II 

108TH CONGRESS 

2D SESSION S. 2014

To amend the Federal Power Act to establish electric reliability standards. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 21, 2004

Ms. CANTWELL (for herself, Mrs. CLINTON, Mr. JEFFORDS, and Mr. FEINGOLD) introduced the following bill; which was read twice and referred 

to the Committee on Energy and Natural Resources 

A BILL

To amend the Federal Power Act to establish electric 

reliability standards.

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 Act 

5 of 2004’’. 

6 SEC. 2. ELECTRIC RELIABILITY STANDARDS. 

7 Part II of the Federal Power Act (16 U.S.C. 824 et 

8 seq.) is amended by adding at the end the following: 

9 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

10 ‘‘(a) DEFINITIONS.—In this section: 
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1 ‘‘(1) BULK-POWER SYSTEM.—The term ‘bulk2 power system’ means a network of interconnected 

3 transmission facilities and generating facilities. 

4 ‘‘(2) ELECTRIC RELIABILITY ORGANIZATION.—

5 The term ‘electric reliability organization’ means a 

6 self-regulating organization certified by the Commis7 sion under subsection (c) the purpose of which is to 

8 promote the reliability of a bulk-power system. 

9 ‘‘(3) RELIABILITY STANDARD.—The term ‘reli10 ability standard’ means a requirement to provide for 

11 reliable operation of a bulk-power system approved 

12 by the Commission under this section. 

13 ‘‘(b) JURISDICTION AND APPLICABILITY.—

14 ‘‘(1) IN GENERAL.—The Commission shall have 

15 jurisdiction, within the United States, over each 

16 electric reliability organization, regional entity, and 

17 user, owner, and operator of a bulk-power system 

18 (including an entity described in section 201(f)), for 

19 the purpose of approving reliability standards and 

20 enforcing compliance with this section. 

21 ‘‘(2) COMPLIANCE.—Each user, owner, and op22 erator of the bulk-power system shall comply with 

23 reliability standards that take effect under this sec24 tion. 

25 ‘‘(c) CERTIFICATION.—
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1 ‘‘(1) FINAL RULE.—Not later than 180 days 

2 after the date of enactment of this section, the Com3 mission shall promulgate a final rule to implement 

4 the requirements of this section. 

5 ‘‘(2) SUBMISSION OF APPLICATION.—Following 

6 the promulgation of a Commission rule under para7 graph (1), any person may submit an application to 

8 the Commission for certification as an electric reli9 ability organization. 

10 ‘‘(3) REQUIREMENTS FOR CERTIFICATION.—

11 The Commission may certify an applicant if the 

12 Commission determines that the applicant—

13 ‘‘(A) has the ability to develop, and en14 force, reliability standards that provide for an 

15 adequate level of reliability of the bulk-power 

16 system; 

17 ‘‘(B) has established rules that—

18 ‘‘(i) ensure the independence of the 

19 applicant from users, owners, and opera20 tors of the bulk-power system, while ensur21 ing fair stakeholder representation in the 

22 selection of the directors of the applicant 

23 and balanced decisionmaking in any com24 mittee or subordinate organizational struc25 ture; 
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1 ‘‘(ii) allocate equitably dues, fees, and 

2 other charges among end users for all ac3 tivities conducted under this section; 

4 ‘‘(iii) provide fair and impartial proce5 dures for enforcement of reliability stand6 ards through imposition of penalties (in7 cluding limitations on activities, functions, 

8 or operations, or other appropriate sanc9 tions); and 

10 ‘‘(iv) provide for reasonable notice and 

11 opportunity for public comment, due proc12 ess, openness, and balance of interests in 

13 developing reliability standards and other14 wise exercising the duties of the applicant. 

15 ‘‘(4) MULTIPLE APPLICATIONS.—If the Com16 mission receives 2 or more timely applications that 

17 satisfy the requirements of this subsection, the Com18 mission shall approve only the application that the 

19 Commission concludes will best implement this sec20 tion. 

21 ‘‘(d) RELIABILITY STANDARDS.—

22 ‘‘(1) FILING.—An electric reliability organiza23 tion shall file a proposed reliability standard or 

24 modification to a reliability standard with the Com25 mission.
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1 ‘‘(2) APPROVAL.—

2 ‘‘(A) IN GENERAL.—The Commission may 

3 approve a proposed reliability standard or modi4 fication to a reliability standard if the Commis5 sion determines that the standard is just, rea6 sonable, not unduly discriminatory or pref7 erential, and in the public interest. 

8 ‘‘(B) DEFERRAL TO ELECTRIC RELI9 ABILITY ORGANIZATIONS.—The Commission—

10 ‘‘(i) shall give due weight to the tech11 nical expertise of the electric reliability or12 ganization with respect to the content of a 

13 proposed standard or modification to a re14 liability standard; but 

15 ‘‘(ii) shall not defer with respect to 

16 the effect of the standard or modification 

17 on competition. 

