II

★(Star Print)

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 introduced the following bill; which was read twice and referred

to the Committee on Energy and Natural Resources

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’’.

6 SEC. 2. ELECTRIC RELIABILITY ORGANIZATION.

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

8 (16 U.S.C. 824 et seq.) is amended by adding at the end

9 the following:
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1 ‘‘SEC. 215. ELECTRIC RELIABILITY ORGANIZATION.

2 ‘‘(a) DEFINITIONS.—In this section:

3 ‘‘(1) AFFILIATED REGIONAL RELIABILITY ENTI4 TY.—The term ‘affiliated regional reliability entity’

5 means an entity delegated authority under sub6 section (h).

7 ‘‘(2) BULK-POWER SYSTEM.—

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

9 system’ means all facilities and control systems

10 necessary for operating an interconnected elec11 tric power transmission grid or any portion of

12 an interconnected transmission grid.

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

14 system’ includes—

15 ‘‘(i) high voltage transmission lines,

16 substations, control centers, communica17 tions, data, and operations planning facili18 ties necessary for the operation of all or

19 any part of the interconnected trans20 mission grid; and

21 ‘‘(ii) the output of generating units

22 necessary to maintain the reliability of the

23 transmission grid.

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

25 ‘bulk-power system user’ means an entity that—
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1 ‘‘(A) sells, purchases, or transmits electric

2 energy over a bulk-power system; or

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

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

5 system; or

6 ‘‘(C) is a system operator.

7 ‘‘(4) ELECTRIC RELIABILITY ORGANIZATION.—

8 The term ‘electric reliability organization’ means the

9 organization designated by the Commission under

10 subsection (d).

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

12 means a rule adopted by an affiliated regional reli13 ability entity for a specific region and designed to

14 implement or enforce 1 or more organization stand15 ards.

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

17 ‘independent director’ means a person that—

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

19 entity that would reasonably be perceived as

20 having a direct financial interest in the outcome

21 of a decision by the board of directors of the

22 electric reliability organization; and

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

24 would interfere with the exercise of independent
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1 judgment in carrying out the responsibilities of

2 a director of the electric reliability organization.

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

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

5 with substantially similar commercial interests, as

6 determined by the board of directors of the electric

7 reliability organization.

8 ‘‘(8) INTERCONNECTION.—The term ‘inter9 connection’ means a geographic area in which the

10 operation of bulk-power system components is syn11 chronized so that the failure of 1 or more of the

12 components may adversely affect the ability of the

13 operators of other components within the inter14 connection to maintain safe and reliable operation of

15 the facilities within their control.

16 ‘‘(9) ORGANIZATION STANDARD.—

17 ‘‘(A) IN GENERAL.—The term ‘organiza18 tion standard’ means a policy or standard

19 adopted by the electric reliability organization

20 to provide for the reliable operation of a bulk21 power system.

22 ‘‘(B) INCLUSIONS.—The term ‘organiza23 tion standard’ includes—

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

25 electric reliability organization; and
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1 ‘‘(ii) a variance approved by the elec2 tric reliability organization.

3 ‘‘(10) PUBLIC INTEREST GROUP.—

4 ‘‘(A) IN GENERAL.—The term ‘public in5 terest group’ means a nonprofit private or pub6 lic organization that has an interest in the ac7 tivities of the electric reliability organization.

8 ‘‘(B) INCLUSIONS.—The term ‘public in9 terest group’ includes—

10 ‘‘(i) a ratepayer advocate;

11 ‘‘(ii) an environmental group; and

12 ‘‘(iii) a State or local government or13 ganization that regulates participants in,

14 and promulgates government policy with

15 respect to, the market for electric energy.

16 ‘‘(11) SYSTEM OPERATOR.—

17 ‘‘(A) IN GENERAL.—The term ‘system op18 erator’ means an entity that operates or is re19 sponsible for the operation of a bulk-power sys20 tem.

21 ‘‘(B) INCLUSIONS.—The term ‘system op22 erator’ includes—

23 ‘‘(i) a control area operator;

24 ‘‘(ii) an independent system operator;

25 ‘‘(iii) a transmission company;
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1 ‘‘(iv) a transmission system operator;

2 and

3 ‘‘(v) a regional security coordinator.

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

5 an exception from the requirements of an organiza6 tion standard (including a proposal for an organiza7 tion standard in a case in which there is no organi8 zation standard) that is adopted by an affiliated re9 gional reliability entity and is applicable to all or a

10 part of the region for which the affiliated regional

11 reliability entity is responsible.

