106TH CONGRESS

2D SESSION S. 2071

AN ACT

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 subsection (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 the 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-
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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 organizations 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 ‘‘(q) PRESERVATION OF STATE AUTHORITY.—

5 ‘‘(1) The electric reliability organization shall

6 have authority to develop, implement, and enforce

7 compliance with standards for the reliable operation

8 of only the bulk-power system.

9 ‘‘(2) This section does not provide the electric

10 reliability organization or the Commission with the

11 authority to set and enforce compliance with stand12 ards for adequacy or safety of electric facilities or

13 services.

14 ‘‘(3) Nothing in this section shall be construed

15 to preempt any authority of any State to take action

16 to ensure the safety, adequacy, and reliability of

17 electric service within that State, as long as such ac18 tion is not inconsistent with any organization stand19 ard.

20 ‘‘(4) Not later than 90 days after the applica21 tion of the electric reliability organization or other

22 affected party, the Commission shall issue a final

23 order determining whether a State action is incon24 sistent with an organization standard, after notice

25 and opportunity for comment, taking into consider-
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1 ation any recommendations of the electric reliability

2 organization.

3 ‘‘(5) The Commission, after consultation with

4 the electric reliability organization, may stay the ef5 fectiveness of any State action, pending the Commis6 sion’s issuance of a final order.’’.

7 (b) ENFORCEMENT.—

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

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

10 amended—

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

12 ‘‘section’’; and

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

14 ‘‘214 or 215’’.

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

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

17 by striking ‘‘or 214’’ each place it appears and in18 serting ‘‘214, or 215’’.

Passed the Senate June 30, 2000.

Attest:

Secretary.
106TH CONGRESS

2D SESSION S. 2071

AN ACT

To benefit electricity consumers by promoting the

reliability of the bulk-power system.