization, all affiliated regional reliability entities,

22 all system operators, and all bulk-power system

23 users, including entities described in section 201(f),

24 for purposes of approving organization standards

25 and enforcing compliance with this section.
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1 ‘‘(2) DEFINITION OF TERMS.—The Commission

2 may by regulation define any term used in this sec3 tion consistent with the definitions in subsection (a)

4 and the purpose and intent of this Act.

5 ‘‘(c) EXISTING RELIABILITY STANDARDS.—

6 ‘‘(1) SUBMISSION TO THE COMMISSION.—Be7 fore designation of an electric reliability organization

8 under subsection (d), any person, including the

9 North American Electric Reliability Council and its

10 member Regional Reliability Councils, may submit

11 to the Commission any reliability standard, guid12 ance, practice, or amendment to a reliability stand13 ard, guidance, or practice that the person proposes

14 to be made mandatory and enforceable.

15 ‘‘(2) REVIEW BY THE COMMISSION.—The Com16 mission, after allowing interested persons an oppor17 tunity to submit comments, may approve a proposed

18 mandatory standard, guidance, practice, or amend19 ment submitted under paragraph (1) if the Commis20 sion finds that the standard, guidance, or practice is

21 just, reasonable, not unduly discriminatory or pref22 erential, and in the public interest.

23 ‘‘(3) EFFECT OF APPROVAL.—A standard, guid24 ance, or practice shall be mandatory and applicable
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1 according to its terms following approval by the

2 Commission and shall remain in effect until it is—

3 ‘‘(A) withdrawn, disapproved, or super4 seded by an organization standard that is

5 issued or approved by the electric reliability or6 ganization and made effective by the Commis7 sion under section (e); or

8 ‘‘(B) disapproved by the Commission if, on

9 complaint or upon motion by the Commission

10 and after notice and an opportunity for com11 ment, the Commission finds the standard, guid12 ance, or practice to be unjust, unreasonable,

13 unduly discriminatory or preferential, or not in

14 the public interest.

15 ‘‘(4) ENFORCEABILITY.—A standard, guidance,

16 or practice in effect under this subsection shall be

17 enforceable by the Commission.

18 ‘‘(d) DESIGNATION OF ELECTRIC RELIABILITY OR19 GANIZATION.—

20 ‘‘(1) REGULATIONS.—

21 ‘‘(A) PROPOSED REGULATIONS.—Not later

22 than 90 days after the date of enactment of

23 this section, the Commission shall propose regu24 lations specifying procedures and requirements
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1 for an entity to apply for designation as the

2 electric reliability organization.

3 ‘‘(B) NOTICE AND COMMENT.—The Com4 mission shall provide notice and opportunity for

5 comment on the proposed regulations.

6 ‘‘(C) FINAL REGULATION.—Not later than

7 180 days after the date of enactment of this

8 section, the Commission shall promulgate final

9 regulations under this subsection.

10 ‘‘(2) APPLICATION.—

11 ‘‘(A) SUBMISSION.—Following the promul12 gation of final regulations under paragraph (1),

13 an entity may submit an application to the

14 Commission for designation as the electric reli15 ability organization.

16 ‘‘(B) CONTENTS.—The applicant shall de17 scribe in the application—

18 ‘‘(i) the governance and procedures of

19 the applicant; and

20 ‘‘(ii) the funding mechanism and ini21 tial funding requirements of the applicant.

22 ‘‘(3) NOTICE AND COMMENT.—The Commission

23 shall—

24 ‘‘(A) provide public notice of the applica25 tion; and
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1 ‘‘(B) afford interested parties an oppor2 tunity to comment.

3 ‘‘(4) DESIGNATION OF ELECTRIC RELIABILITY

4 ORGANIZATION.—The Commission shall designate

5 the applicant as the electric reliability organization

6 if the Commission determines that the applicant—

7 ‘‘(A) has the ability to develop, implement,

8 and enforce standards that provide for an ade9 quate level of reliability of bulk-power systems;

10 ‘‘(B) permits voluntary membership to any

11 bulk-power system user or public interest

12 group;

13 ‘‘(C) ensures fair representation of its

14 members in the selection of its directors and

15 fair management of its affairs, taking into ac16 count the need for efficiency and effectiveness

17 in decisionmaking and operations and the re18 quirements for technical competency in the de19 velopment of organization standards and the ex20 ercise of oversight of bulk-power system reli21 ability;

22 ‘‘(D) ensures that no 2 industry sectors

23 have the ability to control, and no 1 industry

24 sector has the ability to veto, the applicant’s

25 discharge of its responsibilities as the electric
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1 reliability organization (including actions by

2 committees recommending standards for ap3 proval by the board or other board actions to

4 implement and enforce standards);

5 ‘‘(E) provides for governance by a board

6 wholly comprised of independent directors;

7 ‘‘(F) provides a funding mechanism and

8 requirements that—

9 ‘‘(i) are just, reasonable, not unduly

10 discriminatory or preferential and in the

11 public interest; and

12 ‘‘(ii) satisfy the requirements of sub13 section (l);

14 ‘‘(G) has established procedures for devel15 opment of organization standards that—

16 ‘‘(i) provide reasonable notice and op17 portunity for public comment, taking into

18 account the need for efficiency and effec19 tiveness in decisionmaking and operations

20 and the requirements for technical com21 petency in the development of organization

22 standards;

23 ‘‘(ii) ensure openness, a balancing of

24 interests, and due process; and
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1 ‘‘(iii) includes alternative procedures

2 to be followed in emergencies;

3 ‘‘(H) has established fair and impartial

4 procedures for implementation and enforcement

5 of organization standards, either directly or

6 through delegation to an affiliated regional reli7 ability entity, including the imposition of pen8 alties, limitations on activities, functions, or op9 erations, or other appropriate sanctions;

10 ‘‘(I) has established procedures for notice

11 and opportunity for public observation of all

12 meetings, except that the procedures for public

13 observation may include alternative procedures

14 for emergencies or for the discussion of infor15 mation that the directors reasonably determine

16 should take place in closed session, such as liti17 gation, personnel actions, or commercially sen18 sitive information;

19 ‘‘(J) provides for the consideration of rec20 ommendations of States and State commissions;

21 and

22 ‘‘(K) addresses other matters that the

23 Commission considers appropriate to ensure

24 that the procedures, governance, and funding of

25 the electric reliability organization are just, rea-
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1 sonable, not unduly discriminatory or pref2 erential, and in the public interest.

3 ‘‘(5) EXCLUSIVE DESIGNATION.—

4 ‘‘(A) IN GENERAL.—The Commission shall

5 designate only 1 electric reliability organization.

6 ‘‘(B) MULTIPLE APPLICATIONS.—If the

7 Commission receives 2 or more timely applica8 tions that satisfy the requirements of this sub9 section, the Commission shall approve only the

10 application that the Commission determines will

11 best implement this section.

12 ‘‘(e) ORGANIZATION STANDARDS.—

13 ‘‘(1) SUBMISSION OF PROPOSALS TO COMMIS14 SION.—

15 ‘‘(A) IN GENERAL.—The electric reliability

16 organization shall submit to the Commission

17 proposals for any new or modified organization

18 standards.

19 ‘‘(B) CONTENTS.—A proposal submitted

20 under subparagraph (A) shall include—

21 ‘‘(i) a concise statement of the pur22 pose of the proposal; and

23 ‘‘(ii) a record of any proceedings con24 ducted with respect to the proposal.

25 ‘‘(2) REVIEW BY THE COMMISSION.—
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1 ‘‘(A) NOTICE AND COMMENT.—The Com2 mission shall—

3 ‘‘(i) provide notice of a proposal under

4 paragraph (1); and

5 ‘‘(ii) allow interested persons 30 days

6 to submit comments on the proposal.

7 ‘‘(B) ACTION BY THE COMMISSION.—

8 ‘‘(i) IN GENERAL.—After taking into

9 consideration any submitted comments, the

10 Commission shall approve or disapprove a

11 proposed organization standard not later

12 than the end of the 60-day period begin13 ning on the date of the deadline for the

14 submission of comments, except that the

15 Commission may extend the 60-day period

16 for an additional 90 days for good cause.

17 ‘‘(ii) FAILURE TO ACT.—If the Com18 mission does not approve or disapprove a

19 proposal within the period specified in

20 clause (i), the proposed organization stand21 ard shall go into effect subject to its terms,

22 without prejudice to the authority of the

23 Commission to modify the organization

24 standard in accordance with the standards

25 and requirements of this section.
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1 ‘‘(C) EFFECTIVE DATE.—An organization

2 standard approved by the Commission shall

3 take effect not earlier than 30 days after the

4 date of the Commission’s order of approval.

5 ‘‘(D) STANDARDS FOR APPROVAL.—

6 ‘‘(i) IN GENERAL.—The Commission

7 shall approve a proposed new or modified

8 organization standard if the Commission

9 determines the organization standard to be

10 just, reasonable, not unduly discriminatory

11 or preferential, and in the public interest.

12 ‘‘(ii) CONSIDERATIONS.—In the exer13 cise of its review responsibilities under this

14 subsection, the Commission—

15 ‘‘(I) shall give due weight to the

16 technical expertise of the electric reli17 ability organization with respect to

18 the content of a new or modified orga19 nization standard; but

20 ‘‘(II) shall not defer to the elec21 tric reliability organization with re22 spect to the effect of the organization

23 standard on competition.