12 ‘‘(b) COMMISSION AUTHORITY.—

13 ‘‘(1) JURISDICTION.—Notwithstanding section

14 201(f), within the United States, the Commission

15 shall have jurisdiction over the electric reliability or16 ganization, all affiliated regional reliability entities,

17 all system operators, and all bulk-power system

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

19 for purposes of approving organization standards

20 and enforcing compliance with this section.

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

22 may by regulation define any term used in this sec23 tion consistent with the definitions in subsection (a)

24 and the purpose and intent of this Act.

25 ‘‘(c) EXISTING RELIABILITY STANDARDS.—
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1 ‘‘(1) SUBMISSION TO THE COMMISSION.—Be2 fore designation of an electric reliability organization

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

4 North American Electric Reliability Council and its

5 member Regional Reliability Councils, may submit

6 to the Commission any reliability standard, guid7 ance, practice, or amendment to a reliability stand8 ard, guidance, or practice that the person proposes

9 to be made mandatory and enforceable.

10 ‘‘(2) REVIEW BY THE COMMISSION.—The Com11 mission, after allowing interested persons an oppor12 tunity to submit comments, may approve a proposed

13 mandatory standard, guidance, practice, or amend14 ment submitted under paragraph (1) if the Commis15 sion finds that the standard, guidance, or practice is

16 just, reasonable, not unduly discriminatory or pref17 erential, and in the public interest.

18 ‘‘(3) EFFECT OF APPROVAL.—A standard, guid19 ance, or practice shall be mandatory and applicable

20 according to its terms following approval by the

21 Commission and shall remain in effect until it is—

22 ‘‘(A) withdrawn, disapproved, or super23 seded by an organization standard that is

24 issued or approved by the electric reliability or-
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1 ganization and made effective by the Commis2 sion under section (e); or

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

4 complaint or upon motion by the Commission

5 and after notice and an opportunity for com6 ment, the Commission finds the standard, guid7 ance, or practice to be unjust, unreasonable,

8 unduly discriminatory or preferential, or not in

9 the public interest.

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

11 or practice in effect under this subsection shall be

12 enforceable by the Commission.

13 ‘‘(d) DESIGNATION OF ELECTRIC RELIABILITY OR14 GANIZATION.—

15 ‘‘(1) REGULATIONS.—

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

17 than 90 days after the date of enactment of

18 this section, the Commission shall propose regu19 lations specifying procedures and requirements

20 for an entity to apply for designation as the

21 electric reliability organization.

22 ‘‘(B) NOTICE AND COMMENT.—The Com23 mission shall provide notice and opportunity for

24 comment on the proposed regulations.
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1 ‘‘(C) FINAL REGULATION.—Not later than

2 180 days after the date of enactment of this

3 section, the Commission shall promulgate final

4 regulations under this subsection.

5 ‘‘(2) APPLICATION.—

6 ‘‘(A) SUBMISSION.—Following the promul7 gation of final regulations under paragraph (1),

8 an entity may submit an application to the

9 Commission for designation as the electric reli10 ability organization.

11 ‘‘(B) CONTENTS.—The applicant shall de12 scribe in the application—

13 ‘‘(i) the governance and procedures of

14 the applicant; and

15 ‘‘(ii) the funding mechanism and ini16 tial funding requirements of the applicant.

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

18 shall—

19 ‘‘(A) provide public notice of the applica20 tion; and

21 ‘‘(B) afford interested parties an oppor22 tunity to comment.

23 ‘‘(4) DESIGNATION OF ELECTRIC RELIABILITY

24 ORGANIZATION.—The Commission shall designate
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1 the applicant as the electric reliability organization

2 if the Commission determines that the applicant—

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

4 and enforce standards that provide for an ade5 quate level of reliability of bulk-power systems;

6 ‘‘(B) permits voluntary membership to any

7 bulk-power system user or public interest

8 group;

9 ‘‘(C) ensures fair representation of its

10 members in the selection of its directors and

11 fair management of its affairs, taking into ac12 count the need for efficiency and effectiveness

13 in decisionmaking and operations and the re14 quirements for technical competency in the de15 velopment of organization standards and the ex16 ercise of oversight of bulk-power system reli17 ability;

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

19 have the ability to control, and no 1 industry

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

21 discharge of its responsibilities as the electric

22 reliability organization (including actions by

23 committees recommending standards for ap24 proval by the board or other board actions to

25 implement and enforce standards);
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1 ‘‘(E) provides for governance by a board

2 wholly comprised of independent directors;

