I
106TH CONGRESS
1ST SESSION
H. R. 2602
To amend the Federal Power Act with respect to electric reliability and
oversight, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 22, 1999
Mr. WYNN introduced the following bill; which was referred to the Committee
on Commerce
A BILL
To amend the Federal Power Act with respect to electric
reliability and oversight, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘National Electricity
Interstate Transmission Reliability Act’’.
SEC. 2. ELECTRIC RELIABILITY ORGANIZATION AND OVER-
SIGHT.
(a) IN GENERAL.—The Federal Power Act is amend-
ed by adding the following new section after section 214:
‘‘SEC. 215. ELECTRIC RELIABILITY ORGANIZATION AND
OVERSIGHT.
‘‘(a) DEFINITIONS.—As used in this section:
‘‘(1) AFFILIATED
REGIONAL
LIABILITY
ENTI-
TY.—The term ‘affiliated regional reliability entity’
means an entity delegated authority under the provi-
sions of subsection (h).
‘‘(2) BULK-POWER SYSTEM.—The term ‘bulk-
power system’ means all facilities and control sys-
tems necessary for operating an interconnected
transmission grid (or any portion thereof), including
high-voltage transmission lines, substations, control
centers, communications, data, and operations plan-
ning facilities, and the output of generating units
necessary to maintain transmission system reli-
ability.
‘‘(3) ELECTRIC RELIABILITY ORGANIZATION, OR
ORGANIZATION.—The term ‘electric reliability orga-
nization’ or ‘organization’ means the organization
approved by the Commission under subsection
(d)(4).
‘‘(4) ENTITY
RULE.—The term ‘entity rule’
means a rule adopted by an affiliated regional reli-
ability entity for a specific region and designed to
implement or enforce one or more organization
standards. An entity rule shall be approved by the
organization and once approved, shall be treated as
an organization standard.
‘‘(5) INDUSTRY SECTOR.—The term ‘industry
sector’ means a group of users of the bulk power
system with substantially similar commercial inter-
ests, as determined by the Board of the electric reli-
ability organization.
‘‘(6) INTERCONNECTION.—The term ‘inter-
connection’ means a geographic area in which the
operation of bulk-power system components is syn-
chronized such that the failure of one or more of
such components may adversely affect the ability of
the operators of other components within the inter-
connection to maintain safe and reliable operation of
the facilities within their control.
‘‘(7) ORGANIZATION STANDARD.—The term ‘or-
ganization standard’ means a policy or standard
duly adopted by the electric reliability organization
to provide for the reliable operation of a bulk-power
system.
‘‘(8) PUBLIC
INTEREST
GROUP.—The term
‘public interest group’ means any nonprofit private
or public organization that has an interest in the ac-
tivities of the electric reliability organization, includ-
ing, but not limited to, ratepayer advocates, environ-
are part of a bulk-power system, or that is a system
operator.
‘‘(b) COMMISSION
AUTHORITY.—(1) Within the
United States, the Commission shall have jurisdiction over
the electric reliability organization, all affiliated regional
reliability entities, all system operators, and all users of
the bulk-power system, for purposes of approving and en-
forcing compliance with the requirements of this section.
‘‘(2) The Commission may, by rule, define any other
term used in this section, provided such definition is con-
sistent with the definitions in, and the purpose and intent
of, this Act.
‘‘(c) EXISTING
RELIABILITY
STANDARDS.—Fol-
lowing enactment of this section, and prior to the approval
of an organization under subsection (d), any person, in-
cluding the North American Electric Reliability Council
and its member regional reliability councils, may file any
reliability standard, guidance, or practice that they would
propose to be made mandatory and enforceable. The Com-
mission, after allowing interested persons an opportunity
to submit comments, may approve any such proposed
mandatory standard, guidance, or practice, or any amend-
ment thereto, if it finds that the standard, guidance, or
practice, or amendment is just, reasonable, not unduly dis-
criminatory or preferential, and in the public interest. The
Commission may, without further proceeding or finding,
grant its approval to any standard, guidance, or practice
for which no substantive objections are filed in the com-
ment period. Filed standards, guidances, or practices, in-
cluding any amendments thereto, shall be mandatory and
applicable according to their terms following approval by
the Commission and shall remain in effect until (1) with-
drawn, disapproved, or superseded by an organization
standard, issued or approved by the electric reliability or-
ganization and made effective by the Commission under
subsection (e); or (2) disapproved or suspended by the
Commission if, upon complaint or upon its own motion
and after notice and an opportunity for comment, the
Commission finds the standard, guidance, or practice un-
just, unreasonable, unduly discriminatory, or preferential
or not in the public interest. Standards, guidances, or
practices in effect pursuant to the provisions of this sub-
section shall be enforceable by the Commission.
