44918 Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 

15See Pay Ratio Release, supra note 1, at 50122— 

50133. 

16 17 CFR 229.402(u)(4)(ii). See also Pay Ratio 

Release, supra note 1, at 50124–50125 (noting that 

registrants using the de minimis exemption are 

required to provide certain disclosures). 

17See, e.g., Instruction 1 to Item 402(u) of 

Regulation S–K (17 CFR 229.402(u)) and Pay Ratio 

Release, supra note 1, at 50119—50120 (indicating 

that determination of the median employee may be 

made on any date within the last three months of 

the registrant’s last completed fiscal year). 

18See Pay Ratio Release, supra note 1, at 50137– 

50138 (providing that the registrant must disclose 

the substitution as part of its brief description of the 

methodology it used to identify the median 

employee). 

19 17 CFR 229.402(u)(3). 

20 Id. 

21See Pay Ratio Release, supra note 1, at Section 

50165–50166. 

22See, e.g., letters from Davis Polk, FSR, SCG, and 

Insurance Coalition. 

23See, e.g., letters from Davis Polk and Insurance 

Coalition. 

24See, e.g., Publication 15–A Employer’s 

Supplemental Tax Guide (2017). 

25 17 CFR 229.402(u)(3). 

26Because we believe most widely recognized 

tests likely will consider how compensation is 

determined as a factor in identifying a registrant’s 

employees, we believe these tests generally would 

provide a reasonable means of complying with Item 

402(u). See, e.g., note 24. The description of the 

methodology required by Instruction 4 of Item 

402(u) requires a registrant to include an 

explanation of any material assumptions and 

adjustments used. 

employees’’). In the Pay Ratio Release, 

we acknowledged that the inclusion of 

non-U.S. employees would raise 

compliance costs for multinational 

companies.15 To address concerns about 

compliance costs, the rule permits 

registrants to exempt non-U.S. 

employees where these employees 

account for 5% or less of the registrant’s 

total U.S. and non-U.S. employees, with 

certain limitations.16 We are clarifying 

that a registrant may use appropriate 

existing internal records, such as tax or 

payroll records, in determining whether 

the 5% de minimis exemption is 

available.17

2. Median Employee 

We also believe that the use of 

existing internal records may, in many 

circumstances, be appropriate in 

identifying a registrant’s median 

employee. Instruction 4 to Item 402(u) 

permits a registrant to identify its 

median employee using a consistently 

applied compensation measure, such as 

information derived from the 

registrant’s tax or payroll records. We 

are clarifying that a registrant may use 

internal records that reasonably reflect 

annual compensation to identify the 

median employee, even if those records 

do not include every element of 

compensation, such as equity awards 

widely distributed to employees. 

We recognize that, when calculating 

total compensation in accordance with 

Item 402(c)(2)(x) for the identified 

median employee that the registrant 

identified using a consistently applied 

compensation measure based on 

internal records, the registrant may 

determine that there are anomalous 

characteristics of the identified median 

employee’s compensation that have a 

significant higher or lower impact on 

the pay ratio. The Commission 

discussed this issue in the adopting 

release specifically and noted that, in 

such a circumstance, instead of 

concluding that the consistently applied 

compensation measure the registrant 

used was unsuitable to identify its 

median employee, the registrant may 

substitute another employee with 

substantially similar compensation to 

the original identified median employee 

based on the compensation measure it 

used to select the median employee.18

C. Independent Contractors 

For purposes of Item 402(u), the term 

‘‘employee’’ or ‘‘employee of the 

registrant’’ is defined as ‘‘an individual 

employed by the registrant or any of its 

consolidated subsidiaries.’’ 19 Item 

402(u)(3) excludes from the definition 

those workers who are employed, and 

whose compensation is determined, by 

an unaffiliated third party but who 

provide services to the registrant or its 

consolidated subsidiaries as 

independent contractors or ‘‘leased’’ 

workers.20 In the Pay Ratio Release, the 

Commission indicated that excluding 

these workers is appropriate, because 

registrants generally do not control the 

level of compensation that these 

workers are paid.21

Some commenters have expressed 

concerns about the application of the 

rule’s definition of ‘‘employee.’’ 22

Because registrants already make 

determinations as to whether a worker 

is an employee or independent 

contractor in other legal and regulatory 

contexts, such as for employment law or 

tax purposes, some commenters 

suggested that the Commission should 

allow registrants to use widely 

recognized tests to determine who is an 

‘‘employee’’ for purposes of the rule.23

Such a test might, for example, be 

drawn from guidance published by the 

Internal Revenue Service with respect to 

independent contractors.24

Item 402(u)(3) makes clear that an 

‘‘employee’’ is an individual employed 

by the registrant.25 The provision in 

Item 402(u)(3) indicating that the 

definition of ‘‘employee’’ does not 

include workers who are employed, and 

whose compensation is determined, by 

an unaffiliated third party describes one 

category of workers that is expressly 

excluded from the definition of 

‘‘employee’’ under the rule. The 

provision was not intended to serve as 

an exclusive basis for determining 

whether a worker is an employee of the 

registrant. Accordingly, we believe it 

would be consistent with Item 402(u) 

for a registrant to apply a widely 

recognized test under another area of 

law that the registrant otherwise uses to 

determine whether its workers are 

employees.26

By the Commission. 

Dated: September 21, 2017. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–20632 Filed 9–26–17; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 40 

[Docket No. RM16–20–000; Order No. 837] 

Remedial Action Schemes Reliability 

Standard 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Final rule. 

SUMMARY: The Federal Energy 

Regulatory Commission approves 

Reliability Standard PRC–012–2 

(Remedial Action Schemes) submitted 

by the North American Electric 

Reliability Corporation. The purpose of 

Reliability Standard PRC–012–2 is to 

ensure that remedial action schemes do 

not introduce unintentional or 

unacceptable reliability risks to the bulk 

electric system. 

DATES: This rule will become effective 

November 27, 2017. 

FOR FURTHER INFORMATION CONTACT: 

Syed Ahmad (Technical Information), 

Office of Electric Reliability, Division 

of Reliability Standards and Security, 

888 First Street NE., Washington, DC 

20426, Telephone: (202) 502–8718, 

Syed.Ahmad@ferc.gov. 

Alan Rukin (Legal Information), Office 

of the General Counsel, Federal 

Energy Regulatory Commission, 888 

First Street NE., Washington, DC 

20426, Telephone: (202) 502–8502, 

Alan.Rukin@ferc.gov. 

SUPPLEMENTARY INFORMATION: 


asabaliauskas on DSKBBXCHB2PROD with RULES
Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 44919 

1 16 U.S.C. 824o. 

2 Id. 824o(c), (d). 

3 Id. 824o(e). 

4North American Electric Reliability Corp., 116 

FERC ¶ 61,062 (ERO Certification Order), order on 

reh’g and compliance, 117 FERC ¶ 61,126 (2006), 

order on compliance, 118 FERC ¶ 61,190, order on 

reh’g, 119 FERC ¶ 61,046 (2007), aff’d sub nom. 