24 ‘‘(E) REMAND.—A proposed organization

25 standard that is disapproved in whole or in part
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1 by the Commission shall be remanded to the

2 electric reliability organization for further con3 sideration.

4 ‘‘(3) ORDERS TO DEVELOP OR MODIFY ORGANI5 ZATION STANDARDS.—The Commission, on com6 plaint or on motion of the Commission, may order

7 the electric reliability organization to develop and

8 submit to the Commission, by a date specified in the

9 order, an organization standard or modification to

10 an existing organization standard to address a spe11 cific matter if the Commission considers a new or

12 modified organization standard appropriate to carry

13 out this section, and the electric reliability organiza14 tion shall develop and submit the organization

15 standard or modification to the Commission in ac16 cordance with this subsection.

17 ‘‘(4) VARIANCES AND ENTITY RULES.—

18 ‘‘(A) PROPOSAL.—An affiliated regional

19 reliability entity may propose a variance or enti20 ty rule to the electric reliability organization.

21 ‘‘(B) EXPEDITED CONSIDERATION.—If ex22 pedited consideration is necessary to provide for

23 bulk-power system reliability, the affiliated re24 gional reliability entity may—
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1 ‘‘(i) request that the electric reliability

2 organization expedite consideration of the

3 proposal; and

4 ‘‘(ii) file a notice of the request with

5 the Commission.

6 ‘‘(C) FAILURE TO ACT.—

7 ‘‘(i) IN GENERAL.—If the electric reli8 ability organization fails to adopt the vari9 ance or entity rule, in whole or in part, the

10 affiliated regional reliability entity may re11 quest that the Commission review the pro12 posal.

13 ‘‘(ii) ACTION BY THE COMMISSION.—

14 If the Commission determines, after a re15 view of the request, that the action of the

16 electric reliability organization did not con17 form to the applicable standards and pro18 cedures approved by the Commission, or if

19 the Commission determines that the vari20 ance or entity rule is just, reasonable, not

21 unduly discriminatory or preferential, and

22 in the public interest and that the electric

23 reliability organization has unreasonably

24 rejected or failed to act on the proposal,

25 the Commission may—
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1 ‘‘(I) remand the proposal for fur2 ther consideration by the electric reli3 ability organization; or

4 ‘‘(II) order the electric reliability

5 organization or the affiliated regional

6 reliability entity to develop a variance

7 or entity rule consistent with that re8 quested by the affiliated regional reli9 ability entity.

10 ‘‘(D) PROCEDURE.—A variance or entity

11 rule proposed by an affiliated regional reliability

12 entity shall be submitted to the electric reli13 ability organization for review and submission

14 to the Commission in accordance with the pro15 cedures specified in paragraph (2).

16 ‘‘(5) IMMEDIATE EFFECTIVENESS.—

17 ‘‘(A) IN GENERAL.—Notwithstanding any

18 other provision of this subsection, a new or

19 modified organization standard shall take effect

20 immediately on submission to the Commission

21 without notice or comment if the electric reli22 ability organization—

23 ‘‘(i) determines that an emergency ex24 ists requiring that the new or modified or-
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1 ganization standard take effect imme2 diately without notice or comment;

3 ‘‘(ii) notifies the Commission as soon

4 as practicable after making the determina5 tion;

6 ‘‘(iii) submits the new or modified or7 ganization standard to the Commission not

8 later than 5 days after making the deter9 mination; and

10 ‘‘(iv) includes in the submission an ex11 planation of the need for immediate effec12 tiveness.

13 ‘‘(B) NOTICE AND COMMENT.—The Com14 mission shall—

15 ‘‘(i) provide notice of the new or modi16 fied organization standard or amendment

17 for comment; and

18 ‘‘(ii) follow the procedures set out in

19 paragraphs (2) and (3) for review of the

20 new or modified organization standard.

21 ‘‘(6) COMPLIANCE.—Each bulk power system

22 user shall comply with an organization standard that

23 takes effect under this section.

24 ‘‘(f) COORDINATION WITH CANADA AND MEXICO.—
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1 ‘‘(1) RECOGNITION.—The electric reliability or2 ganization shall take all appropriate steps to gain

3 recognition in Canada and Mexico.

4 ‘‘(2) INTERNATIONAL AGREEMENTS.—

5 ‘‘(A) IN GENERAL.—The President shall

6 use best efforts to enter into international

7 agreements with the appropriate governments

8 of Canada and Mexico to provide for—

9 ‘‘(i) effective compliance with organi10 zation standards; and

11 ‘‘(ii) the effectiveness of the electric

12 reliability organization in carrying out its

13 mission and responsibilities.

14 ‘‘(B) COMPLIANCE.—All actions taken by

15 the electric reliability organization, an affiliated

16 regional reliability entity, and the Commission

17 shall be consistent with any international agree18 ment under subparagraph (A).

19 ‘‘(g) CHANGES IN PROCEDURE, GOVERNANCE, OR

20 FUNDING.—

21 ‘‘(1) SUBMISSION TO THE COMMISSION.—The

22 electric reliability organization shall submit to the

23 Commission—

24 ‘‘(A) any proposed change in a procedure,

25 governance, or funding provision; or
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1 ‘‘(B) any change in an affiliated regional

2 reliability entity’s procedure, governance, or

3 funding provision relating to delegated func4 tions.

5 ‘‘(2) CONTENTS.—A submission under para6 graph (1) shall include an explanation of the basis

7 and purpose for the change.

8 ‘‘(3) EFFECTIVENESS.—

9 ‘‘(A) CHANGES IN PROCEDURE.—

10 ‘‘(i) CHANGES CONSTITUTING A

11 STATEMENT OF POLICY, PRACTICE, OR IN12 TERPRETATION.—A proposed change in

13 procedure shall take effect 90 days after

14 submission to the Commission if the

15 change constitutes a statement of policy,

16 practice, or interpretation with respect to

17 the meaning or enforcement of the proce18 dure.

19 ‘‘(ii) OTHER CHANGES.—A proposed

20 change in procedure other than a change

21 described in clause (i) shall take effect on

22 a finding by the Commission, after notice

23 and opportunity for comment, that the

24 change—
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1 ‘‘(I) is just, reasonable, not un2 duly discriminatory or preferential,

3 and in the public interest; and

4 ‘‘(II) satisfies the requirements

5 of subsection (d)(4).

6 ‘‘(B) CHANGES IN GOVERNANCE OR FUND7 ING.—A proposed change in governance or

8 funding shall not take effect unless the Com9 mission finds that the change—

10 ‘‘(i) is just, reasonable, not unduly

11 discriminatory or preferential, and in the

12 public interest; and

13 ‘‘(ii) satisfies the requirements of sub14 section (d)(4).

15 ‘‘(4) ORDER TO AMEND.—

16 ‘‘(A) IN GENERAL.—The Commission, on

17 complaint or on the motion of the Commission,

18 may require the electric reliability organization

19 to amend a procedural, governance, or funding

20 provision if the Commission determines that the

21 amendment is necessary to meet the require22 ments of this section.

23 ‘‘(B) FILING.—The electric reliability or24 ganization shall submit the amendment in ac25 cordance with paragraph (1).
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1 ‘‘(h) DELEGATIONS OF AUTHORITY.—

2 ‘‘(1) IN GENERAL.—

3 ‘‘(A) IMPLEMENTATION AND ENFORCE4 MENT OF COMPLIANCE.—At the request of an

5 entity, the electric reliability organization shall

6 enter into an agreement with the entity for the

7 delegation of authority to implement and en8 force compliance with organization standards in

9 a specified geographic area if the electric reli10 ability organization finds that—

11 ‘‘(i) the entity satisfies the require12 ments of subparagraphs (A), (B), (C), (D),

13 (F), (J), and (K) of subsection (d)(4); and

14 ‘‘(ii) the delegation would promote the

15 effective and efficient implementation and

16 administration of bulk-power system reli17 ability.

18 ‘‘(B) OTHER AUTHORITY.—The electric re19 liability organization may enter into an agree20 ment to delegate to an entity any other author21 ity, except that the electric reliability organiza22 tion shall reserve the right to set and approve

23 standards for bulk-power system reliability.

24 ‘‘(2) APPROVAL BY THE COMMISSION.—
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1 ‘‘(A) SUBMISSION TO THE COMMISSION.—

2 The electric reliability organization shall submit

3 to the Commission—

4 ‘‘(i) any agreement entered into under

5 this subsection; and

6 ‘‘(ii) any information the Commission

7 requires with respect to the affiliated re8 gional reliability entity to which authority

9 is delegated.

10 ‘‘(B) STANDARDS FOR APPROVAL.—The

11 Commission shall approve the agreement, fol12 lowing public notice and an opportunity for

13 comment, if the Commission finds that the

14 agreement—

15 ‘‘(i) meets the requirements of para16 graph (1); and

17 ‘‘(ii) is just, reasonable, not unduly

18 discriminatory or preferential, and in the

19 public interest.

20 ‘‘(C) REBUTTABLE PRESUMPTION.—A pro21 posed delegation agreement with an affiliated

22 regional reliability entity organized on an inter23 connection-wide basis shall be rebuttably pre24 sumed by the Commission to promote the effec25 tive and efficient implementation and adminis-
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1 tration of the reliability of the bulk-power sys2 tem.