‘‘(d) ORGANIZATION APPROVAL.—(1) Not later than
90 days after the date of enactment of this section, the
Commission shall issue proposed rules specifying proce-
dures and requirements for an entity to apply for approval
as the electric reliability organization. The Commission
shall provide notice and opportunity for comment on the
proposed rules. The Commission shall issue a final rule
under this subsection within 180 days after the date of
enactment of this section.
‘‘(2) Following the issuance of a final Commission
rule under paragraph (1), an entity may submit an appli-
cation to the Commission for approval as the electric reli-
ability organization. The applicant shall specify in its ap-
plication its governance and procedures, as well as its
funding mechanism and initial funding requirements.
‘‘(3) The Commission shall provide public notice of
the application and afford interested parties an oppor-
tunity to comment.
‘‘(4) The Commission shall approve the application
if the Commission determines that the applicant—
‘‘(A) has the ability to develop, implement, and
enforce standards that provide for an adequate level
of reliability of the bulk-power system;
‘‘(B) permits voluntary membership to any user
of the bulk-power system or public interest group;
‘‘(C) assures fair representation of its members
in the selection of its directors and fair management
of its affairs, taking into account the need for effi-
ciency and effectiveness in decisionmaking and oper-
ations and the requirements for technical com-
petency in the development of organization stand-
ards and the exercise of oversight of bulk-power sys-
tem reliability;
‘‘(D) assures that no two industry sectors have
the ability to control, and no one industry sector has
the ability to veto, the electric reliability organiza-
tion’s discharge of its responsibilities (including ac-
tions by committees recommending standards to the
board or other board actions to implement and en-
force standards);
‘‘(E) provides for governance by a board wholly
comprised of independent directors;
‘‘(F) provides a funding mechanism and re-
quirements that are just, reasonable, and not unduly
discriminatory or preferential and are in the public
interest, and which satisfy the requirements of sub-
section (l);
‘‘(G) establishes procedures for development of
organization standards that provide reasonable no-
tice and opportunity for public comment, taking into
account the need for efficiency and effectiveness in
decisionmaking and operations and the requirements
for technical competency in the development of orga-
nization standards, and which standards develop-
ment process has the following attributes:
‘‘(i) openness,
‘‘(ii) balance of interests, and
‘‘(iii) due process, except that the proce-
dures may include alternative procedures for
emergencies;
‘‘(H) establishes fair and impartial procedures
for implementation and enforcement of organization
standards, either directly or through delegation to
an affiliated regional reliability entity, including the
imposition of penalties, limitations on activities,
functions, or operations, or other appropriate sanc-
tions;
‘‘(I) establishes procedures for notice and op-
portunity for public observation of all meetings, ex-
cept that the procedures for public observation may
include alternative procedures for emergencies or for
the discussion of information the directors determine
should take place in closed session, such as litiga-
tion, personnel actions, or commercially sensitive in-
formation;
‘‘(J) provides for the consideration of rec-
ommendations of States and State commissions; and
‘‘(K) addresses other matters that the Commis-
sion may deem necessary or appropriate to ensure
that the procedures, governance, and funding of the
electric reliability organization are just, reasonable,
not unduly discriminatory or preferential, and are in
the public interest.
‘‘(5) The Commission shall approve only one electric
reliability organization. If the Commission receives two or
more timely applications that satisfy the requirements of
this subsection, the Commission shall approve only the ap-
plication it concludes will best implement the provisions
of this section.
‘‘(e) ESTABLISHMENT OF AND MODIFICATIONS TO
ORGANIZATION STANDARDS.—(1) The electric reliability
organization shall file with the Commission any new or
modified organization standards, including any variances
or entity rules, and the Commission shall follow the proce-
dures under paragraph (2) for review of that filing.