18 ‘‘(3) REBUTTABLE PRESUMPTIONS FOR INTER19 CONNECTION-WIDE ORGANIZATIONS.—The electric 

20 reliability organization and the Commission shall 

21 rebuttably presume that a proposal from a regional 

22 entity organized on an interconnection-wide basis for 

23 a reliability standard or modification to a reliability 

24 standard to be applicable on an interconnection-wide 
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1 basis is just, reasonable, not unduly discriminatory 

2 or preferential, and in the public interest. 

3 ‘‘(4) DISAPPROVAL.—The Commission shall re4 mand to the electric reliability organization for fur5 ther consideration a proposed reliability standard or 

6 a modification to a reliability standard that the 

7 Commission disapproves in whole or in part. 

8 ‘‘(5) MANDATORY SUBMISSION.—The Commis9 sion, on its own motion or on complaint, may order 

10 an electric reliability organization to submit to the 

11 Commission a proposed reliability standard or a 

12 modification to a reliability standard that addresses 

13 a specific matter if the Commission considers such 

14 a new or modified reliability standard to be appro15 priate to carry out this section. 

16 ‘‘(e) ENFORCEMENT.—

17 ‘‘(1) PENALTIES BY ELECTRIC RELIABILITY OR18 GANIZATIONS ON USERS, OWNERS, OR OPERA19 TORS.—An electric reliability organization may im20 pose a penalty on a user, owner, or operator of a 

21 bulk-power system if the electric reliability organiza22 tion, after notice and an opportunity for a hearing—

23 ‘‘(A) finds that the user, owner, or oper24 ator of the bulk-power system has violated a re-
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1 liability standard approved by the Commission 

2 under subsection (d); and 

3 ‘‘(B) files notice with the Commission, 

4 which shall affirm, set aside, or modify the ac5 tion. 

6 ‘‘(2) ORDERS OR PENALTIES BY COMMISSION

7 ON USERS, OWNERS, OR OPERATORS.—On its own 

8 motion or on complaint, the Commission may order 

9 compliance with a reliability standard, and may im10 pose a penalty against a user, owner, or operator of 

11 a bulk-power system, if the Commission finds, after 

12 notice and opportunity for a hearing, that the user, 

13 owner, or operator of the bulk-power system has vio14 lated or threatens to violate a reliability standard. 

15 ‘‘(3) DELEGATION TO REGIONAL ENTITY.—

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

17 promulgate regulations authorizing the electric 

18 reliability organization to—

19 ‘‘(i) enter into an agreement to dele20 gate authority to a regional entity for the 

21 purpose of proposing and enforcing reli22 ability standards (including related activi23 ties) if—
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1 ‘‘(I) the regional entity satisfies 

2 the requirements of subparagraphs 

3 (A) and (B) of subsection (c)(2); and 

4 ‘‘(II) the agreement promotes ef5 fective and efficient administration of 

6 bulk-power system reliability; and 

7 ‘‘(ii) modify the delegation. 

8 ‘‘(B) REBUTTABLE PRESUMPTIONS FOR

9 INTERCONNECTION-WIDE ORGANIZATIONS.—

10 The electric reliability organization and the 

11 Commission shall rebuttably presume that a 

12 proposal for delegation to a regional entity or13 ganized on an interconnection-wide basis pro14 motes effective and efficient administration of 

15 bulk-power system reliability and should be ap16 proved. 

17 ‘‘(C) DIRECT DELEGATION TO REGIONAL

18 ENTITY.—The regulations may provide that the 

19 Commission may assign the authority of the 

20 electric reliability organization to enforce reli21 ability standards directly to a regional entity 

22 consistent with this paragraph. 

23 ‘‘(4) COMPLIANCE.—The Commission may take 

24 such action as is necessary or appropriate against 

25 the electric reliability organization or a regional enti-
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1 ty to ensure compliance with a reliability standard 

2 or any Commission order affecting the electric reli3 ability organization or regional entity. 

4 ‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA5 NIZATION RULES.—

6 ‘‘(1) FILING.—An electric reliability organiza7 tion shall file with the Commission for approval any 

8 proposed rule or proposed rule change, accompanied 

9 by an explanation of the basis and purpose of the 

10 rule or change. 

11 ‘‘(2) COMMISSION INITIATIVE.—The Commis12 sion, on its own motion or complaint, may propose 

13 a change to the rules of the electric reliability orga14 nization. 

15 ‘‘(3) EFFECTIVE DATE.—A proposed rule or 

16 proposed rule change shall take effect on a finding 

17 by the Commission, after notice and opportunity for 

18 comment, that the change is just, reasonable, not 

19 unduly discriminatory or preferential, is in the pub20 lic interest, and satisfies the requirements of sub21 section (c)(2). 