3 ‘‘(F) provides a funding mechanism and

4 requirements that—

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

6 discriminatory or preferential and in the

7 public interest; and

8 ‘‘(ii) satisfy the requirements of sub9 section (l);

10 ‘‘(G) has established procedures for devel11 opment of organization standards that—

12 ‘‘(i) provide reasonable notice and op13 portunity for public comment, taking into

14 account the need for efficiency and effec15 tiveness in decisionmaking and operations

16 and the requirements for technical com17 petency in the development of organization

18 standards;

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

20 interests, and due process; and

21 ‘‘(iii) includes alternative procedures

22 to be followed in emergencies;

23 ‘‘(H) has established fair and impartial

24 procedures for implementation and enforcement

25 of organization standards, either directly or
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1 through delegation to an affiliated regional reli2 ability entity, including the imposition of pen3 alties, limitations on activities, functions, or op4 erations, or other appropriate sanctions;

5 ‘‘(I) has established procedures for notice

6 and opportunity for public observation of all

7 meetings, except that the procedures for public

8 observation may include alternative procedures

9 for emergencies or for the discussion of infor10 mation that the directors reasonably determine

11 should take place in closed session, such as liti12 gation, personnel actions, or commercially sen13 sitive information;

14 ‘‘(J) provides for the consideration of rec15 ommendations of States and State commissions;

16 and

17 ‘‘(K) addresses other matters that the

18 Commission considers appropriate to ensure

19 that the procedures, governance, and funding of

20 the electric reliability organization are just, rea21 sonable, not unduly discriminatory or pref22 erential, and in the public interest.

23 ‘‘(5) EXCLUSIVE DESIGNATION.—

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

25 designate only 1 electric reliability organization.
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1 ‘‘(B) MULTIPLE APPLICATIONS.—If the

2 Commission receives 2 or more timely applica3 tions that satisfy the requirements of this sub4 section, the Commission shall approve only the

5 application that the Commission determines will

6 best implement this section.

7 ‘‘(e) ORGANIZATION STANDARDS.—

8 ‘‘(1) SUBMISSION OF PROPOSALS TO COMMIS9 SION.—

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

11 organization shall submit to the Commission

12 proposals for any new or modified organization

13 standards.

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

15 under subparagraph (A) shall include—

16 ‘‘(i) a concise statement of the pur17 pose of the proposal; and

18 ‘‘(ii) a record of any proceedings con19 ducted with respect to the proposal.

20 ‘‘(2) REVIEW BY THE COMMISSION.—

21 ‘‘(A) NOTICE AND COMMENT.—The Com22 mission shall—

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

24 paragraph (1); and
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1 ‘‘(ii) allow interested persons 30 days

2 to submit comments on the proposal.

3 ‘‘(B) ACTION BY THE COMMISSION.—

4 ‘‘(i) IN GENERAL.—After taking into

5 consideration any submitted comments, the

6 Commission shall approve or disapprove a

7 proposed organization standard not later

8 than the end of the 60-day period begin9 ning on the date of the deadline for the

10 submission of comments, except that the

11 Commission may extend the 60-day period

12 for an additional 90 days for good cause.

13 ‘‘(ii) FAILURE TO ACT.—If the Com14 mission does not approve or disapprove a

15 proposal within the period specified in

16 clause (i), the proposed organization stand17 ard shall go into effect subject to its terms,

18 without prejudice to the authority of the

19 Commission to modify the organization

20 standard in accordance with the standards

21 and requirements of this section.

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

23 standard approved by the Commission shall

24 take effect not earlier than 30 days after the

25 date of the Commission’s order of approval.
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1 ‘‘(D) STANDARDS FOR APPROVAL.—

2 ‘‘(i) IN GENERAL.—The Commission

3 shall approve a proposed new or modified

4 organization standard if the Commission

5 determines the organization standard to be

6 just, reasonable, not unduly discriminatory

7 or preferential, and in the public interest.

8 ‘‘(ii) CONSIDERATIONS.—In the exer9 cise of its review responsibilities under this

10 subsection, the Commission—

11 ‘‘(I) shall give due weight to the

12 technical expertise of the electric reli13 ability organization with respect to

14 the content of a new or modified orga15 nization standard; but

16 ‘‘(II) shall not defer to the elec17 tric reliability organization with re18 spect to the effect of the organization

19 standard on competition.