3 ‘‘(D) INVALIDITY ABSENT APPROVAL.—No

4 delegation by the electric reliability organization

5 shall be valid unless the delegation is approved

6 by the Commission.

7 ‘‘(3) PROCEDURES FOR ENTITY RULES AND

8 VARIANCES.—

9 ‘‘(A) IN GENERAL.—A delegation agree10 ment under this subsection shall specify the

11 procedures by which the affiliated regional reli12 ability entity may propose entity rules or

13 variances for review by the electric reliability

14 organization.

15 ‘‘(B) INTERCONNECTION-WIDE ENTITY

16 RULES AND VARIANCES.— In the case of a pro17 posal for an entity rule or variance that would

18 apply on an interconnection-wide basis, the elec19 tric reliability organization shall approve the en20 tity rule or variance unless the electric reli21 ability organization makes a written finding

22 that the entity rule or variance—

23 ‘‘(i) was not developed in a fair and

24 open process that provided an opportunity

25 for all interested parties to participate;
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1 ‘‘(ii) would have a significant adverse

2 impact on reliability or commerce in other

3 interconnections;

4 ‘‘(iii) fails to provide a level of reli5 ability of the bulk-power system within the

6 interconnection such that the entity rule or

7 variance would be likely to cause a serious

8 and substantial threat to public health,

9 safety, welfare, or national security; or

10 ‘‘(iv) would create a serious and sub11 stantial burden on competitive markets

12 within the interconnection that is not nec13 essary for reliability.

14 ‘‘(C) NONINTERCONNECTION-WIDE ENTITY

15 RULES AND VARIANCES.—In the case of a pro16 posal for an entity rule or variance that would

17 apply only to part of an interconnection, the

18 electric reliability organization shall approve the

19 entity rule or variance if the affiliated regional

20 reliability entity demonstrates that the

21 proposal—

22 ‘‘(i) was developed in a fair and open

23 process that provided an opportunity for

24 all interested parties to participate;
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1 ‘‘(ii) would not have an adverse im2 pact on commerce that is not necessary for

3 reliability;

4 ‘‘(iii) provides a level of bulk-power

5 system reliability that is adequate to pro6 tect public health, safety, welfare, and na7 tional security and would not have a sig8 nificant adverse impact on reliability; and

9 ‘‘(iv) in the case of a variance, is

10 based on a justifiable difference between

11 regions or subregions within the affiliated

12 regional reliability entity’s geographic area.

13 ‘‘(D) ACTION BY THE ELECTRIC RELI14 ABILITY ORGANIZATION.—

15 ‘‘(i) IN GENERAL.—The electric reli16 ability organization shall approve or dis17 approve a proposal under subparagraph

18 (A) within 120 days after the proposal is

19 submitted.

20 ‘‘(ii) FAILURE TO ACT.—If the electric

21 reliability organization fails to act within

22 the time specified in clause (i), the pro23 posal shall be deemed to have been ap24 proved.
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1 ‘‘(iii) SUBMISSION TO THE COMMIS2 SION.—After approving a proposal under

3 subparagraph (A), the electric reliability

4 organization shall submit the proposal to

5 the Commission for approval under the

6 procedures prescribed under subsection (e).

7 ‘‘(E) DIRECT SUBMISSIONS.—An affiliated

8 regional reliability entity may not submit a pro9 posal for approval directly to the Commission

10 except as provided in subsection (e)(4).

11 ‘‘(4) FAILURE TO REACH DELEGATION AGREE12 MENT.—

13 ‘‘(A) IN GENERAL.—If an affiliated re14 gional reliability entity requests, consistent with

15 paragraph (1), that the electric reliability orga16 nization delegate authority to it, but is unable

17 within 180 days to reach agreement with the

18 electric reliability organization with respect to

19 the requested delegation, the entity may seek

20 relief from the Commission.

21 ‘‘(B) REVIEW BY THE COMMISSION.—The

22 Commission shall order the electric reliability

23 organization to enter into a delegation agree24 ment under terms specified by the Commission
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1 if, after notice and opportunity for comment,

2 the Commission determines that—

3 ‘‘(i) a delegation to the affiliated re4 gional reliability entity would—

5 ‘‘(I) meet the requirements of

6 paragraph (1); and

7 ‘‘(II) would be just, reasonable,

8 not unduly discriminatory or pref9 erential, and in the public interest;

10 and

11 ‘‘(ii) the electric reliability organiza12 tion unreasonably withheld the delegation.

13 ‘‘(5) ORDERS TO MODIFY DELEGATION AGREE14 MENTS.—

15 ‘‘(A) IN GENERAL.—On complaint, or on

16 motion of the Commission, after notice to the

17 appropriate affiliated regional reliability entity,

18 the Commission may order the electric reli19 ability organization to propose a modification to

20 a delegation agreement under this subsection if

21 the Commission determines that—

22 ‘‘(i) the affiliated regional reliability

23 entity—

24 ‘‘(I) no longer has the capacity to

25 carry out effectively or efficiently the
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1 implementation or enforcement re2 sponsibilities under the delegation

3 agreement;

4 ‘‘(II) has failed to meet its obli5 gations under the delegation agree6 ment; or

7 ‘‘(III) has violated this section;

8 ‘‘(ii) the rules, practices, or proce9 dures of the affiliated regional reliability

10 entity no longer provide for fair and im11 partial discharge of the implementation or

12 enforcement responsibilities under the dele13 gation agreement;

14 ‘‘(iii) the geographic boundary of a

15 transmission entity approved by the Com16 mission is not wholly within the boundary

17 of an affiliated regional reliability entity,

18 and the difference in boundaries is incon19 sistent with the effective and efficient im20 plementation and administration of bulk21 power system reliability; or

22 ‘‘(iv) the agreement is inconsistent

23 with a delegation ordered by the Commis24 sion under paragraph (4).

25 ‘‘(B) SUSPENSION.—
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1 ‘‘(i) IN GENERAL.—Following an

2 order to modify a delegation agreement

3 under subparagraph (A), the Commission

4 may suspend the delegation agreement if

5 the electric reliability organization or the

6 affiliated regional reliability entity does not

7 propose an appropriate and timely modi8 fication.

9 ‘‘(ii) ASSUMPTION OF RESPONSIBIL10 ITIES.—If a delegation agreement is sus11 pended, the electric reliability organization

12 shall assume the responsibilities delegated

13 under the delegation agreement.

14 ‘‘(i) ORGANIZATION MEMBERSHIP.—Each system op15 erator shall be a member of—

16 ‘‘(1) the electric reliability organization; and

17 ‘‘(2) any affiliated regional reliability entity op18 erating under an agreement effective under sub19 section (h) applicable to the region in which the sys20 tem operator operates, or is responsible for the oper21 ation of, a transmission facility.

22 ‘‘(j) ENFORCEMENT.—

23 ‘‘(1) DISCIPLINARY ACTIONS.—

24 ‘‘(A) IN GENERAL.—Consistent with proce25 dures approved by the Commission under sub-
32

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1 section (d)(4)(H), the electric reliability organi2 zation may impose a penalty, limitation on ac3 tivities, functions, or operations, or other dis4 ciplinary action that the electric reliability orga5 nization finds appropriate against a bulk-power

6 system user if the electric reliability organiza7 tion, after notice and an opportunity for inter8 ested parties to be heard, issues a finding in

9 writing that the bulk-power system user has

10 violated an organization standard.

11 ‘‘(B) NOTIFICATION.—The electric reli12 ability organization shall immediately notify the

13 Commission of any disciplinary action imposed

14 with respect to an act or failure to act of a

15 bulk-power system user that affected or threat16 ened to affect bulk-power system facilities lo17 cated in the United States.

18 ‘‘(C) RIGHT TO PETITION.—A bulk-power

19 system user that is the subject of disciplinary

20 action under paragraph (1) shall have the right

21 to petition the Commission for a modification

22 or rescission of the disciplinary action.

23 ‘‘(D) INJUNCTIONS.—If the electric reli24 ability organization finds it necessary to prevent

25 a serious threat to reliability, the electric reli-
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1 ability organization may seek injunctive relief in

2 the United States district court for the district

3 in which the affected facilities are located.

4 ‘‘(E) EFFECTIVE DATE.—

5 ‘‘(i) IN GENERAL.—Unless the Com6 mission, on motion of the Commission or

7 on application by the bulk-power system

8 user that is the subject of the disciplinary

9 action, suspends the effectiveness of a dis10 ciplinary action, the disciplinary action

11 shall take effect on the 30th day after the

12 date on which—

13 ‘‘(I) the electric reliability organi14 zation submits to the Commission—

15 ‘‘(aa) a written finding that

16 the bulk-power system user vio17 lated an organization standard;

18 and

19 ‘‘(bb) the record of pro20 ceedings before the electric reli21 ability organization; and

22 ‘‘(II) the Commission posts the

23 written finding on the Internet.

24 ‘‘(ii) DURATION.—A disciplinary ac25 tion shall remain in effect or remain sus-
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1 pended unless the Commission, after notice

2 and opportunity for hearing, affirms, sets

3 aside, modifies, or reinstates the discipli4 nary action.

5 ‘‘(iii) EXPEDITED CONSIDERATION.—

6 The Commission shall conduct the hearing

7 under procedures established to ensure ex8 pedited consideration of the action taken.

