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system components is synchronized such that the fail-
ure of 1 or more of the components may adversely af-
fect the ability of the operators of other components 
within the system to maintain reliable operation of 
the portion of the system within their control. 
‘‘(6) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(b) JURISDICTION
AND APPLICABILITY.—(1) The 
Commission shall have jurisdiction, within the United 
States, over the ERO certified by the Commission under 
subsection (c), any regional entities, and all users, owners 
and operators of the bulk-power system (including the enti-
ties described in section 201(f)), for purposes of approving 
reliability standards established under this section and en-
forcing compliance with this section. 
‘‘(2) All users, owners, and operators of the bulk-power 
system shall comply with reliability standards that take ef-
fect under this section. 
‘‘(3) The Commission shall issue a final rule to imple-
ment the requirements of this section not later than 180 
days after the date of enactment of this section. 
‘‘(c) CERTIFICATION.—(1) Following the issuance of a 
Commission rule under subsection (b)(3), any person may
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submit an application to the Commission for certification 
as the Electric Reliability Organization. 
‘‘(2) The Commission may certify 1 such ERO if the 
Commission determines that the ERO— 
‘‘(A) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that 
provide for an adequate level of reliability of the bulk- 
power system; and 
‘‘(B) has established rules that— 
‘‘(i) ensure the independence of the ERO 
from the users and owners and operators of the 
bulk-power system, while ensuring fair stake-
holder representation in the selection of the direc-
tors of the ERO and balanced decisionmaking in 
any ERO committee or subordinate organiza-
tional structure; 
‘‘(ii) allocate equitably reasonable dues, fees, 
and other charges among end users for all activi-
ties under this section; 
‘‘(iii) provide fair and impartial procedures 
for enforcement of reliability standards through 
the imposition of penalties in accordance with 
subsection (e) (including limitations on activi-
ties, functions, or operations, or other appro-
priate sanctions);
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‘‘(iv) provide for reasonable notice and op-
portunity for public comment, due process, open-
ness, and balance of interests in developing reli-
ability standards and otherwise exercising the 
duties of the ERO; and 
‘‘(v) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
‘‘(d) RELIABILITY STANDARDS.—(1) The ERO shall 
file each reliability standard or modification to a reliability 
standard that the ERO proposes to be made effective under 
this section with the Commission. 
‘‘(2)(A) The Commission may approve, by rule or 
order, a proposed reliability standard or modification to 
a reliability standard if the Commission determines that 
the standard is just, reasonable, not unduly discriminatory 
or preferential, and in the public interest. 
‘‘(B) The Commission— 
‘‘(i) shall give due weight to the technical exper-
tise of the ERO with respect to the content of a pro-
posed standard or modification to a reliability stand-
ard and to the technical expertise of a regional entity 
organized on an interconnection-wide basis with re-
spect to a reliability standard to be applicable within 
that interconnection; but
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‘‘(ii) shall not defer with respect to the effect of 
a standard on competition. 
‘‘(C) A proposed standard or modification shall take 
effect on approval by the Commission. 
‘‘(3) The ERO shall rebuttably presume that a pro-
posal from a regional entity organized on an interconnec-
tion-wide basis for a reliability standard or modification 
to a reliability standard to be applicable on an interconnec-
tion-wide basis is just, reasonable, not unduly discrimina-
tory or preferential, and in the public interest. 
‘‘(4) The Commission shall remand to the ERO for fur-
ther consideration a proposed reliability standard or a 
modification to a reliability standard that the Commission 
disapproves in whole or in part. 
‘‘(5) The Commission, on a motion of the Commission 
or on complaint, may order the ERO to submit to the Com-
mission a proposed reliability standard or a modification 
to a reliability standard that addresses a specific matter 
if the Commission considers such a new or modified reli-
ability standard appropriate to carry out this section. 
‘‘(6)(A) The final rule adopted under subsection (b)(2) 
shall include fair processes for the identification and timely 
resolution of any conflict between a reliability standard and 
any function, rule, order, tariff, rate schedule, or agreement
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accepted, approved, or ordered by the Commission applica-
ble to a transmission organization. 
‘‘(B) The transmission organization shall continue to 
comply with such function, rule, order, tariff, rate schedule 
or agreement accepted approved, or ordered by the Commis-
sion until— 
‘‘(i) the Commission finds a conflict exists be-
tween a reliability standard and any such provision; 
‘‘(ii) the Commission orders a change to the pro-
vision pursuant to section 206; and 
‘‘(iii) the ordered change becomes effective under 
this part. 
‘‘(C) If the Commission determines that a reliability 
standard needs to be changed as a result of such a conflict, 
the Commission shall order the ERO to develop and file 
with the Commission a modified reliability standard under 
paragraph (4) or (5). 
‘‘(e) ENFORCEMENT.—(1) Subject to paragraph (2), 
the ERO may impose a penalty on a user or owner or oper-
ator of the bulk-power system for a violation of a reliability 
standard approved by the Commission under subsection (d) 
if the ERO, after notice and an opportunity for a hearing— 
‘‘(A) finds that the user or owner or operator has 
violated a reliability standard approved by the Com-
mission under subsection (d); and
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‘‘(B) files notice and the record of the proceeding 
with the Commission. 
‘‘(2)(A) A penalty imposed under paragraph (1) may 
take effect not earlier than the day that is 31 days after 
the date on which the ERO files with the Commission notice 
of the penalty and the record of proceedings. 
‘‘(B) The penalty shall be subject to review by the Com-
mission on— 
‘‘(i) a motion by the Commission; or 
‘‘(ii) application by the user, owner or operator 
that is the subject of the penalty filed not later than 
30 days after the date on which the notice is filed 
with the Commission. 
‘‘(C) Application to the Commission for review, or the 
initiation of review by the Commission on a motion of the 
Commission, shall not operate as a stay of the penalty un-
less the Commission orders otherwise on a motion of the 
Commission or on application by the user, owner or oper-
ator that is the subject of the penalty. 
‘‘(D) In any proceeding to review a penalty imposed 
under paragraph (1), the Commission, after notice and op-
portunity for hearing (which hearing may consist solely of 
the record before the ERO and opportunity for the presen-
tation of supporting reasons to affirm, modify, or set aside 
the penalty), shall by order—