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

21 standard that is disapproved in whole or in part

22 by the Commission shall be remanded to the

23 electric reliability organization for further con24 sideration.
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1 ‘‘(3) ORDERS TO DEVELOP OR MODIFY ORGANI2 ZATION STANDARDS.—The Commission, on com3 plaint or on motion of the Commission, may order

4 the electric reliability organization to develop and

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

6 order, an organization standard or modification to

7 an existing organization standard to address a spe8 cific matter if the Commission considers a new or

9 modified organization standard appropriate to carry

10 out this section, and the electric reliability organiza11 tion shall develop and submit the organization

12 standard or modification to the Commission in ac13 cordance with this subsection.

14 ‘‘(4) VARIANCES AND ENTITY RULES.—

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

16 reliability entity may propose a variance or enti17 ty rule to the electric reliability organization.

18 ‘‘(B) EXPEDITED CONSIDERATION.—If ex19 pedited consideration is necessary to provide for

20 bulk-power system reliability, the affiliated re21 gional reliability entity may—

22 ‘‘(i) request that the electric reliability

23 organization expedite consideration of the

24 proposal; and
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1 ‘‘(ii) file a notice of the request with

2 the Commission.

3 ‘‘(C) FAILURE TO ACT.—

4 ‘‘(i) IN GENERAL.—If the electric reli5 ability organization fails to adopt the vari6 ance or entity rule, in whole or in part, the

7 affiliated regional reliability entity may re8 quest that the Commission review the pro9 posal.

10 ‘‘(ii) ACTION BY THE COMMISSION.—

11 If the Commission determines, after a re12 view of the request, that the action of the

13 electric reliability organization did not con14 form to the applicable standards and pro15 cedures approved by the Commission, or if

16 the Commission determines that the vari17 ance or entity rule is just, reasonable, not

18 unduly discriminatory or preferential, and

19 in the public interest and that the electric

20 reliability organization has unreasonably

21 rejected or failed to act on the proposal,

22 the Commission may—

23 ‘‘(I) remand the proposal for fur24 ther consideration by the electric reli25 ability organization; or
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1 ‘‘(II) order the electric reliability

2 organization or the affiliated regional

3 reliability entity to develop a variance

4 or entity rule consistent with that re5 quested by the affiliated regional reli6 ability entity.

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

8 rule proposed by an affiliated regional reliability

9 entity shall be submitted to the electric reli10 ability organization for review and submission

11 to the Commission in accordance with the pro12 cedures specified in paragraph (2).

13 ‘‘(5) IMMEDIATE EFFECTIVENESS.—

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

15 other provision of this subsection, a new or

16 modified organization standard shall take effect

17 immediately on submission to the Commission

18 without notice or comment if the electric reli19 ability organization—

20 ‘‘(i) determines that an emergency ex21 ists requiring that the new or modified or22 ganization standard take effect imme23 diately without notice or comment;
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1 ‘‘(ii) notifies the Commission as soon

2 as practicable after making the determina3 tion;

4 ‘‘(iii) submits the new or modified or5 ganization standard to the Commission not

6 later than 5 days after making the deter7 mination; and

8 ‘‘(iv) includes in the submission an ex9 planation of the need for immediate effec10 tiveness.

11 ‘‘(B) NOTICE AND COMMENT.—The Com12 mission shall—

13 ‘‘(i) provide notice of the new or modi14 fied organization standard or amendment

15 for comment; and

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

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

18 new or modified organization standard.

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

20 user shall comply with an organization standard that

21 takes effect under this section.

22 ‘‘(f) COORDINATION WITH CANADA AND MEXICO.—

23 ‘‘(1) RECOGNITION.—The electric reliability or24 ganization shall take all appropriate steps to gain

25 recognition in Canada and Mexico.
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1 ‘‘(2) INTERNATIONAL AGREEMENTS.—

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

3 use best efforts to enter into international

4 agreements with the appropriate governments

5 of Canada and Mexico to provide for—

6 ‘‘(i) effective compliance with organi7 zation standards; and

8 ‘‘(ii) the effectiveness of the electric

9 reliability organization in carrying out its

10 mission and responsibilities.

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

12 the electric reliability organization, an affiliated

13 regional reliability entity, and the Commission

14 shall be consistent with any international agree15 ment under subparagraph (A).

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

17 FUNDING.—

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

19 electric reliability organization shall submit to the

20 Commission—

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

22 governance, or funding provision; or

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

24 reliability entity’s procedure, governance, or
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1 funding provision relating to delegated func2 tions.

3 ‘‘(2) CONTENTS.—A submission under para4 graph (1) shall include an explanation of the basis

5 and purpose for the change.