9 ‘‘(2) COMPLIANCE ORDERS.— The Commission,

10 on complaint by any person or on motion of the

11 Commission, may order compliance with an organi12 zation standard and may impose a penalty, limita13 tion on activities, functions, or operations, or take

14 such other disciplinary action as the Commission

15 finds appropriate, against a bulk-power system user

16 with respect to actions affecting or threatening to

17 affect bulk-power system facilities located in the

18 United States if the Commission finds, after notice

19 and opportunity for a hearing, that the bulk-power

20 system user has violated or threatens to violate an

21 organization standard.

22 ‘‘(3) OTHER ACTIONS.—The Commission may

23 take such action as is necessary against the electric

24 reliability organization or an affiliated regional reli25 ability entity to ensure compliance with an organiza-
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1 tion standard, or any Commission order affecting

2 electric reliability organization or affiliated regional

3 reliability entity.

4 ‘‘(k) RELIABILITY REPORTS.—The electric reliability

5 organization shall—

6 ‘‘(1) conduct periodic assessments of the reli7 ability and adequacy of the interconnected bulk8 power system in North America; and

9 ‘‘(2) report annually to the Secretary of Energy

10 and the Commission its findings and recommenda11 tions for monitoring or improving system reliability

12 and adequacy.

13 ‘‘(l) ASSESSMENT AND RECOVERY OF CERTAIN

14 COSTS.—

15 ‘‘(1) IN GENERAL.—The reasonable costs of the

16 electric reliability organization, and the reasonable

17 costs of each affiliated regional reliability entity that

18 are related to implementation or enforcement of or19 ganization standards or other requirements con20 tained in a delegation agreement approved under

21 subsection (h), shall be assessed by the electric reli22 ability organization and each affiliated regional reli23 ability entity, respectively, taking into account the

24 relationship of costs to each region and based on an
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1 allocation that reflects an equitable sharing of the

2 costs among all electric energy consumers.

3 ‘‘(2) RULES.—The Commission shall provide by

4 rule for the review of costs and allocations under

5 paragraph (1) in accordance with the standards in

6 this subsection and subsection (d)(4)(F).

7 ‘‘(m) APPLICATION OF ANTITRUST LAWS.—

8 ‘‘(1) IN GENERAL.—Notwithstanding any other

9 provision of law, the following activities are

10 rebuttably presumed to be in compliance with the

11 antitrust laws of the United States:

12 ‘‘(A) Activities undertaken by the electric

13 reliability organization under this section or af14 filiated regional reliability entity operating

15 under a delegation agreement under subsection

16 (h).

17 ‘‘(B) Activities of a member of the electric

18 reliability organization or affiliated regional re19 liability entity in pursuit of the objectives of the

20 electric reliability organization or affiliated re21 gional reliability entity under this section un22 dertaken in good faith under the rules of the

23 organization of the electric reliability organiza24 tion or affiliated regional reliability entity.
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1 ‘‘(2) AVAILABILITY OF DEFENSES.—In a civil

2 action brought by any person or entity against the

3 electric reliability organization or an affiliated re4 gional reliability entity alleging a violation of an

5 antitrust law based on an activity under this Act,

6 the defenses of primary jurisdiction and immunity

7 from suit and other affirmative defenses shall be

8 available to the extent applicable.

9 ‘‘(n) REGIONAL ADVISORY ROLE.—

10 ‘‘(1) ESTABLISHMENT OF REGIONAL ADVISORY

11 BODY.—The Commission shall establish a regional

12 advisory body on the petition of the Governors of at

13 least two-thirds of the States within a region that

14 have more than one-half of their electrical loads

15 served within the region.

16 ‘‘(2) MEMBERSHIP.—A regional advisory

17 body—

18 ‘‘(A) shall be composed of 1 member from

19 each State in the region, appointed by the Gov20 ernor of the State; and

21 ‘‘(B) may include representatives of agen22 cies, States, and Provinces outside the United

23 States, on execution of an appropriate inter24 national agreement described in subsection (f).
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1 ‘‘(3) FUNCTIONS.—A regional advisory body

2 may provide advice to the electric reliability organi3 zation, an affiliated regional reliability entity, or the

4 Commission regarding—

5 ‘‘(A) the governance of an affiliated re6 gional reliability entity existing or proposed

7 within a region;

8 ‘‘(B) whether a standard proposed to apply

9 within the region is just, reasonable, not unduly

10 discriminatory or preferential, and in the public

11 interest; and

12 ‘‘(C) whether fees proposed to be assessed

13 within the region are—

14 ‘‘(i) just, reasonable, not unduly dis15 criminatory or preferential, and in the pub16 lic interest; and

17 ‘‘(ii) consistent with the requirements

18 of subsection (l).

19 ‘‘(4) DEFERENCE.—In a case in which a re20 gional advisory body encompasses an entire inter21 connection, the Commission may give deference to

22 advice provided by the regional advisory body under

23 paragraph (3).

24 ‘‘(o) APPLICABILITY OF SECTION.—This section does

25 not apply outside the 48 contiguous States.
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1 ‘‘(p) REHEARINGS; COURT REVIEW OF ORDERS.—

2 Section 313 applies to an order of the Commission issued

3 under this section.’’.

4 (b) ENFORCEMENT.—

5 (1) GENERAL PENALTIES.—Section 316(c) of

6 the Federal Power Act (16 U.S.C. 825o(c)) is

7 amended—

8 (A) by striking ‘‘subsection’’ and inserting

9 ‘‘section’’; and

10 (B) by striking ‘‘or 214’’ and inserting

11 ‘‘214 or 215’’.

12 (2) CERTAIN PROVISIONS.—Section 316A of the

13 Federal Power Act (16 U.S.C. 825o–1) is amended

14 by striking ‘‘or 214’’ each place it appears and in15 serting ‘‘214, or 215’’.

16 (c) SAVINGS CLAUSE.—[RESERVED]

17 SECTION 1. SHORT TITLE.

18 This Act may be cited as the ‘‘Electric Reliability 2000

19 Act’’.

20 SEC. 2. ELECTRIC RELIABILITY ORGANIZATION.

21 (a) IN GENERAL.—Part II of the Federal Power Act

22 (16 U.S.C. 824 et seq.) is amended by adding at the end

23 the following:

24 ‘‘SEC. 215. ELECTRIC RELIABILITY ORGANIZATION.

25 ‘‘(a) DEFINITIONS.—In this section:
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1 ‘‘(1) AFFILIATED REGIONAL RELIABILITY ENTI2 TY.—The term ‘affiliated regional reliability entity’

3 means an entity delegated authority under subsection

4 (h).

5 ‘‘(2) BULK-POWER SYSTEM.—

6 ‘‘(A) IN GENERAL.—The term ‘bulk-power

7 system’ means all facilities and control systems

8 necessary for operating an interconnected electric

9 power transmission grid or any portion of an

10 interconnected transmission grid.

11 ‘‘(B) INCLUSIONS.—The term ‘bulk-power

12 system’ includes—

13 ‘‘(i) high voltage transmission lines,

14 substations, control centers, communica15 tions, data, and operating planning facili16 ties necessary for the operation of all or any

17 part of the interconnected transmission

18 grid; and

19 ‘‘(ii) the output of generating units

20 necessary to maintain the reliability of the

21 transmission grid.

22 ‘‘(3) BULK-POWER SYSTEM USER.—The term

23 ‘bulk-power system user’ means an entity that—

24 ‘‘(A) sells, purchases, or transmits electric

25 energy over a bulk-power system; or
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1 ‘‘(B) owns, operates, or maintains facilities

2 or control systems that are part of a bulk-power

3 system; or

4 ‘‘(C) is a system operator.

5 ‘‘(4) ELECTRIC RELIABILITY ORGANIZATION.—

6 The term ‘electric reliability organization’ means the

7 organization designated by the Commission under

8 subsection (d).

9 ‘‘(5) ENTITY RULE.—The term ‘entity rule’

10 means a rule adopted by an affiliated regional reli11 ability entity for a specific region and designed to

12 implement or enforce 1 or more organization stand13 ards.

14 ‘‘(6) INDEPENDENT DIRECTOR.—The term ‘inde15 pendent director’ means a person that—

16 ‘‘(A) is not an officer or employee of an en17 tity that would reasonably be perceived as hav18 ing a direct financial interest in the outcome of

19 a decision by the board of directors of the electric

20 reliability organization; and

21 ‘‘(B) does not have a relationship that

22 would interfere with the exercise of independent

23 judgment in carrying out the responsibilities of

24 a director of the electric reliability organization.
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1 ‘‘(7) INDUSTRY SECTOR.—The term ‘industry

2 sector’ means a group of bulk-power system users with

3 substantially similar commercial interests, as deter4 mined by the board of directors of the electric reli5 ability organization.

6 ‘‘(8) INTERCONNECTION.—The term ‘interconnec7 tion’ means a geographic area in which the operation

8 of bulk-power system components is synchronized so

9 that the failure of 1 or more of the components may

10 adversely affect the ability of the operators of other

11 components within the interconnection to maintain

12 safe and reliable operation of the facilities within

13 their control.

14 ‘‘(9) ORGANIZATION STANDARD.—

15 ‘‘(A) IN GENERAL.—The term ‘organization

16 standard’ means a policy or standard adopted

17 by the electric reliability organization to provide

18 for the reliable operation of a bulk-power system.