Alcoa Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009). 

5 Mandatory Reliability Standards for the BulkPower System, Order No. 693, FERC Stats. & Regs. 

¶ 31,242, order on reh’g, Order No. 693–A, 120 

FERC ¶ 61,053 (2007). 

6 Id. PP 1529–1533. 

7 Id. PP 1534–1540. 

8 Id. PP 1517–18, 1520. The Commission used the 

term ‘‘fill-in-the-blank’’ standards to refer to 

proposed Reliability Standards that required the 

regional reliability organizations to develop at a 

later date criteria for use by users, owners or 

operators within each region. Id. P 297. 

9 Id. PP 1521, 1522, 1524. 

10 Id. PP 1525, 1526, 1528. 

11 Id. PP 1520, 1524, 1528. 

12N. Am. Elec. Reliability Corp., Docket No. 

RD16–5–000 (June 23, 2016) (delegated letter order); 

NERC Glossary, http://www.nerc.com/files/ 

glossary_of_terms.pdf. 

13NERC Glossary, http://www.nerc.com/files/ 

glossary_of_terms.pdf; see also Revisions to 

Emergency Operations Reliability Standards; 

Revisions to Undervoltage Load Shedding 

Reliability Standards; Revisions to the Definition of 

‘‘Remedial Action Scheme’’ and Related Reliability 

Standards, Order No. 818, 153 FERC ¶ 61,228, at 

PP 24, 31 (2015). 

14Reliability Standard PRC–012–2 is not attached 

to this Final Rule. The Reliability Standard is 

available on the Commission’s eLibrary document 

retrieval system in Docket No. RM16–20–000 and 

is posted on NERC’s Web site, http://

www.nerc.com. 

15NERC Petition at 2. 

Order No. 837 

Final Rule 

(Issued September 20, 2017) 

1. Pursuant to section 215 of the 

Federal Power Act (FPA), the Federal 

Energy Regulatory Commission 

(Commission) approves Reliability 

Standard PRC–012–2 (Remedial Action 

Schemes).1 The North American Electric 

Reliability Corporation (NERC), the 

Commission-certified Electric 

Reliability Organization (ERO), 

submitted Reliability Standard PRC– 

012–2 for approval. The purpose of 

Reliability Standard PRC–012–2 is to 

ensure that remedial action schemes do 

not introduce unintentional or 

unacceptable reliability risks to the bulk 

electric system. In addition, the 

Commission approves the associated 

violation risk factors and violation 

severity levels, implementation plan, 

and effective date proposed by NERC. 

The Commission also approves the 

retirement of currently-effective 

Reliability Standards PRC–015–1 and 

PRC–016–1 as well as NERC’s request to 

withdraw proposed Reliability 

Standards PRC–012–1, PRC–013–1, and 

PRC–014–1, which are now pending 

before the Commission. 

I. Background 

A. Section 215 and Mandatory 

Reliability Standards 

2. Section 215 of the FPA requires a 

Commission-certified ERO to develop 

mandatory and enforceable Reliability 

Standards, subject to Commission 

review and approval.2 Once approved, 

the Reliability Standards may be 

enforced by the ERO subject to 

Commission oversight or by the 

Commission independently.3 In 2006, 

the Commission certified NERC as the 

ERO pursuant to section 215 of the 

FPA.4

B. Order No. 693 

3. On March 16, 2007, the 

Commission issued Order No. 693, 

approving 83 of the 107 Reliability 

Standards filed by NERC, including 

Reliability Standards PRC–015–1 

(Remedial Action Scheme Data and 

Documentation) and PRC–016–1 

(Remedial Action Scheme 

Misoperation).5 Reliability Standard 

PRC–015–1 requires transmission 

owners, generator owners, and 

distribution providers to maintain a 

listing; retain evidence of review; and 

provide documentation of existing, new 

or functionally modified special 

protection systems.6 Reliability 

Standard PRC–016–1 requires 

transmission owners, generator owners, 

and distribution providers to provide 

the regional reliability organization with 

documentation, analyses and corrective 

action plans for misoperation of special 

protection systems.7

4. In Order No. 693, the Commission 

determined that then-proposed 

Reliability Standard PRC–012–0 was a 

‘‘fill-in-the-blank’’ Reliability Standard 

because, while it would require regional 

reliability organizations to ensure that 

all special protection systems are 

properly designed, meet performance 

requirements, and are coordinated with 

other protection systems, NERC had not 

submitted any regional review 

procedures with the proposed 

Reliability Standard.8 Similarly, the 

Commission determined that proposed 

Reliability Standard PRC–013–0 was a 

‘‘fill-in-the-blank’’ Reliability Standard 

because, although it was intended to 

ensure that all special protection 

systems are properly designed, meet 

performance requirements, and are 

coordinated with other protection 

systems by requiring the regional 

reliability organization to maintain a 

database of information on special 

protection systems, NERC had not filed 

any regional procedures for maintaining 

the databases.9 Further, the Commission 

determined that proposed Reliability 

Standard PRC–014–0 was a ‘‘fill-in-theblank’’ Reliability Standard because, 

while it was proposed to ensure that 

special protection systems are properly 

designed, meet performance 

requirements, and are coordinated with 

other protection systems by requiring 

the regional reliability organization to 

assess and document the operation, 

coordination, and compliance with 

NERC Reliability Standards and 

effectiveness of special protection 

systems at least once every five years, 

NERC had not submitted any regional 

procedures for this assessment and 

documentation.10 The Commission 

stated that it would not approve or 

remand proposed Reliability Standards 

PRC–012–0, PRC–013–0 or PRC–014–0 

until NERC submitted the additional 

necessary information to the 

Commission.11

C. Remedial Action Schemes 

5. On June 23, 2016, the Commission 

approved NERC’s revision to the NERC 

Glossary of Terms Used in NERC 

Reliability Standards (NERC Glossary) 

that redefines special protection system 

to have the same definition as remedial 

action scheme, effective April 1, 2017.12

The NERC Glossary defines remedial 

action scheme to mean: 

A scheme designed to detect 

predetermined System conditions and 

automatically take corrective actions that 

may include, but are not limited to, adjusting 

or tripping generation (MW and Mvar), 

tripping load, or reconfiguring a System(s). 

[Remedial Action Schemes (RAS)] 

accomplish objectives such as: 

• Meet requirements identified in the 

NERC Reliability Standards; 

• Maintain Bulk Electric System (BES) 

stability; 

• Maintain acceptable BES voltages; 

• Maintain acceptable BES power flows; 

• Limit the impact of Cascading or extreme 

events.13

The revised remedial action scheme 

definition also identifies fourteen items 

that do not individually constitute a 

remedial action scheme. 