22 ‘‘(g) 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.—The 

2 President shall, to the maximum extent practicable, 

3 enter into international agreements with the govern4 ments of Canada and Mexico to provide for effective 

5 compliance with reliability standards and the effec6 tiveness of the electric reliability organization in the 

7 United States and Canada or Mexico. 

8 ‘‘(h) RELIABILITY REPORTS.—The electric reliability 

9 organization shall conduct periodic assessments of the reli10 ability and adequacy of the interconnected bulk-power sys11 tem in North America. 

12 ‘‘(i) SAVINGS PROVISIONS.—

13 ‘‘(1) COMPLIANCE.—The electric reliability or14 ganization shall have authority to develop and en15 force compliance with standards for the reliable op16 eration of only the bulk-power system. 

17 ‘‘(2) ADDITIONAL CAPACITY; ADEQUACY OR

18 SAFETY.—This section does not provide the electric 

19 reliability organization or the Commission with the 

20 authority—

21 ‘‘(A) to order the construction of addi22 tional generation or transmission capacity; or 

23 ‘‘(B) to establish and enforce compliance 

24 with standards for adequacy or safety of electric 

25 facilities or services. 
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1 ‘‘(3) STATE ACTION.—Nothing in this section 

2 preempts any authority of a State to take action to 

3 ensure the safety, adequacy, and reliability of elec4 tric service within that State, as long as the action 

5 is not inconsistent with any reliability standard. 

6 ‘‘(4) CONSISTENCY WITH RELIABILITY STAND7 ARDS.—Not later than 90 days after the filing of the 

8 application of the electric reliability organization or 

9 other affected party, and after notice and oppor10 tunity for comment, the Commission shall issue a 

11 final order determining whether a State action is in12 consistent with a reliability standard, taking into 

13 consideration any recommendation of the electric re14 liability organization. 

15 ‘‘(5) STAYS.—The Commission, after consulta16 tion with the electric reliability organization, may 

17 stay the effectiveness of any State action, pending 

18 the issuance of a final order by the Commission. 

19 ‘‘(j) APPLICATION OF ANTITRUST LAWS.—

20 ‘‘(1) DEFINITION OF ANTITRUST LAWS.—In 

21 this subsection: 

22 ‘‘(A) IN GENERAL.—The term ‘antitrust 

23 laws’ has the meaning given the term in sub24 section (a) of the first section of the Clayton 

25 Act (15 U.S.C. 12(a)). 
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1 ‘‘(B) INCLUSION.—The term ‘antitrust 

2 laws’ includes section 5 of the Federal Trade 

3 Commission Act (15 U.S.C. 45), to the extent 

4 that section applies to unfair methods of com5 petition. 

6 ‘‘(2) APPLICATION.—To the extent undertaken 

7 to develop, implement, or enforce a reliability stand8 ard, each of the following activities shall not, in any 

9 action under the antitrust laws, be deemed illegal 

10 per se: 

11 ‘‘(A) Activities undertaken by an electric 

12 reliability organization under this section. 

13 ‘‘(B) Activities of a user, owner, or oper14 ator of the bulk-power system undertaken in 

15 good faith under the rules of an electric reli16 ability organization. 

17 ‘‘(3) RULE OF REASON.—In any action under 

18 the antitrust laws, an activity described in para19 graph (2) shall be judged on the basis of the reason20 ableness of the activity, taking into account all rel21 evant factors affecting competition and reliability. 

22 ‘‘(k) REGIONAL ADVISORY BODIES.—

23 ‘‘(1) IN GENERAL.—The Commission shall es24 tablish a regional advisory body on the petition of at 

least 2 25 ⁄3 of the States within a region that have more 
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than 1 1 ⁄2 of their electric loads served within the re2 gion. 

3 ‘‘(2) COMPOSITION.—A regional advisory 

4 body—

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

6 each participating State in the region, ap7 pointed by the Governor of the State; and 

8 ‘‘(B) may include representatives of agen9 cies, States, and provinces outside the United 

10 States. 

11 ‘‘(3) ADVICE.—A regional advisory body may 

12 provide advice to an electric reliability organization, 

13 a regional reliability entity, or the Commission re14 garding—

15 ‘‘(A) the governance of an existing or pro16 posed regional reliability entity within the same 

17 region; 

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

19 within the region is just, reasonable, not unduly 

20 discriminatory or preferential, and in the public 

21 interest; 

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

23 within the region are just, reasonable, not un24 duly discriminatory or preferential, and in the 

25 public interest; and 
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1 ‘‘(D) any other responsibilities requested 

2 by the Commission. 

3 ‘‘(4) INTERCONNECTION-WIDE BASIS.—The 

4 Commission may give deference to the advice of any 

5 such regional advisory body if the regional advisory 

6 board is organized on an interconnection-wide basis. 

7 ‘‘(l) NONAPPLICATION TO ALASKA AND HAWAII.—

8 This section does not apply to Alaska or Hawaii.’’.

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