19 ‘‘(B) INCLUSIONS.—The term ‘organization

20 standard’ includes—

21 ‘‘(i) an entity rule approved by the

22 electric reliability organization; and

23 ‘‘(ii) a variance approved by the elec24 tric reliability organization.

25 ‘‘(10) PUBLIC INTEREST GROUP.—
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1 ‘‘(A) IN GENERAL.—The term ‘public inter2 est group’ means a nonprofit private or public

3 organization that has an interest in the activi4 ties of the electric reliability organization.

5 ‘‘(B) INCLUSIONS.—The term ‘public inter6 est group’ includes—

7 ‘‘(i) a ratepayer advocate;

8 ‘‘(ii) an environmental group; and

9 ‘‘(iii) a State or local government or10 ganization that regulates participants in,

11 and promulgates government policy with re12 spect to, the market for electric energy.

13 ‘‘(11) SYSTEM OPERATOR.—

14 ‘‘(A) IN GENERAL.—The term ‘system oper15 ator’ means an entity that operates or is respon16 sible for the operation of a bulk-power system.

17 ‘‘(B) INCLUSIONS.—The term ‘system oper18 ator’ includes—

19 ‘‘(i) a control area operator;

20 ‘‘(ii) an independent system operator;

21 ‘‘(iii) a transmission company;

22 ‘‘(iv) a transmission system operator;

23 and

24 ‘‘(v) a regional security coordinator.
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1 ‘‘(12) VARIANCE.—The term ‘variance’ means an

2 exception from the requirements of an organization

3 standard (including a proposal for an organization

4 standard in a case in which there is no organization

5 standard) that is adopted by an affiliated regional re6 liability entity and is applicable to all or a part of

7 the region for which the affiliated regional reliability

8 entity is responsible.

9 ‘‘(b) COMMISSION AUTHORITY.—

10 ‘‘(1) JURISDICTION.—Notwithstanding section

11 201(f), within the United States, the Commission

12 shall have jurisdiction over the electric reliability or13 ganization, all affiliated regional reliability entities,

14 all system operators, and all bulk-power users, includ15 ing entities described in section 201(f), for purposes

16 of approving organization standards and enforcing

17 compliance with this section.

18 ‘‘(2) DEFINITION OF TERMS.—The Commission

19 may by regulation define any term used in this sec20 tion consistent with the definitions in subsection (a)

21 and the purpose and intent of this Act.

22 ‘‘(c) EXISTING RELIABILITY STANDARDS.—

23 ‘‘(1) SUBMISSION TO THE COMMISSION.—Before

24 designation of an electric reliability organization

25 under subsection (d), any person, including the North
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1 American Electric Reliability Council and its mem2 ber Regional Reliability Councils, may submit to the

3 Commission any reliability standard, guidance, prac4 tice, or amendment to a reliability standard, guid5 ance, or practice that the person proposes to be made

6 mandatory and enforceable.

7 ‘‘(2) REVIEW BY THE COMMISSION.—The Com8 mission, after allowing interested persons an oppor9 tunity to submit comments, may approve a proposed

10 mandatory standard, guidance, practice, or amend11 ment submitted under paragraph (1) if the Commis12 sion finds that the standard, guidance, or practice is

13 just, reasonable, not unduly discriminatory or pref14 erential, and in the public interest.

15 ‘‘(3) EFFECT OF APPROVAL.—A standard, guid16 ance, or practice shall be mandatory and applicable

17 according to its terms following approval by the Com18 mission and shall remain in effect until it is—

19 ‘‘(A) withdrawn, disapproved, or superseded

20 by an organization standard that is issued or

21 approved by the electric reliability organization

22 and made effective by the Commission under sec23 tion (e); or

24 ‘‘(B) disapproved by the Commission if, on

25 complaint or upon motion by the Commission
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1 and after notice and an opportunity for com2 ment, the Commission finds the standard, guid3 ance, or practice to be unjust, unreasonable, un4 duly discriminatory or preferential, or not in the

5 public interest.

6 ‘‘(4) ENFORCEABILITY.—A standard, guidance,

7 or practice in effect under this subsection shall be en8 forceable by the Commission.

9 ‘‘(d) DESIGNATION OF ELECTRIC RELIABILITY ORGA10 NIZATION.—

11 ‘‘(1) REGULATIONS.—

12 ‘‘(A) PROPOSED REGULATIONS.—Not later

13 than 90 days after the date of enactment of this

14 section, the Commission shall propose regulations

15 specifying procedures and requirements for an

16 entity to apply for designation as the electric re17 liability organization.

18 ‘‘(B) NOTICE AND COMMENT.—The Commis19 sion shall provide notice and opportunity for

20 comment on the proposed regulations.

21 ‘‘(C) FINAL REGULATION.—Not later than

22 180 days after the date of enactment of this sec23 tion, the Commission shall promulgate final reg24 ulations under this subsection.

25 ‘‘(2) APPLICATION.—
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1 ‘‘(A) Submission.—Following the promulga2 tion of final regulations under paragraph (1), an

3 entity may submit an application to the Com4 mission for designation as the electric reliability

5 organization.

6 ‘‘(B) CONTENTS.—The applicant shall de7 scribe in the application—

8 ‘‘(i) the governance and procedures of

9 the applicant; and

10 ‘‘(ii) the funding mechanism and ini11 tial funding requirements of the applicant.

12 ‘‘(3) NOTICE AND COMMENT.—The Commission

13 shall—

14 ‘‘(A) provide public notice of the applica15 tion; and

16 ‘‘(B) afford interested parties an oppor17 tunity to comment.

18 ‘‘(4) DESIGNATION OF ELECTRIC RELIABILITY

19 ORGANIZATION.—The Commission shall designate the

20 applicant as the electric reliability organization if the

21 Commission determines that the applicant—

22 ‘‘(A) has the ability to develop, implement,

23 and enforce standards that provide for an ade24 quate level of reliability of bulk-power systems;
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1 ‘‘(B) permits voluntary membership to any

2 bulk-power system user or public interest group;

3 ‘‘(C) ensures fair representation of its mem4 bers in the selection of its directors and fair

5 management of its affairs, taking into account

6 the need for efficiency and effectiveness in deci7 sionmaking and operations and the requirements

8 for technical competency in the development of

9 organization standards and the exercise of over10 sight of bulk-power system reliability;

11 ‘‘(D) ensures that no 2 industry sectors have

12 the ability to control, and no 1 industry sector

13 has the ability to veto, the applicant’s discharge

14 of its responsibilities as the electric reliability or15 ganization (including actions by committees rec16 ommending standards for approval by the board

17 or other board actions to implement and enforce

18 standards);

19 ‘‘(E) provides for governance by a board

20 wholly comprised of independent directors;

21 ‘‘(F) provides a funding mechanism and re22 quirements that—

23 ‘‘(i) are just, reasonable, not unduly

24 discriminatory or preferential and in the

25 public interest; and
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1 ‘‘(ii) satisfy the requirements of sub2 section (l);

3 ‘‘(G) has established procedures for develop4 ment of organization standards that—

5 ‘‘(i) provide reasonable notice and op6 portunity for public comment, taking into

7 account the need for efficiency and effective8 ness in decisionmaking and operations and

9 the requirements for technical competency

10 in the development of organization stand11 ards;

12 ‘‘(ii) ensure openness, a balancing of

13 interests, and due process; and

14 ‘‘(iii) includes alternative procedures

15 to be followed in emergencies;

16 ‘‘(H) has established fair and impartial

17 procedures for implementation and enforcement

18 of organization standards, either directly or

19 through delegation to an affiliated regional reli20 ability entity, including the imposition of pen21 alties, limitations on activities, functions, or op22 erations, or other appropriate sanctions;

23 ‘‘(I) has established procedures for notice

24 and opportunity for public observation of all

25 meetings, except that the procedures for public
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1 observation may include alternative procedures

2 for emergencies or for the discussion of informa3 tion that the directors reasonably determine

4 should take place in closed session, such as liti5 gation, personnel actions, or commercially sen6 sitive information;

7 ‘‘(J) provides for the consideration of rec8 ommendations of States and State commissions;

9 and

10 ‘‘(K) addresses other matters that the Com11 mission considers appropriate to ensure that the

12 procedures, governance, and funding of the elec13 tric reliability organization are just, reasonable,

14 not unduly discriminatory or preferential, and

15 in the public interest.

16 ‘‘(5) EXCLUSIVE DESIGNATION.—

17 ‘‘(A) IN GENERAL.—The Commission shall

18 designate only 1 electric reliability organization.

19 ‘‘(B) MULTIPLE APPLICATIONS.—If the

20 Commission receives 2 or more timely applica21 tions that satisfy the requirements of this sub22 section, the Commission shall approve only the

23 application that the Commission determines will

24 best implement this section.

25 ‘‘(e) ORGANIZATION STANDARDS.—
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1 ‘‘(1) SUBMISSION OF PROPOSALS TO COMMIS2 SION.—

3 ‘‘(A) IN GENERAL.—The electric reliability

4 organization shall submit to the Commission

5 proposals for any new or modified organization

6 standards.