D. NERC Petition and Reliability 

Standard PRC–012–2 

6. On August 5, 2016, NERC 

submitted a petition seeking 

Commission approval of proposed 

Reliability Standard PRC–012–2.14

NERC contended that Reliability 

Standard PRC–012–2 is just, reasonable, 

not unduly discriminatory or 

preferential, and in the public interest.15

NERC explained that the intent of 


asabaliauskas on DSKBBXCHB2PROD with RULES
44920 Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 

16NERC noted that it submitted ‘‘for 

completeness’’ revised versions of Reliability 

Standards PRC–012–1, PRC–013–1, and PRC–014– 

1 in its petition to revise the definition of remedial 

action scheme, but NERC did not request 

Commission approval of the revised Reliability 

Standards in that proceeding. Id. at 1 n.5. 17 Id. at 12–13. 18 Id. at 3. 19 Id. at 40. 20 Id. at 41. 21 Id. at 42. 22 Id.at 43. 

23 Id. at 43–44. 

24 Id. at 44–45. 

25 Id. at 15–18. 

26 Id. at 18–22. 

27 Id. at 19 & n.44. 

28 Id. at 19. 

29 Id. at 28. 

30 Id. at 28–29. 

31 Id. at 25. 

32 Id.at 25–26. 

33 Id. at 26. 

34 Id. at 29–34. 

35 Id. at 34–36. 

36 Id. at 36–38. 

Reliability Standard PRC–012–2 is to 

supersede ‘‘pending’’ Reliability 

Standards PRC–012–1, PRC–013–1, and 

PRC–014–1 and to retire and replace 

currently-effective Reliability Standards 

PRC–015–1 and PRC–016–1.16 NERC 

stated that Reliability Standard PRC– 

012–2 represents substantial 

improvements over these Reliability 

Standards because it streamlines and 

consolidates existing requirements; 

corrects the applicability of previously 

unapproved Reliability Standards; and 

implements a continent-wide remedial 

action scheme review program.17

7. NERC stated that, in the United 

States, Reliability Standard PRC–012–2 

will apply to reliability coordinators, 

planning coordinators, and remedial 

action scheme-entities. Reliability 

Standard PRC–012–2 defines remedial 

action scheme-entities to include each 

transmission owner, generation owner, 

or distribution provider that owns all or 

part of a remedial action scheme. 

8. NERC stated that Reliability 

Standard PRC–012–2 includes nine 

requirements that combine all existing 

(both effective and ‘‘pending’’) 

Reliability Standards mentioned above 

into a single, consolidated, continentwide Reliability Standard to address all 

aspects of remedial action schemes.18

NERC explained that all of the 

requirements in Reliability Standard 

PRC–012–1 except R2 are now covered 

in Requirements R1, R2, R3, R4, R5, R6, 

and R8 of Reliability Standard PRC– 

012–2.19 NERC maintained that 

Reliability Standard PRC–012–1, 

Requirement R2 is ‘‘administrative in 

nature and does not contribute to 

reliability.’’ 20 NERC also stated that it 

established Reliability Standard PRC– 

012–2, Requirement R9 to replace the 

mandate in Reliability Standard PRC– 

013–1 that responsible entities maintain 

a remedial action scheme database with 

pertinent technical information for each 

remedial action scheme.21 NERC 

explained that Reliability Standard 

PRC–012–2, Requirements R4 and R6 

cover the review and the mandate to 

take corrective action required by 

Reliability Standard PRC–014–1.22

NERC stated that it integrated the 

performance requirements in Reliability 

Standard PRC–015–1 into Reliability 

Standard PRC–012–2, Requirements R1, 

R2, and R3.23 NERC also asserted that it 

integrated the performance 

requirements in Reliability Standard 

PRC–016–1 into Reliability Standard 

PRC–012–2, Requirements R5, R6, and 

R7.24

9. NERC explained how the nine 

Requirements in Reliability Standard 

PRC- 012–2 work together and with 

other Reliability Standards. According 

to NERC, Requirements R1, R2, and R3, 

together, establish a process for the 

reliability coordinator to review new or 

modified remedial action schemes.25

The reliability coordinator must 

complete the review before an entity 

places a new or functionally modified 

remedial action scheme into service. 

10. Requirement R4 requires the 

planning coordinator to perform a 

periodic evaluation of each remedial 

action scheme within its planning area, 

at least once every five years.26 The 

evaluation must determine, inter alia, 

whether each remedial action scheme: 

(1) Mitigates the system conditions or 

contingencies for which it was 

designed; and (2) avoids adverse 

interactions with other remedial action 

scheme and protection systems. 

Requirement R4, Part 4.1.3 footnote 1 

defines a certain subset of remedial 

action schemes as ‘‘limited impact.’’ 

Requirement R4, Part 4.1.3 footnote 1 

states: ‘‘A RAS designated as limited 

impact cannot, by inadvertent operation 

or failure to operate, cause or contribute 

to BES Cascading, uncontrolled 

separation, angular instability, voltage 

instability, voltage collapse, or 

unacceptably damped oscillations.’’ 27

Further, Requirement R4, Parts 4.1.3, 

4.1.4, and 4.1.5 provide certain 

exceptions to ‘‘limited impact’’ remedial 

action schemes. For example, Part 4.1.5 

states that: 

Except for limited impact RAS, a single 

component failure in the RAS, when the RAS 

is intended to operate does not prevent the 

BES from meeting the same performance 

requirements (defined in Reliability Standard 

TPL–001–4 or its successor) as those required 

for the events and conditions for which the 

RAS is designed.28

NERC explained that Requirement R4 

‘‘does not supersede or modify 

[planning coordinator] responsibilities 

under Reliability Standard TPL–001– 

4.’’ 29 NERC continued that even though 

Part 4.1.5 exempts ‘‘limited impact’’ 

remedial action schemes from certain 

aspects of Reliability Standard PRC– 

012–2, Requirement R4 does not exempt 

‘‘limited impact’’ remedial actions 

schemes from meeting each of the 

performance requirements in Reliability 

Standard TPL–001–4.30

11. NERC stated that prior to 

development of Reliability Standard 

PRC–012–2, two NERC Regions, the 

Northeast Power Coordinating Council 

(NPCC) and the Western Electric 

Coordinating Council (WECC), used 

their own remedial action scheme 

classification regimes to identify 

remedial action schemes that would 

meet criteria similar to those for 

remedial action schemes described as 

‘‘limited impact’’ in Reliability Standard 

PRC–012–2.31 NERC continued that the 

standard drafting team identified the 

Local Area Protection Scheme (LAPS) 

classification in WECC and the Type III 

classification in NPCC as consistent 

with the ‘‘limited impact’’ 

designation.32 According to NERC, 

remedial action schemes implemented 

prior to the effective date of Reliability 

Standard PRC–012–2 that have gone 

through the regional review processes of 

WECC or NPCC and that are classified 

as either a LAPS by WECC or a Type III 

by NPCC would be considered a 

‘‘limited impact’’ remedial action 

scheme for purposes of Reliability 

Standard PRC–012–2.33

12. Requirements R5, R6, and R7 

pertain to the analysis of each remedial 

action scheme operation or 

misoperation.34 A remedial action 

scheme-entity must perform an analysis 

of each remedial action scheme 

operation or misoperation and provide 

the results to the reviewing reliability 

coordinator. Further, the remedial 

action scheme-entity must develop and 

submit a corrective action plan to the 

reviewing reliability coordinator after 

learning of a deficiency with its 

remedial action scheme, implement the 

corrective action plan, and update it as 

necessary. Requirement R8 requires 

periodic testing of remedial action 

scheme performance: Every six years for 

normal remedial action schemes and 

every 12 years for ‘‘limited impact’’ 

remedial action schemes.35 Requirement 

R9 requires the reliability coordinator to 

annually update its remedial action 

scheme database.36


asabaliauskas on DSKBBXCHB2PROD with RULES
Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 44921 

37Remedial Action Schemes Reliability Standard, 

Notice of Proposed Rulemaking, 82 FR 9702 (Jan. 

