The panel concluded that federal legislation was needed to accomplish this. The rules will be developed and enforced by the people with the technical expertise to oversee the running of the high-voltage interstate electric transmission grid and by those who use it. The resulting standards that the ERO develops would be industry rules, not government rules. FERC also would perform an appellate role in the case of disputes that cannot be resolved by the ERO itself. The legislative proposal respects the international character of the interconnected North American electric transmission system, and provides a significant role for regional entities in implementing and enforcing compliance with reliability standards, including delegated authority to develop appropriate regional reliability rules.
Enforcement is inherently a governmental function.
Delegating the enforcement function to an industry self-regulatory organization, as the NERC proposal would do, requires that there be government oversight. Legislation is needed to authorize the delegation of the enforcement function, and to designate an appropriate government entity in a backstop role. FERC should play this backstop role, because it already has jurisdiction and authority over many aspects of the electric industry, and has an existing staff and organization focused on electricity regulation. Given the nature of the transmission grid, developments in one state can have dramatic effects on another part of the grid. No single state is in a position to oversee developments in geographically distant areas.