7 ‘‘(B) CONTENTS.—A proposal submitted

8 under subparagraph (A) shall include—

9 ‘‘(i) a concise statement of the purpose

10 of the proposal; and

11 ‘‘(ii) a record of any proceedings con12 ducted with respect to the proposal.

13 ‘‘(2) REVIEW BY THE COMMISSION.—

14 ‘‘(A) NOTICE AND COMMENT.—The Commis15 sion shall—

16 ‘‘(i) provide notice of a proposal under

17 paragraph (1); and

18 ‘‘(ii) allow interested persons 30 days

19 to submit comments on the proposal.

20 ‘‘(B) ACTION BY THE COMMISSION.—

21 ‘‘(i) IN GENERAL.—After taking into

22 consideration any submitted comments, the

23 Commission shall approve or disapprove a

24 proposed organization standard not later

25 than the end of the 60-day period beginning
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1 on the date of the deadline for the submis2 sion of comments, except that the Commis3 sion may extend the 60-day period for an

4 additional 90 days for good cause.

5 ‘‘(ii) FAILURE TO ACT.—If the Com6 mission does not approve or disapprove a

7 proposal within the period specified in

8 clause (i), the proposed organization stand9 ard shall go into effect subject to its terms,

10 without prejudice to the authority of the

11 Commission to modify the organization

12 standard in accordance with the standards

13 and requirements of this section.

14 ‘‘(C) EFFECTIVE DATE.—An organization

15 standard approved by the Commission shall take

16 effect not earlier than 30 days after the date of

17 the Commission’s order of approval.

18 ‘‘(D) STANDARDS FOR APPROVAL.—

19 ‘‘(i) IN GENERAL.—The Commission

20 shall approve a proposed new or modified

21 organization standard if the Commission

22 determines the organization standard to be

23 just, reasonable, not unduly discriminatory

24 or preferential, and in the public interest.
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1 ‘‘(ii) CONSIDERATIONS.—In the exer2 cise of its review responsibilities under this

3 subsection, the Commission—

4 ‘‘(I) shall give due weight to the

5 technical expertise of the electric reli6 ability organization with respect to the

7 content of a new or modified organiza8 tion standard; but

9 ‘‘(II) shall not defer to the electric

10 reliability organization with respect to

11 the effect of the organization standard

12 on competition.

13 ‘‘(E) REMAND.—A proposed organization

14 standard that is disapproved in whole or in part

15 by the Commission shall be remanded to the elec16 tric reliability organization for further consider17 ation.

18 ‘‘(3) ORDERS TO DEVELOP OR MODIFY ORGANI19 ZATION STANDARDS.—The Commission, on complaint

20 or on motion of the Commission, may order the elec21 tric reliability organization to develop and submit to

22 the Commission, by a date specified in the order, an

23 organization standard or modification to an existing

24 organization standard to address a specific matter if

25 the Commission considers a new or modified organi-
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1 zation standard appropriate to carry out this section,

2 and the electric reliability organization shall develop

3 and submit the organization standard or modification

4 to the Commission in accordance with this subsection.

5 ‘‘(4) VARIANCES AND ENTITY RULES.—

6 ‘‘(A) PROPOSAL.—An affiliated regional re7 liability entity may propose a variance or entity

8 rule to the electric reliability organization.

9 ‘‘(B) EXPEDITED CONSIDERATION.—If expe10 dited consideration is necessary to provide for

11 bulk-power system reliability, the affiliated re12 gional reliability entity may—

13 ‘‘(i) request that the electric reliability

14 organization expedite consideration of the

15 proposal; and

16 ‘‘(ii) file a notice of the request with

17 the Commission.

18 ‘‘(C) FAILURE TO ACT.—

19 ‘‘(i) IN GENERAL.—If the electric reli20 ability organization fails to adopt the vari21 ance or entity rule, in whole or in part, the

22 affiliated regional reliability entity may re23 quest that the Commission review the pro24 posal.
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1 ‘‘(ii) ACTION BY THE COMMISSION.—If

2 the Commission determines, after a review

3 of the request, that the action of the electric

4 reliability organization did not conform to

5 the applicable standards and procedures ap6 proved by the Commission, or if the Com7 mission determines that the variance or en8 tity rule is just, reasonable, not unduly dis9 criminatory or preferential, and in the pub10 lic interest and that the electric reliability

11 organization has unreasonably rejected or

12 failed to act on the proposal, the Commis13 sion may—

14 ‘‘(I) remand the proposal for fur15 ther consideration by the electric reli16 ability organization; or

17 ‘‘(II) order the electric reliability

18 organization or the affiliated regional

19 reliability entity to develop a variance

20 or entity rule consistent with that re21 quested by the affiliated regional reli22 ability entity.

23 ‘‘(D) PROCEDURE.—A variance or entity

24 rule proposed by an affiliated regional reliability

25 entity shall be submitted to the electric reli-
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1 ability organization for review and submission

2 to the Commission in accordance with the proce3 dures specified in paragraph (2).

4 ‘‘(5) IMMEDIATE EFFECTIVENESS.—

5 ‘‘(A) IN GENERAL.—Notwithstanding any

6 other provision of this subsection, a new or

7 modified organization standard shall take effect

8 immediately on submission to the Commission

9 without notice or comment if the electric reli10 ability organization—

11 ‘‘(i) determines that an emergency ex12 ists requiring that the new or modified or13 ganization standard take effect immediately

14 without notice or comment;

15 ‘‘(ii) notifies the Commission as soon

16 as practicable after make the determination;

17 ‘‘(iii) submits the new or modified or18 ganization standard to the Commission not

19 later than 5 days after making the deter20 mination; and

21 ‘‘(iv) includes in the submission an ex22 planation of the need for immediate effec23 tiveness.

24 ‘‘(B) NOTICE AND COMMENT.—The Commis25 sion shall—
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1 ‘‘(i) provide notice of the new or modi2 fied organization standard or amendment

3 for comment; and

4 ‘‘(ii) follow the procedures set out in

5 paragraphs (2) and (3) for review of the

6 new or modified organization standard.

7 ‘‘(6) COMPLIANCE.—Each bulk power system

8 user shall comply with an organization standard that

9 takes effect under this section.

10 ‘‘(f) COORDINATIN WITH CANADA AND MEXICO.—

11 ‘‘(1) RECOGNITION.—The electric reliability or12 ganization shall take all appropriate steps to gain

13 recognition in Canada and Mexico.

14 ‘‘(2) INTERNATIONAL AGREEMENTS.—

15 ‘‘(A) IN GENERAL.—The President shall use

16 best efforts to enter into international agreements

17 with the appropriate governments of Canada

18 and Mexico to provide for—

19 ‘‘(i) effective compliance with organi20 zation standards; and

21 ‘‘(ii) the effectiveness of the electric re22 liability organization in carrying out its

23 mission and responsibilities.

24 ‘‘(B) COMPLIANCE.—All actions taken by

25 the electric reliability organization, an affiliated
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1 regional reliability entity, and the Commission

2 shall be consistent with any international agree3 ment under subparagraph (A).

4 ‘‘(g) CHANGES IN PROCEDURE, GOVERNANCE, OR

5 FUNDING.—

6 ‘‘(1) SUBMISSION TO THE COMMISSION.—The

7 electric reliability organization shall submit to the

8 Commission—

9 ‘‘(A) any proposed change in a procedure,

10 governance, or funding provision; or

11 ‘‘(B) any change in an affiliated regional

12 reliability entity’s procedure, governance, or

13 funding provision relating to delegated functions.

14 ‘‘(2) CONTENTS.—A submission under para15 graph (1) shall include an explanation of the basis

16 and purpose for the change.

17 ‘‘(3) EFFECTIVENESS.—

18 ‘‘(A) CHANGES IN PROCEDURE.—

19 ‘‘(i) CHANGES CONSTITUTING A STATE20 MENT OF POLICY, PRACTICE, OR INTERPRE21 TATION.—A proposed change in procedure

22 shall take effect 90 days after submission to

23 the Commission if the change constitutes a

24 statement of policy, practice, or interpreta-
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1 tion with respect to the meaning or enforce2 ment of the procedure.

3 ‘‘(ii) OTHER CHANGES.—A proposed

4 change in procedure other than a change de5 scribed in clause (i) shall take effect on a

6 finding by the Commission, after notice and

7 opportunity for comment, that the change—

8 ‘‘(I) is just, reasonable, not un9 duly discriminatory or preferential,

10 and in the public interest; and

11 ‘‘(II) satisfies the requirements of

12 subsection (d)(4).

13 ‘‘(B) CHANGES IN GOVERNANCE OR FUND14 ING.—A proposed change in governance or fund15 ing shall not take effect unless the Commission

16 finds that the change—

17 ‘‘(i) is just, reasonable, not unduly dis18 criminatory or preferential, and in the pub19 lic interest; and

20 ‘‘(ii) satisfies the requirements of sub21 section (d)(4).

22 ‘‘(4) ORDER TO AMEND.—

23 ‘‘(A) IN GENERAL.—The Commission, on

24 complaint or on the motion of the Commission,

25 may require the electric reliability organization
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1 to amend a procedural, governance, or funding

2 provision if the Commission determines that the

3 amendment is necessary to meet the requirements

4 of the section.

5 ‘‘(B) FILING.—The electric reliability orga6 nization shall submit the amendment in accord7 ance with paragraph (1).