19, 2017), 158 FERC ¶ 61,042 (2017) (NOPR). 

38NOPR, 158 FERC ¶ 61,042 at P 16. 

39 Id. P 14. 

40 Id. 

41 16 U.S.C. 824o(d)(2). 

42Order No. 693, FERC Stats. & Regs. ¶ 31,242 at 

PP 297–298, 1517–1520. 

43NERC Comments at 4; Joint ISO Comments at 

2; EEI Comments at 4. 

44NERC Comments at 5. 

45 Id. at 5; Joint ISO Comments at 2. 

46 Joint ISO Comments at 2. 

47EEI Comments at 4. 

48NESCO Comments at 2. 

49 Id. 

50NERC Comments at 5. 

51 Id. at 6. 

52 Id.; Joint ISO Comments at 3. 

13. NERC proposed an 

implementation plan that includes an 

effective date for Reliability Standard 

PRC–012–2 that is the first day of the 

first calendar quarter that is thirty-six 

months after the date that the 

Commission approves the Reliability 

Standard. Concurrent with the effective 

date, the implementation plan calls for 

the retirement of currently-effective 

Reliability Standards PRC–015–1 and 

PRC–016–1 and withdrawal of 

‘‘pending’’ Reliability Standards PRC– 

012–1, PRC–013–1, and PRC–014–1. 

E. Notice of Proposed Rulemaking 

14. On January 19, 2017, the 

Commission issued a Notice of 

Proposed Rulemaking proposing to 

approve Reliability Standard PRC–012– 

2.37 The NOPR also proposed to clarify 

that, consistent with NERC’s 

representation in its petition, Reliability 

Standard PRC–012–2 will not modify or 

supersede any system performance 

obligations under Reliability Standard 

TPL–001–4.38 In addition, the NOPR 

proposed to approve the associated 

violation risk factors and violation 

severity levels, implementation plan, 

and effective date proposed by NERC.39

The NOPR further proposed to approve 

the withdrawal of ‘‘pending’’ Reliability 

Standards PRC–012–1, PRC–013–1, and 

PRC–014–1 and retirement of currentlyeffective Reliability Standards PRC– 

015–1 and PRC–016–1, as proposed by 

NERC.40

15. In response to the NOPR, entities 

filed seven sets of comments. We 

address below the issues raised in the 

NOPR and comments. The Appendix to 

this Final Rule lists the entities that 

filed comments in response to the 

NOPR. 

II. Discussion 

16. Pursuant to section 215(d)(2) of 

the FPA, we hereby approve Reliability 

Standard PRC–012–2.41 Reliability 

Standard PRC–012–2 promotes 

efficiency and clarity by addressing all 

aspects of remedial action schemes in a 

single, continent-wide Reliability 

Standard. Reliability Standard PRC– 

012–2 enhances reliability by assigning 

specific remedial action scheme 

responsibilities to appropriate 

functional entities. Further, Reliability 

Standard PRC–012–2 improves 

reliability by establishing a centralized 

process to review new or modified 

remedial action schemes prior to 

implementation, by requiring periodic 

evaluations, tests, and operational 

analyses of each remedial action 

scheme, and by requiring an annual 

update of an area-wide remedial action 

scheme database. We determine that 

Reliability Standard PRC–012–2 

satisfies the relevant directives in Order 

No. 693 for the ERO to provide 

additional information regarding review 

procedures for remedial action schemes 

(then called special protection systems) 

and to establish continent-wide 

uniformity.42

17. We also approve the associated 

violation risk factors and violation 

severity levels, implementation plan, 

and effective date proposed by NERC. In 

addition, we approve, upon the effective 

date of Reliability Standard PRC–012–2, 

the withdrawal of pending Reliability 

Standards PRC–012–1, PRC–013–1, and 

PRC–014–1 and the retirement of 

currently-effective Reliability Standards 

PRC–015–1 and PRC–016–1 due to their 

consolidation with proposed Reliability 

Standard PRC–012–2. 

A. Impact of Reliability Standard PRC– 

012–2 on Compliance With Reliability 

Standard TPL–001–4 

NOPR 

18. The NOPR sought comments on 

its proposal to clarify that Reliability 

Standard PRC–012–2 will not modify or 

supersede any system performance 

obligation under Reliability Standard 

TPL–001–4. The NOPR also sought 

comments on the processes used to 

ensure LAPS or Type III remedial action 

schemes’ compliance with Reliability 

Standard TPL–001–4 prior to the 

effective date of Reliability Standard 

PRC–012–2. 

Comments 

19. NERC, Joint ISOs, and the EEI 

support the Commission’s proposal to 

approve Reliability Standard PRC–012– 

2 with a clarification that it does not 

modify or supersede any system 

performance obligations under 

Reliability Standard TPL–001–4.43

NERC states that Reliability Standard 

PRC–012–2 merely adds design, 

implementation, and review 

requirements ensuring that remedial 

action schemes enhance reliability and 

do not introduce unintentional or 

unacceptable reliability risks.44 NERC 

and Joint ISOs state that Reliability 

Standard PRC–012–2 does not 

supersede or modify the system 

performance requirements of Reliability 

Standard TPL–001–4 because 

responsible entities must still assume 

that all remedial action schemes operate 

correctly, guaranteeing a nonconsequential load loss by less than 75 

MW.45 Joint ISOs believe that no 

clarification to Reliability Standard 

PRC–012–2 is necessary; but if the 

Commission determines that some 

clarification is necessary, the 

Commission may confirm that under 

Reliability Standard TPL–001–4, 

responsible entities can assume that all 

remedial action schemes operate as 

designed.46 EEI states that while it is 

unlikely that the exceptions in 

Reliability Standard PRC–012–2 would 

be interpreted by industry as exempting 

any of the performance requirements in 

Reliability Standard TPL–001–4, EEI is 

supportive of the proposed clarification 

since such clarification would remove 

any ambiguity.47

20. NESCOE contends that, absent 

confirmation that Reliability Standard 

TPL–001–4 allows responsible entities 

to assume that all remedial action 

schemes operate properly, a clarification 

that Reliability Standard PRC–012–2 

does not modify or supersede any 

system performance obligations under 

Reliability Standard TPL–001–4 may be 

misinterpreted by entities, requiring 

actions that would increase material 

costs without benefit.48 NESCO states 

that reliability gains must be measured 

against the risk and cost associated with 

any standard.49

21. NERC states that LAPS in WECC 

and Type III remedial actions schemes 

in NPCC must be compliant with 

Reliability Standard TPL–001–4 before 

and after the effective date of proposed 

Reliability Standard PRC–012–2.50

According to NERC, Reliability 

Standard TPL–001–4 does not 

distinguish between different types of 

remedial action schemes or exempt 

LAPS or Type III remedial action 

schemes from any of the performance 

requirements.51 NERC and Joint ISOs 

state that additional regional controls 

that maintain remedial action scheme 

compliance with the performance 

requirements of Reliability Standard 

TPL–001–4 are in place.52


asabaliauskas on DSKBBXCHB2PROD with RULES
44922 Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 

53EEI Comments at 5. 