6 ‘‘(3) EFFECTIVENESS.—

7 ‘‘(A) CHANGES IN PROCEDURE.—

8 ‘‘(i) CHANGES CONSTITUTING A

9 STATEMENT OF POLICY, PRACTICE, OR IN10 TERPRETATION.—A proposed change in

11 procedure shall take effect 90 days after

12 submission to the Commission if the

13 change constitutes a statement of policy,

14 practice, or interpretation with respect to

15 the meaning or enforcement of the proce16 dure.

17 ‘‘(ii) OTHER CHANGES.—A proposed

18 change in procedure other than a change

19 described in clause (i) shall take effect on

20 a finding by the Commission, after notice

21 and opportunity for comment, that the

22 change—

23 ‘‘(I) is just, reasonable, not un24 duly discriminatory or preferential,

25 and in the public interest; and
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1 ‘‘(II) satisfies the requirements

2 of subsection (d)(4).

3 ‘‘(B) CHANGES IN GOVERNANCE OR FUND4 ING.—A proposed change in governance or

5 funding shall not take effect unless the Com6 mission finds that the change—

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

8 discriminatory or preferential, and in the

9 public interest; and

10 ‘‘(ii) satisfies the requirements of sub11 section (d)(4).

12 ‘‘(4) ORDER TO AMEND.—

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

14 complaint or on the motion of the Commission,

15 may require the electric reliability organization

16 to amend a procedural, governance, or funding

17 provision if the Commission determines that the

18 amendment is necessary to meet the require19 ments of this section.

20 ‘‘(B) FILING.—The electric reliability or21 ganization shall submit the amendment in ac22 cordance with paragraph (1).

23 ‘‘(h) DELEGATIONS OF AUTHORITY.—

24 ‘‘(1) IN GENERAL.—
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1 ‘‘(A) IMPLEMENTATION AND ENFORCE2 MENT OF COMPLIANCE.—At the request of an

3 entity, the electric reliability organization shall

4 enter into an agreement with the entity for the

5 delegation of authority to implement and en6 force compliance with organization standards in

7 a specified geographic area if the electric reli8 ability organization finds that—

9 ‘‘(i) the entity satisfies the require10 ments of subparagraphs (A), (B), (C), (D),

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

12 ‘‘(ii) the delegation would promote the

13 effective and efficient implementation and

14 administration of bulk-power system reli15 ability.

16 ‘‘(B) OTHER AUTHORITY.—The electric re17 liability organization may enter into an agree18 ment to delegate to an entity any other author19 ity, except that the electric reliability organiza20 tion shall reserve the right to set and approve

21 standards for bulk-power system reliability.

22 ‘‘(2) APPROVAL BY THE COMMISSION.—

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

24 The electric reliability organization shall submit

25 to the Commission—
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1 ‘‘(i) any agreement entered into under

2 this subsection; and

3 ‘‘(ii) any information the Commission

4 requires with respect to the affiliated re5 gional reliability entity to which authority

6 is delegated.

7 ‘‘(B) STANDARDS FOR APPROVAL.—The

8 Commission shall approve the agreement, fol9 lowing public notice and an opportunity for

10 comment, if the Commission finds that the

11 agreement—

12 ‘‘(i) meets the requirements of para13 graph (1); and

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

15 discriminatory or preferential, and in the

16 public interest.

17 ‘‘(C) REBUTTABLE PRESUMPTION.—A pro18 posed delegation agreement with an affiliated

19 regional reliability entity organized on an inter20 connection-wide basis shall be rebuttably pre21 sumed by the Commission to promote the effec22 tive and efficient implementation and adminis23 tration of the reliability of the bulk-power sys24 tem.
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1 ‘‘(D) INVALIDITY ABSENT APPROVAL.—No

2 delegation by the electric reliability organization

3 shall be valid unless the delegation is approved

4 by the Commission.

5 ‘‘(3) PROCEDURES FOR ENTITY RULES AND

6 VARIANCES.—

7 ‘‘(A) IN GENERAL.—A delegation agree8 ment under this subsection shall specify the

9 procedures by which the affiliated regional reli10 ability entity may propose entity rules or

11 variances for review by the electric reliability

12 organization.

13 ‘‘(B) INTERCONNECTION-WIDE ENTITY

14 RULES AND VARIANCES.— In the case of a pro15 posal for an entity rule or variance that would

16 apply on an interconnection-wide basis, the elec17 tric reliability organization shall approve the en18 tity rule or variance unless the electric reli19 ability organization makes a written finding

20 that the entity rule or variance—

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

22 open process that provided an opportunity

23 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]

Æ