8 ‘‘(h) DELEGATIONS OF AUTHORITY.—

9 ‘‘(1) IN GENERAL.—

10 ‘‘(A) IMPLEMENTATION AND ENFORCEMENT

11 OF COMPLIANCE.—At the request of an entity,

12 the electric reliability organization shall enter

13 into an agreement with the entity for the delega14 tion of authority to implement and enforce com15 pliance with organization standards in a speci16 fied geographic area if the electric reliability or17 ganization finds that—

18 ‘‘(i) the entity satisfies the require19 ments of subparagraphs (A), (B), (C), (D),

20 (F), (J), and (K) of subsection (d)(4); and

21 ‘‘(ii) the delegation would promote the

22 effective and efficient implementation and

23 administration of bulk-power system reli24 ability.
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1 ‘‘(B) OTHER AUTHORITY.—The electric reli2 ability organization may enter into an agree3 ment to delegate to an entity any other author4 ity, except that the electric reliability organiza5 tion shall reserve the right to set and approve

6 standards for bulk-power system reliability.

7 ‘‘(2) APPROVAL BY THE COMMISSION.—

8 ‘‘(A) SUBMISSION TO THE COMMISSION.—

9 The electric reliability organization shall submit

10 to the Commission—

11 ‘‘(i) any agreement entered into under

12 this subsection; and

13 ‘‘(ii) any information the Commission

14 requires with respect to the affiliated re15 gional reliability entity to which authority

16 is delegated.

17 ‘‘(B) STANDARDS FOR APPROVAL.—The

18 Commission shall approve the agreement, fol19 lowing public notice and an opportunity for

20 comment, if the Commission finds that the

21 agreement—

22 ‘‘(i) meets the requirements of para23 graph (1); and
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1 ‘‘(ii) is just, reasonable, not unduly

2 discriminatory or preferential, and in the

3 public interest.

4 ‘‘(C) REBUTTABLE PRESUMPTION.—A pro5 posed delegation agreement with an affiliated re6 gional reliability entity organized on an inter7 connection-wide basis shall be rebuttably pre8 sumed by the Commission to promote the effec9 tive and efficient implementation and adminis10 tration of the reliability of the bulk-power sys11 tem.

12 ‘‘(D) INVALIDITY ABSENT APPROVAL.—No

13 delegation by the electric reliability organization

14 shall be valid unless the delegation is approved

15 by the Commission.

16 ‘‘(3) PROCEDURES FOR ENTITY RULES AND

17 VARIANCES.—

18 ‘‘(A) IN GENERAL.—A delegation agreement

19 under this subsection shall specify the procedures

20 by which the affiliated regional reliability entity

21 may propose entity rules or variances for review

22 by the electric reliability organization.

23 ‘‘(B) INTERCONNECTION-WIDE ENTITY

24 RULES AND VARIANCES.—In the case of a pro25 posal for an entity rule or variance that would
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1 apply on an interconnection-wide basis, the elec2 tric reliability organization shall approve the en3 tity rule or variance unless the electric reli4 ability organization makes a written finding

5 that the entity rule or variance—

6 ‘‘(i) was not developed in a fair and

7 open process that provided an opportunity

8 for all interested parties to participate;

9 ‘‘(ii) would have a significant adverse

10 impact on reliability or commerce in other

11 interconnections;

12 ‘‘(iii) fails to provide a level of reli13 ability of the bulk-power system within the

14 interconnection such that the entity rule or

15 variance would be likely to cause a serious

16 and substantial threat to public health, safe17 ty, welfare, or national security; or

18 ‘‘(iv) would create a serious and sub19 stantial burden on competitive markets

20 within the interconnection that is not nec21 essary for reliability.

22 ‘‘(C) NONINTERCONNECTION-WIDE ENTITY

23 RULES AND VARIANCES.—In the case of a pro24 posal for an entity rule or variance that would

25 apply only to part of an interconnection, the
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1 electric reliability organization shall approve the

2 entity rule or variance if the affiliated regional

3 reliability entity demonstrates that the

4 proposal—

5 ‘‘(i) was developed in a fair and open

6 process that provided an opportunity for all

7 interested parties to participate;

8 ‘‘(ii) would not have an adverse im9 pact on commerce that is not necessary for

10 reliability;

11 ‘‘(iii) provides a level of bulk-power

12 system reliability that is adequate to protect

13 public health, safety, welfare, and national

14 security and would not have a significant

15 adverse impact on reliability; and

16 ‘‘(iv) in the case of a variance, is based

17 on a justifiable difference between regions or

18 subregions within the affiliated regional re19 liability entity’s geographic area.

20 ‘‘(D) ACTION BY THE ELECTRIC RELI21 ABILITY ORGANIZATION.—

22 ‘‘(i) IN GENERAL.—The electric reli23 ability organization shall approve or dis24 approve a proposal under subparagraph (A)
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1 within 120 days after the proposal is sub2 mitted.

3 ‘‘(ii) FAILURE TO ACT.—If the electric

4 reliability organization fails to act within

5 the time specified in clause (i), the proposal

6 shall be deemed to have been approved.

7 ‘‘(iii) SUBMISSION TO THE COMMIS8 SION.—After approving a proposal under

9 subparagraph (A), the electric reliability or10 ganization shall submit the proposal to the

11 Commission for approval under the proce12 dures prescribed under subsection (e).

13 ‘‘(E) DIRECT SUBMISSIONS.—An affiliated

14 regional reliability entity may not submit a pro15 posal for approval directly to the Commission

16 except as provided in subsection (e)(4).

17 ‘‘(4) FAILURE TO REACH DELEGATION AGREE18 MENT.—

19 ‘‘(A) IN GENERAL.—If an affiliated regional

20 reliability entity requests, consistent with para21 graph (1), that the electric reliability organiza22 tion delegate authority to it, but is unable with23 in 180 days to reach agreement with the electric

24 reliability organization with respect to the re-
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1 quested delegation, the entity may seek relief

2 from the Commission.

3 ‘‘(B) REVIEW BY THE COMMISSION.—The

4 Commission shall order the electric reliability or5 ganization to enter into a delegation agreement

6 under terms specified by the Commission if, after

7 notice and opportunity for comment, the Com8 mission determines that—

9 ‘‘(i) a delegation to the affiliated re10 gional reliability entity would—

11 ‘‘(I) meet the requirements of

12 paragraph (1); and

13 ‘‘(II) would be just, reasonable,

14 not unduly discriminatory or pref15 erential, and in the public interest;

16 and

17 ‘‘(ii) the electric reliability organiza18 tion unreasonably withheld the delegation.

19 ‘‘(5) ORDERS TO MODIFY DELEGATION AGREE20 MENTS.—

21 ‘‘(A) IN GENERAL.—On complaint, or on

22 motion of the Commission, after notice to the ap23 propriate affiliated regional reliability entity,

24 the Commission may order the electric reliability

25 organization to propose a modification to a dele-
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1 gation agreement under this subsection if the

2 Commission determines that—

3 ‘‘(i) the affiliated regional reliability

4 entity—

5 ‘‘(I) no longer has the capacity to

6 carry out effectively or efficiently the

7 implementation or enforcement respon8 sibilities under the delegation agree9 ment;

10 ‘‘(II) has failed to meet its obliga11 tions under the delegation agreement;

12 or

13 ‘‘(III) has violated this section;

14 ‘‘(ii) the rules, practices, or procedures

15 of the affiliated regional reliability entity

16 no longer provide for fair and impartial

17 discharge of the implementation or enforce18 ment responsibilities under the delegation

19 agreement;

20 ‘‘(iii) the geographic boundary of a

21 transmission entity approved by the Com22 mission is not wholly within the boundary

23 of an affiliated regional reliability entity,

24 and the difference in boundaries is incon25 sistent with the effective and efficient imple-
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1 mentation and administration of bulk2 power system reliability; or

3 ‘‘(iv) the agreement is inconsistent

4 with a delegation ordered by the Commis5 sion under paragraph (4).

6 ‘‘(B) SUSPENSION.—

7 ‘‘(i) IN GENERAL.—Following an order

8 to modify a delegation agreement under

9 subparagraph (A), the Commission may

10 suspend the delegation agreement if the elec11 tric reliability organization or the affiliated

12 regional reliability entity does not propose

13 an appropriate and timely modification.

14 ‘‘(ii) ASSUMPTION OF RESPONSIBIL15 ITIES.—If a delegation agreement is sus16 pended, the electric reliability organization

17 shall assume the responsibilities delegated

18 under the delegation agreement.

19 ‘‘(i) ORGANIZATION MEMBERSHIP.—Each system op20 erator shall be a member of—

21 ‘‘(1) the electric reliability organization; and

22 ‘‘(2) any affiliated regional reliability entity op23 erating under an agreement effect under subsection

24 (h) applicable to the region in which the system oper-
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1 ator operates, or is responsible for the operation of, a

2 transmission facility.

3 ‘‘(j) ENFORCEMENT.—

4 ‘‘(1) DISCIPLINARY ACTIONS.—

5 ‘‘(A) IN GENERAL.—Consistent with proce6 dures approved by the Commission under sub7 section (d)(4)(H), the electric reliability organi8 zation may impose a penalty, limitation on ac9 tivities, functions, or operations, or other dis10 ciplinary action that the electric reliability orga11 nization finds appropriate against a bulk-power

12 system user if the electric reliability organiza13 tion, after notice and an opportunity for inter14 ested parties to be heard, issues a finding in

15 writing that the bulk-power system user has vio16 lated an organization standard.