54 Id. 

55NERC Comments at 5. In response to the 

requests by Joint ISOs and NESCOE for 

confirmation that Reliability Standard TPL–001–4 

allows responsible entities to assume that all 

remedial action schemes operate properly, the 

Commission declines to interpret Reliability 

Standard TPL–001–4 in this proceeding. However, 

this Final Rule approving Reliability Standard PRC– 

012–2 in no way modifies the requirements of 

Reliability Standard TPL–001–4 or the compliance 

obligations associated with Reliability Standard 

TPL–001–4. 

56We note that WECC’s and NPCC’s remedial 

action scheme criteria and associated regional terms 

found in the ‘‘Technical Justification’’ section of 

Reliability Standard PRC–012–2 were not submitted 

for approval by NERC and as such are not part of 

this proceeding. 

57NERC Comments at 8; Joint ISO Comments at 

3; EEI at 5. 

58NERC Comments at 8. 

59 Id. 

60NERC Comments at 9; EEI Comments at 5. 

61 Id. 

62NERC Comments at 9; Joint ISO Comments at 

3; EEI Comments at 6. 

63 Joint ISO Comments at 3–4. 

64MISO Comments at 6. 

65Bonneville Comments at 2; ITC Comments at 1. 

66Bonneville Comments at 2. 

67 Id. 

68 ITC Comments at 1. 

69 Id. at 2. 

70MISO Comments at 2. 

71 Id. 

22. EEI questions the relevancy of 

asking the industry to comment on 

WECC LAPS or NPCC Type III remedial 

action schemes reclassification as 

‘‘limited impact’’ remedial action 

schemes.53 EEI contends that once the 

Commission approves Reliability 

Standard PRC–012–2, WECC and NPCC 

must be compliant regardless. EEI 

believes that insights into processes 

ensuring compliance with Reliability 

Standard PRC–012–2 are irrelevant.54

Commission Determination 

23. We adopt our NOPR proposal and 

clarify that Reliability Standard PRC– 

012–2 does not modify or supersede any 

system performance obligations under 

Reliability Standard TPL–001–4. We 

agree with and, thus, adopt NERC’s 

explanation: 

Nothing in proposed Reliability Standard 

PRC–012–2 or the designation of a RAS as 

‘‘limited impact’’ exempts an entity from 

meeting its performance requirements under 

[Reliability Standard] TPL–001–4, including 

the requirement that Non-Consequential 

Load Loss may not exceed 75 MW for certain 

Category P1, P2, or P3 contingencies, as 

provided in Table 1 and footnote 12 of TPL– 

001–4. 

In performing the assessments required 

pursuant to Reliability Standard TPL–001–4, 

an entity must consider all RAS, whether 

designated as ‘‘limited impact’’ or not. While 

Reliability Standard TPL–001–4, 

Requirement R2, Part 2.7.1 recognizes that 

entities may use a RAS as a method for 

meeting the performance obligations of Table 

1, TPL–001–4 does not distinguish between 

different types of RAS. As such, entities must 

satisfy the performance requirements of TPL– 

001–4 considering the actions of ‘‘limited 

impact’’ RAS and non-limited impact RAS 

alike.55

This clarification should help entities 

avoid confusion regarding compliance 

obligations when implementing PRC– 

012–2. 

24. In addition, we accept NERC’s 

assurance that LAPS in WECC and Type 

III remedial actions schemes in NPCC 

must be compliant with Reliability 

Standard TPL–001–4 before and after 

the effective date of proposed Reliability 

Standard PRC–012–2.56

B. Definition of ‘‘Limited Impact’’ 

Remedial Action Schemes 

NOPR 

25. The NOPR sought comment on 

whether NERC should define the term 

‘‘limited impact’’ remedial action 

schemes in the NERC Glossary. 

Comments 

26. NERC, Joint ISOs, and EEI contend 

that NERC should not define the term 

‘‘limited impact’’ remedial action 

scheme in the NERC Glossary.57 NERC 

states that it typically develops terms in 

the NERC Glossary for one of two 

reasons: ‘‘(1) To establish a single 

meaning for a term or concept used 

across several different Reliability 

Standards or multiple times within a 

single Reliability Standard, or (2) to 

provide for a more readable standard by 

creating a shorthand reference to avoid 

unnecessary repetition.’’ 58 NERC 

contends that neither reason exists for 

‘‘limited impact’’ remedial action 

schemes.59

27. NERC and EEI maintain that 

remedial action schemes vary widely in 

complexity and impact on the bulk 

electric system.60 NERC and EEI explain 

that NERC should not define ‘‘limited 

impact’’ remedial action schemes 

because not all remedial action schemes 

impact the bulk electric system 

similarly and the diversity of remedial 

action schemes makes it difficult to 

establish a common definition for North 

America.61

28. NERC, Joint ISOs, and EEI assert 

that other comprehensive lists may 

establish a baseline definition for 

‘‘limited impact’’ remedial action 

schemes.62 Joint ISOs note that the 

performance criteria described in 

Reliability Standard PRC–012–2, 

Requirement 4.1.3, footnote 1 provide 

an adequate level of guidance.63 MISO 

contends that NERC need not define 

‘‘limited impact’’ remedial action 

scheme in the NERC Glossary.64

29. Bonneville and ITC contend that 

NERC should define the term ‘‘limited 

impact’’ remedial action schemes in the 

NERC Glossary.65Bonneville states that 

the footnote in Reliability Standard 

PRC–012–2 only reiterates the 

substantive requirements of ‘‘limited 

impact’’ remedial action schemes under 

Requirement R4.3.1 and does not clarify 

how ‘‘limited impact’’ remedial action 

schemes differ from normal remedial 

action schemes.66 Bonneville proposes 

the following definition for ‘‘limited 

impact’’ remedial action schemes: 

A remedial action scheme whose operation 

or misoperation only affects the local area 

defined by the RAS-entity that owns all of 

part of the remedial action scheme and does 

not affect the BES of any adjacent 

Transmission Owners, Transmission 

Operators, Generation Owners, or Generation 

Operators.67

ITC also states that the Commission 

should issue a directive to NERC to 

define ‘‘limited impact’’ remedial action 

schemes in the NERC Glossary.68 ITC 

states that doing so avoids confusion 

while ensuring consistency, facilitates 

the use of the term in other Reliability 

Standards, and enhances the overall 

usefulness of the NERC Glossary.69

Commission Determination 

30. We determine not to require NERC 

to define ‘‘limited impact’’ remedial 

action schemes in the NERC Glossary. 