17 ‘‘(B) NOTIFICATION.—The electric reli18 ability organization shall immediately notify the

19 Commission of any disciplinary action imposed

20 with respect to an act or failure to act of a bulk21 power system user that affected or threatened to

22 affect bulk-power system facilities located in the

23 United States.

24 ‘‘(C) RIGHT TO PETITION.—A bulk-power

25 system user that is the subject of disciplinary ac-
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1 tion under paragraph (1) shall have the right to

2 petition the Commission for a modification or

3 rescission of the disciplinary action.

4 ‘‘(D) INJUNCTIONS.—If the electric reli5 ability organization finds it necessary to prevent

6 a serious threat to reliability, the electric reli7 ability organization may seek injunctive relief in

8 the United States district court for the district in

9 which the affected facilities are located.

10 ‘‘(E) EFFECTIVE DATE.—

11 ‘‘(i) IN GENERAL.—Unless the Com12 mission, on motion of the Commission or on

13 application by the bulk-power system user

14 that is the subject of the disciplinary action,

15 suspends the effectiveness of a disciplinary

16 action, the disciplinary action shall take ef17 fect on the 30th day after the date on

18 which—

19 ‘‘(I) the electric reliability organi20 zation submits to the Commission—

21 ‘‘(aa) a written finding that

22 the bulk-power system user vio23 lated an organization standard;

24 and
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1 ‘‘(bb) the record of pro2 ceedings before the electric reli3 ability organization; and

4 ‘‘(II) the Commission posts the

5 written finding on the Internet.

6 ‘‘(ii) DURATION.—A disciplinary ac7 tion shall remain in effect or remain sus8 pended unless the Commission, after notice

9 and opportunity for hearing, affirms, sets

10 aside, modifies, or reinstates the discipli11 nary action.

12 ‘‘(iii) EXPEDITED CONSIDERATION.—

13 The Commission shall conduct the hearing

14 under procedures established to ensure expe15 dited consideration of the action taken.

16 ‘‘(2) COMPLIANCE ORDERS.—The Commission,

17 on complaint by any person or on motion of the Com18 mission, may order compliance with an organization

19 standard and may impose a penalty, limitation on

20 activities, functions, or operations, or take such other

21 disciplinary action as the Commission finds appro22 priate, against a bulk-power system user with respect

23 to actions affecting or threatening to affect bulk-power

24 system facilities located in the United States if the

25 Commission finds, after notice and opportunity for a
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1 hearing, that the bulk-power system user has violated

2 or threatens to violate an organization standard.

3 ‘‘(3) OTHER ACTIONS.—The Commission may

4 take such action as is necessary against the electric

5 reliability organization or an affiliated regional reli6 ability entity to ensure compliance with an organiza7 tion standard, or any Commission order affecting

8 electric reliability organization or affiliated regional

9 reliability entity.

10 ‘‘(k) RELIABILITY REPORTS.—The electric reliability

11 organization shall—

12 ‘‘(1) conduct periodic assessment of the reli13 ability and adequacy of the interconnected bulk-power

14 system in North America; and

15 ‘‘(2) report annually to the Secretary of Energy

16 and the Commission its findings and recommenda17 tions for monitoring or improving system reliability

18 and adequacy.

19 ‘‘(l) ASSESSMENT AND RECOVERY OF CERTAIN

20 COSTS.—

21 ‘‘(1) IN GENERAL.—The reasonable costs of the

22 electric reliability organization, and the reasonable

23 costs of each affiliated regional reliability entity that

24 are related to implementation or enforcement of orga25 nization standards or other requirements contained in
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1 a delegation agreement approved under subsection

2 (h), shall be assessed by the electric reliability organi3 zation and each affiliated regional reliability entity,

4 respectively, taking into account the relationship of

5 costs to each region and based on an allocation that

6 reflects an equitable sharing of the costs among all

7 electric energy consumers.

8 ‘‘(2) RULES.—The Commission shall provide by

9 rule for the review of costs and allocations under

10 paragraph (1) in accordance with the standards in

11 this subsection and subsection (d)(4)(F).

12 ‘‘(m) APPLICATION OF ANTITRUST LAWS.—

13 ‘‘(1) IN GENERAL.—Notwithstanding any other

14 provision of law, the following activities are

15 rebuttably presumed to be in compliance with the

16 antitrust laws of the United States:

17 ‘‘(A) Activities undertaken by the electric

18 reliability organization under this section or af19 filiated regional reliability entity operating

20 under a delegation agreement under subsection

21 (h).

22 ‘‘(B) Activities of a member of the electric

23 reliability organizations or affiliated regional re24 liability entity in pursuit of the objectives of the

25 electric reliability organization or affiliated re-
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1 gional reliability entity under this section under2 taken in good faith under the rules of the organi3 zation of the electric reliability organization or

4 affiliated regional reliability entity.

5 ‘‘(2) AVAILABILITY OF DEFENSES.—In a civil ac6 tion brought by any person or entity against the elec7 tric reliability organization or an affiliated regional

8 reliability entity alleging a violation of an antitrust

9 law based on an activity under this Act, the defenses

10 of primary jurisdiction and immunity from suit and

11 other affirmative defenses shall be available to the ex12 tent applicable.

13 ‘‘(n) REGIONAL ADVISORY ROLE.—

14 ‘‘(1) ESTABLISHMENT OF REGIONAL ADVISORY

15 BODY.—The Commission shall establish a regional ad16 visory body on the petition of the Governors of at

17 least two-thirds of the States within a region that

18 have more than one-half of their electrical loads served

19 within the region.

20 ‘‘(2) MEMBERSHIP.—A regional advisory body—

21 ‘‘(A) shall be composed of 1 member from

22 each State in the region, appointed by the Gov23 ernor of the State; and

24 ‘‘(B) may include representatives of agen25 cies, States, and Provinces outside the United
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1 States, on execution of an appropriate inter2 national agreement described in subsection (f).

3 ‘‘(3) FUNCTIONS.—A regional advisory body

4 may provide advice to the electric reliability organi5 zation, an affiliated regional reliability entity, or the

6 Commission regarding—

7 ‘‘(A) the governance of an affiliated regional

8 reliability entity existing or proposed within a

9 region;

10 ‘‘(B) whether a standard proposed to apply

11 within the region is just, reasonable, not unduly

12 discriminatory or preferential, and in the public

13 interest; and

14 ‘‘(C) whether fees proposed to be assessed

15 within the region are—

16 ‘‘(i) just, reasonable, not unduly dis17 criminatory or preferential, and in the pub18 lic interest; and

19 ‘‘(ii) consistent with the requirements

20 of subsection (1).

21 ‘‘(4) DEFERENCE.—In a case in which a re22 gional advisory body encompasses an entire inter23 connection, the Commission may give deference to ad24 vice provided by the regional advisory body under

25 paragraph (3).
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1 ‘‘(o) APPLICABILITY OF SECTION.—This section does

2 not apply outside the 48 contiguous States.

3 ‘‘(p) REHEARINGS; COURT REVIEW OF ORDERS.—Sec4 tion 313 applies to an order of the Commission issued under

5 this section.

6 ‘‘(q) PRESERVATION OF STATE AUTHORITY.—

7 ‘‘(1) The Electric Reliability Organization shall

8 have authority to develop, implement, and enforce

9 compliance with standards for the reliable operation

10 of only the Bulk Power System.

11 ‘‘(2) This section does not provide the Electric

12 Reliability Organization or the Commission with the

13 authority to set and enforce compliance with stand14 ards for adequacy or safety of electric facilities or

15 services.

16 ‘‘(3) Nothing in this section shall be construed to

17 preempt any authority of any State to take action to

18 ensure the safety, adequacy, and reliability of electric

19 service within that State, as long as such action is

20 not inconsistent with any Organization Standard.

21 ‘‘(4) Not later than 90 days after the application

22 of the Electric Reliability Organization or other af23 fected party, the Commission shall issue a final order

24 determining whether a state action is inconsistent

25 with an Organization Standard, after notice and op-
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1 portunity for comment, taking into consideration any

2 recommendations of the Electric Reliability Organiza3 tion.

4 ‘‘(5) The Commission, after consultation with the

5 Electric Reliability Organization, may stay the effec6 tiveness of any state action, pending the Commis7 sion’s issuance of a final order.’’.

8 ‘‘(b) ENFORCEMENT.—

9 ‘‘(1) GENERAL PENALTIES.—Section 316(c) of

10 the Federal Power Act (16 U.S.C. 825o(c)) is

11 amended—

12 ‘‘(A) by striking ‘‘subsection’’ and inserting

13 ‘‘section’’; and

14 ‘‘(B) by striking ‘‘or 214’’ and inserting

15 ‘‘214 or 215’’.

16 ‘‘(2) CERTAIN PROVISIONS.—Section 316A of the

17 Federal Power Act (16 U.S.C. 825o–1) is amended by

18 striking ‘‘or 214’’ each place it appears and inserting

19 ‘‘214, or 215’’.
Calendar No. 642

106TH CONGRESS

2D SESSION S. 2071

A BILL

To benefit electricity consumers by promoting the

reliability of the bulk-power system.

JUNE 27, 2000

Reported with an amendment