We agree with NERC, Joint ISOs, and 

EEI that a definition of ‘‘limited impact’’ 

remedial action schemes is unnecessary 

at this time given the diversity among 

the different types, functions, and 

placements of remedial action schemes 

across North America. In addition, only 

Reliability Standard PRC–012–2 uses 

the term ‘‘limited impact’’ remedial 

action schemes, thus eliminating one of 

the principal reasons for normally 

including terms in the NERC Glossary 

(i.e., to establish a single meaning for a 

term or concept used across several 

different Reliability Standards). Should 

this situation change, the Commission 

may reconsider this determination. 

C. Other Issues 

Comments 

31. MISO contends that the 

Commission should not approve 

Reliability Standard PRC–012–2 as 

proposed.70 MISO contends that 

oversight of remedial action schemes 

would be difficult for reliability 

coordinators and planning coordinators 

when remedial action schemes span 

multiple footprints.71 MISO also 

contends that Reliability Standard PRC– 


asabaliauskas on DSKBBXCHB2PROD with RULES
Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 44923 

72 Id. at 3. 

73 Id. at 4–5. 

74 Id. 6–7. 

75Bonneville Comments at 2. 

76 Id. 

77 Id. at 3. 

78 Id. 

79MISO Comments at 2. 

80 Joint ISOs Comments at 1. 

81With respect to MISO’s proposal that each 

remedial action scheme be renewed every five 

years, NERC explained that Reliability Standard 

PRC–012–2, Requirement R4 provides for periodic 

remedial action scheme evaluations (i.e., at least 

every five years) by planning coordinators that will 

result in one of three determinations: (1) 

Affirmation that the existing remedial action 

scheme is effective; (2) identification of changes 

needed to the existing remedial action scheme; or 

(3) justification for remedial action scheme 

retirement. NERC Petition at 21. Provided that the 

remedial action scheme is determined to be 

effective, is made effective, or retired, we see no 

reliability reason to direct inclusion of an 

additional renewal sub-requirement. 

82NERC Petition at 17. 

83 Id. 

84 44 U.S.C. 3507(d). 

85 5 CFR 1320.11. 

86The Commission is being conservative and not 

subtracting hours at this time from FERC–725A. 

012–2 creates a geographical variation 

in transmission system characteristics 

which result in uneven distribution of 

coordination burden and duplicative 

work on remedial action schemes.72

MISO contends that the planning 

assessment performance requirements 

in Reliability Standard PRC–012–2 are 

better placed in Reliability Standard 

TPL–001–4 to avoid redundancies.73

Finally, MISO proposes a five-year 

evaluation of remedial action schemes, 

which includes a renewal requirement 

to benefit efficient operations.74

32. Bonneville contends that 

Reliability Standard PRC–012–2, 

Requirement R2 gives reliability 

coordinators too much time to complete 

reviews of remedial action schemes.75

Bonneville states that Reliability 

Standard PRC–012–2, Requirement R2 

provides reliability coordinators four 

calendar months to review a remedial 

action scheme.76 Bonneville states that 

in the Western Interconnection, these 

reviews are currently completed in two 

weeks. Bonneville continues that 

Reliability Standard PRC–012–2 allows 

an additional fourteen weeks for review, 

which would prevent Bonneville from 

completing remedial action scheme 

projects in a timely manner.77

Bonneville proposes that Reliability 

Standard PRC–012–2, Requirement R2 

should require reliability coordinators 

to complete their reviews within four 

weeks.78

Commission Determination 

33. MISO’s opposition to Reliability 

Standard PRC–012–2 is largely based on 

perceived ‘‘inefficiencies’’ created by 

the Reliability Standard because it 

allegedly lacks regional coordination 

between reliability coordinators and 

planning coordinators and because of 

‘‘redundancies’’ between PRC–012–2 

and Reliability Standard TPL–001–4. 

We are not persuaded that MISO’s 

concerns justify remanding Reliability 

Standard PRC–012–2. As discussed 

above, we determine that the Reliability 

Standard PRC–012–2 satisfies section 

215(d)(2) of the FPA in that it is just, 

reasonable, not unduly discriminatory 

or preferential, and in the public 

interest. MISO accepts that Reliability 

Standard PRC–012–2 ‘‘shifts 

responsibility from the eight Regional 

Reliability Organizations (RROs) to 

Reliability Coordinators and Planning 

Coordinators’’ and MISO ‘‘agrees that 

the Reliability Coordinators and 

Planning Coordinators are best 

positioned to perform review and 

evaluation tasks associated with 

RAS.’’ 79 We also note that other 

commenters, including Joint ISOs, do 

not share MISO’s concerns and support 

approval of Reliability Standard PRC– 

012–2 as drafted.80 To the extent that 

MISO continues to believe that 

improvements should be made to 

Reliability Standard PRC–012–2, MISO 

may pursue any modifications through 

the NERC standards development 

process.81

34. We are not persuaded by 

Bonneville’s comments regarding the 

period that reliability coordinators have 

to review remedial action schemes. 

NERC stated that Reliability Standard 

PRC–012–2, Requirement R2 establishes 

a comprehensive, consistent review 

process that includes a detailed 

checklist that reliability coordinators 

must use to identify design and 

implementation aspects of the remedial 

action schemes that are critical to an 

effective framework.82 NERC also stated 

that allowing four months to complete 

this detailed review is consistent with 

industry practice, provides adequate 

time for a complete review, and 

includes additional flexibility for 

unique or unforeseen circumstances.83

While four calendar months may be 

longer than what is typical in the 

Western Interconnection, we determine 

that NERC’s proposal is reasonable 

because it provides a single, consistent, 

continent-wide timeframe for reviews. 

Moreover, as Bonneville recognizes, 

Reliability Standard PRC–012–2, 

Requirement R2 permits entities to use 

a mutually agreed upon schedule 

instead of the four-month default 

timeline provided for in Requirement 

R2. Accordingly, Bonneville’s request is 

denied on this issue. 

III. Information Collection Statement 

35. The collection of information 

addressed in this final rule is subject to 

review by the Office of Management and 

Budget (OMB) under section 3507(d) of 

the Paperwork Reduction Act of 1995.84

OMB’s regulations require approval of 

certain information collection 

requirements imposed by agency 

rules.85 Upon approval of a collection(s) 

of information, OMB will assign an 

OMB control number and an expiration 

date. Respondents subject to the filing 

requirements of a rule will not be 

penalized for failing to respond to these 

collections of information unless the 

collections of information display a 

valid OMB control number. 

36. Public Reporting Burden: The 

number of respondents below is based 

on an examination of the NERC 

compliance registry for reliability 

coordinators, planning coordinators, 

transmission owners, generation 

owners, and distribution providers and 

an estimation of how many entities from 

that registry will be affected by the 

proposed Reliability Standard. At the 

time of Commission review of 

Reliability Standard PRC–012–2, 15 

reliability coordinators, 71 planning 

coordinators, 328 transmission owners, 

930 generation owners, and 367 

distribution providers in the United 

States were registered in the NERC 

compliance registry. However, under 

NERC’s compliance registration 

program, entities may be registered for 

multiple functions, so these numbers 

incorporate some double counting. The 

Commission notes that many generation 

sites share a common generation owner. 

37. Reliability Standards PRC–015–1 

and PRC–016–1 are in the Reliability 

Standards approved in FERC–725A, 

(OMB Control No. 1902–0244). 

Reliability Standards PRC–015–1 and 

PRC–016–1 will be retired when 

Reliability Standard PRC–012–2 

becomes effective, which will reduce 

the burden in FERC–725A.86

38. Reliability Standard PRC–012–2 

sets forth Requirements for remedial 

action schemes to ensure that remedial 

action schemes do not introduce 

unintentional or unacceptable reliability 

risks to the bulk electric system and are 

coordinated to provide the service to the 

system as intended. Reliability Standard 

PRC–012–2 improves upon the existing 

Reliability Standards because it removes 

ambiguity in NERC’s original ‘‘fill-inthe-blank’’ Reliability Standards by 

assigning responsibility to appropriate 


asabaliauskas on DSKBBXCHB2PROD with RULES
44924 Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 

87 In the burden table, engineering is abbreviated 

as ‘‘Eng.’’ and record keeping is abbreviated as 

‘‘R.K.’’ 

88The estimates for cost per response are derived 

using the following formula: Burden Hours per 

Response * $/hour = Cost per Response. The 

$64.29/hour figure for an engineer and the $37.75/ 

hour figure for a record clerk are based on the 

average salary plus benefits data from the Bureau 

of Labor Statistics. 

89Regulations Implementing the National 

Environmental Policy Act of 1969, Order No. 486, 

52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. 

Preambles 1986–1990 ¶ 30,783 (1987). 

90 18 CFR 380.4(a)(2)(ii). 

91 5 U.S.C. 601–612. 

92NOPR, 158 FERC ¶ 61,042 at P 26. 

93The Small Business Administration sets the 

threshold for what constitutes a small business. 

Public utilities may fall under one of several 

different categories, each with a size threshold 

based on the company’s number of employees, 

including affiliates, the parent company, and 

subsidiaries. For the analysis in this rulemaking, we 

apply a 500 employee threshold for each affected 

entity. Each entity is classified as Electric Bulk 

Power Transmission and Control (NAICS code 

221121). 

functional entities. Reliability Standard 

PRC–012–2 also streamlines and 

consolidates the remedial action scheme 

Reliability Standards into one clear, 

effective Reliability Standard under 

Information Collection FERC–725G. 

39. The following table illustrates the 

estimated burden to be applied to 

FERC–725G information collection.87

FERC–725G IN RM16–20–000 

[Mandatory Reliability Standards: Reliability Standard PRC–012–2] 

Requirement and 

respondent category for PRC– 

012–2 

Number of 

respondents 

Number of 

responses per 

respondent 

Total number 

of responses 

Average burden hours & cost 

per response 88 Annual burden hours & total annual cost 

(1) (2) (1) * (2) = (3) (4) (3) * (4) = (5) 

R1. Each RAS-entity (TO, GO, 

DP).

1,595 1 1,595 (Eng.) 24 hrs. ($1,543); (R.K.) 

12 hrs. ($453).

57,420 hrs. (38,280 Eng., 19,140 R.K.); 

$3,183,556 ($2,461,021 Eng., $722,535 

R.K.) 

R2. Each Reliability Coordinator.15 1 15 (Eng.) 16 hrs. ($1,029); (R.K.) 

4 hrs. ($151).

300 hrs. (240 Eng., 60 R.K.); $17,695 

($15,430 Eng., $2,265 R.K.) 

R4. Each Planning Coordinator 71 1 71 (Eng.) 16 hrs. ($1,029); (R.K.) 

4 hrs. ($151).

1,420 hrs. (1,136 Eng., 284 R.K.); $85,754 

($73,033 Eng., $10,721 R.K.) 

R5, R6, R7, and R8. Each 

RAS-entity (TO, GO, DP).

1,595 1 1,595 (Eng.) 24 hrs. ($1,543); (R.K.) 

12 hrs. ($453).

57,420 hrs. (38,280 Eng., 19,140 R.K.); 

$3,183,556 ($2,461,021 Eng., $722,535 

R.K.) 

R9. Each Reliability Coordinator.15 1 15 (Eng.) 10 hrs. ($653); (R.K.) 4 

hrs. ($151).

210 hrs. (150 Eng., 60 R.K.); $11,909 ($9,644 

Eng., $2,265 R.K.) 

Total ................................... ........................ ........................ 3,291 .................................................. 116,770 hrs. (78,086 Eng., 38,684 R.K.); 

$6,480,470 ($5,020,149 Eng.; $1,460,321 

R.K.) 

Title: FERC–725A (Mandatory 

Reliability Standards); FERC–725G 

(Mandatory Reliability Standards: PRC– 

012–2). 

Action: Revision to existing 

collections. 

OMB Control No: 1902–0244 (FERC– 

725A); 1902–0252 (FERC–725G). 

Respondents: Business or other for 

profit, and not for profit institutions. 

Frequency of Responses: Annually. 

Necessity of the Information: 

Reliability Standard PRC–012–2 sets 

forth Requirements for remedial action 

schemes to ensure that remedial action 

schemes do not introduce unintentional 

or unacceptable reliability risks to the 

bulk electric system and are coordinated 

to provide the service to the system as 

intended. 

Internal Review: The Commission has 

assured itself, by means of its internal 

review, that there is specific, objective 

support for the burden estimates 

associated with the information 

requirements. 

40. Interested persons may obtain 

information on the reporting 

requirements by contacting the Federal 

Energy Regulatory Commission, Office 

of the Executive Director, 888 First 

Street NE., Washington, DC 20426 

[Attention: Ellen Brown, email: 

DataClearance@ferc.gov, phone: (202) 

502–8663, fax: (202) 273–0873]. 

41. Comments concerning the 

information collection in this Final Rule 

and the associated burden estimates 

should be sent to the Office of 

Management and Budget, Office of 

Information and Regulatory Affairs 

[Attention: Desk Officer for the Federal 

Energy Regulatory Commission]. For 

security reasons, comments should be 

sent by email to OMB at the following 

email address: oira_submission@

omb.eop.gov. Please reference FERC– 

725A and FERC–725G and the docket 

number of this Final Rule, Docket No. 

RM16–20–000, in your submission. 

IV. Environmental Analysis 

42. The Commission is required to 

prepare an Environmental Assessment 

or an Environmental Impact Statement 

for any action that may have a 

significant adverse effect on the human 

environment.89 The action proposed 

here falls within the categorical 

exclusion in the Commission’s 

regulations for rules that are clarifying, 

corrective or procedural, for information 

gathering, analysis, and 

dissemination.90

V. Regulatory Flexibility Act 

43. The Regulatory Flexibility Act of 

1980 (RFA) generally requires a 

description and analysis of proposed 

rules that will have significant 

economic impact on a substantial 

number of small entities.91

44. In the NOPR, the Commission 

proposed that Reliability Standard PRC– 

012–2 will apply to approximately 1681 

entities in the United States.92 The 

Commission did not receive any 

comments on the impact on small 

entities. Comparison of the applicable 

entities with the Commission’s small 

business data indicates that 

approximately 1,025 are small entities 

or 61 percent of the respondents 

affected by proposed Reliability 

Standard PRC–012–2.93 The 

Commission estimates for these small 

entities, Reliability Standard PRC–012– 

2 may need to be evaluated and 

documented every five years with a cost 

of $6,322 for each evaluation. The 

Commission views this as a minimal 

economic impact for each entity. 

Accordingly, the Commission certifies 

that Reliability Standard PRC–012–2 

will not have a significant economic 

impact on a substantial number of small 

entities. 


asabaliauskas on DSKBBXCHB2PROD with RULES
Federal Register / Vol. 82, No. 186 / Wednesday, September 27, 2017 / Rules and Regulations 44925 

VI. Document Availability 

45. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and/or print the contents of this 

document via the Internet through the 

Commission’s Home Page (http://

www.ferc.gov) and in the Commission’s 

Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. 

Eastern time) at 888 First Street NE., 

Room 2A, Washington DC 20426. 

46. From the Commission’s Home 

Page on the Internet, this information is 

available on eLibrary. The full text of 

this document is available on eLibrary 

in PDF and Microsoft Word format for 

viewing, printing, and/or downloading. 

To access this document in eLibrary, 

type the docket number excluding the 

last three digits of this document in the 

docket number field. 

47. User assistance is available for 

eLibrary and the Commission’s Web site 

during normal business hours from 

FERC Online Support at 202–502–6652 

(toll free at 1–866–208–3676) or email at 

ferconlinesupport@ferc.gov, or the 

Public Reference Room at (202) 502– 

8371, TTY (202)502–8659. Email the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

VII. Effective Date and Congressional 

Notification 

48. The final rule is effective 

November 27, 2017. The Commission 

has determined, with the concurrence of 

the Administrator of the Office of 

Information and Regulatory Affairs of 

OMB, that this rule is not a ‘‘major rule’’ 

as defined in section 351 of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996. This final rule is 

being submitted to the Senate, House, 

and Government Accountability Office. 

By the Commission. 

Issued: September 20, 2017. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

Appendix 

Bonneville Power Administration 

(Bonneville) 

Edison Electric Institute (EEI) 

International Transmission Company d/b/a 

ITC Transmission, Michigan Electric 

Transmission Company, LLC, ITC Midwest 

LLC and ITC Great Plains, LLC (together, 

ITC) 

Midcontinent Independent System Operator, 

Inc. (MISO) 

New England States Committee on Electricity 

(NESCOE) 

New York Independent System Operator, 

Independent Electricity System Operator, 

ISO New England, Inc. and Electric 

Reliability Council of Texas, Inc. (together, 

Joint ISOs) 

North American Electric Reliability 

Corporation (NERC) 

[FR Doc. 2017–20669 Filed 9–26–17; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF TREASURY 

Internal Revenue Service 

26 CFR Part 31 

[TD 9824] 

RIN 1545–BN58 

Withholding on Payments of Certain 

Gambling Winnings 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations with respect to the 

withholding from, and the information 

reporting on, certain payments of 

gambling winnings from horse races, 

dog races, and jai alai and on certain 

other payments of gambling winnings. 

The final regulations affect both payers 

and payees of the gambling winnings. 

DATES: Effective date: These regulations 

are effective on September 27, 2017. 

Applicability Dates: For dates of 

applicability, see §§ 31.3402(q)–1(g) and 

31.3406(g)–2(h). 

FOR FURTHER INFORMATION CONTACT: 

David Bergman, (202) 317–6845 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains final 

regulations in Title 26 of the Code of 

Federal Regulations under section 3402 

of the Internal Revenue Code (Code). 

The final regulations amend, update, 

and clarify the existing withholding and 

information reporting requirements for 

certain gambling winnings under 

§ 31.3402(q)–1 of the Employment Tax 

Regulations, and make conforming 

changes to § 31.3406(g)–2. 

On December 30, 2016, the Treasury 

Department and the IRS published a 

notice of proposed rulemaking (REG– 

123841–16) in the Federal Register, 81 

FR 96406, containing proposed 

regulations that would provide a new 

rule regarding how payers determine the 

amount of the wager in parimutuel 

wagering transactions with respect to 

horse races, dog races, and jai alai, and 

that would update the existing rules to 

reflect current law regarding the 

withholding thresholds and certain 

information reporting requirements. 

Over 2,700 written public comments 

were received in response to the notice 

of proposed rulemaking. No public 

hearing was requested. After careful 

consideration of the written comments, 

the proposed regulations are adopted as 

modified by this Treasury Decision. 

Explanation and Summary of 

Comments 

All of the written comments on the 

notice of proposed rulemaking were 

considered and are available at 

www.regulations.gov or upon request. 

Many of these comments addressed 

similar issues and expressed similar 

points of view. These comments are 

summarized in this preamble. 

Rule for Determining the Amount of the 

Wager in the Case of Horse Races, Dog 

Races, and Jai Alai 

The proposed regulations contained a 

new rule for determining the amount of 

the wager in the case of horse races, dog 

races, and jai alai to allow all wagers 

placed in a single parimutuel pool and 

represented on a single ticket to be 

aggregated and treated as a single wager. 

Commenters largely supported the 

proposed rules because they believe that 

the rules accurately and fairly reflect 

parimutuel wagering realities. 

Some commenters raised concerns 

that the single ticket requirement in the 

proposed regulations did not address 

electronic wagering. Commenters stated 

that in horse racing a paper ticket can 

only accommodate six separate lines of 

bets. In contrast, electronic wagering 

utilizes an ‘‘account wagering’’ system 

that can accommodate dozens (or even 

hundreds) of lines of bets in a single 

parimutuel pool, allowing bettors to 

place more, customized wagers. As a 

result, some commenters requested a 

special rule for electronic wagering. 

The proposed rule at § 31.3402(q)– 

1(c)(1)(ii) is specifically not limited to a 

paper ticket, but also includes an 

electronic record that is presented to 

collect proceeds from a wager or wagers 

placed in a single parimutuel pool. 

Therefore, the rule in proposed 

§ 31.3402(q)–1(c)(1)(ii) is not dependent 

on the applicable industry’s ticketing 

format. Further, despite the commenters 

concern regarding the limits on the 

number of lines a paper ticket can 

accommodate, the proposed regulations 

do not limit the number of bets on a 

single ticket nor do the proposed 

regulations contain a rule governing the 

number of bets that can be contained on 

a single, electronic record of a wagering 

transaction. 

Another commenter stated that the 

single ticket requirement puts a person 

making an electronic bet at a 

disadvantage because it removes the 

opportunity to place bets in a single 


asabaliauskas on DSKBBXCHB2PROD with RULES