‘‘(2) 
Submissions 
under 
paragraph 
(1) 
shall
include—
‘‘(A) a concise statement of the purpose of the
proposal, and
‘‘(B) a record of any proceedings conducted
with respect to such proposal.
The Commission shall provide notice of the filing of such
proposal and afford interested persons 30 days to submit
comments. The Commission, after taking into consider-
ation any submitted comments, shall approve or dis-
approve such proposal not later than 60 days after the
deadline for the submission of comments, except that the
Commission may extend the 60-day period for an addi-
tional 90 days for good cause, and except further that if
the Commission does not act to approve or disapprove a
proposal within the foregoing periods, the proposal shall
go into effect subject to its terms, without prejudice to
the authority of the Commission thereafter to suspend or
modify the proposal in accordance with the standards and
requirements of this section. Proposals approved by the
Commission shall take effect according to their terms but
not earlier than 30 days after the effective date of the
Commission’s order, except as provided in paragraph (3)
of this subsection.
‘‘(3)(A) In the exercise of its review responsibilities
under this subsection, the Commission shall give due
weight to the technical expertise of the electric reliability
organization with respect to the content of a new or modi-
fied organization standard, but shall not defer to the orga-
nization with respect to the effect of the standard on com-
petition. The Commission shall approve a proposed new
or modified organization standard if it determines the pro-
posal to be just, reasonable, not unduly discriminatory or
preferential, and in the public interest. The Commission,
either upon complaint or upon its own motion, shall sus-
pend an existing organization standard, if it determines
the standard to be unjust, unreasonable, unduly discrimi-
natory or preferential, or not in the public interest.
‘‘(B) An existing or proposed organization standard
which is disapproved or suspended in whole or in part by
the Commission shall be remanded to the electric reli-
ability organization for further consideration.
‘‘(C) The Commission, on its own motion or upon
complaint, may direct the electric reliability organization
to develop an organization standard, including modifica-
tion to an existing organization standard, addressing a
specific matter by a date certain if the Commission con-
siders such new or modified organization standard nec-
essary or appropriate to further the purposes of this sec-
tion. The electric reliability organization shall file any such
new or modified organization standard in accordance with
this subsection.
‘‘(D) An affiliated regional reliability entity may pro-
pose a variance or entity rule to the electric reliability or-
ganization. The affiliated regional reliability entity may
request that the electric reliability organization expedite
consideration of the proposal, and may file a notice of such
request with the Commission, if expedited consideration
is necessary to provide for bulk-power system reliability.
If the electric reliability organization fails to adopt the
variance or entity rule, either in whole or in part, the affili-
ated regional reliability entity may request that the Com-
mission review such action. If the Commission determines,
after its review of such a request, that the action of the
electric reliability organization did not conform to the ap-
plicable standards and procedures approved by the Com-
mission, or if the Commission determines that the variance
or entity rule is just, reasonable, not unduly discrimina-
tory or preferential, and in the public interest, and that
the electric reliability organization has unreasonably re-
jected the proposed variance or entity rule, then the Com-
mission may remand the proposed variance or entity rule
for further consideration by the electric reliability organi-
zation or may direct the electric reliability organization or
the affiliated regional reliability entity to develop a vari-
ance or entity rule consistent with that requested by the
affiliated regional reliability entity. Any such variance or
entity rule proposed by an affiliated regional reliability en-
tity shall be submitted to the electric reliability organiza-
tion for review and filing with the Commission in accord-
ance with the procedures specified in this subsection.
‘‘(E) Notwithstanding any other provision of this sub-
section, a proposed organization standard or amendment
shall take effect according to its terms if the electric reli-
ability organization determines that an emergency exists
requiring that such proposed organization standard or
amendment take effect without notice or comment. The
electric reliability organization shall notify the Commission
immediately following such determination and shall file
such emergency organization standard or amendment with
the Commission not later than 5 days following such de-
termination and shall include in such filing an explanation
of the need for such emergency standard. Subsequently,
the Commission shall provide notice of the organization
standard or amendment for comment, and shall follow the
procedures set out in paragraphs (2) and (3) for review
of the new or modified organization standard. Any such
organization standard that has gone into effect shall re-
main in effect unless and until suspended or disapproved
by the Commission. If the Commission determines at any
time that the emergency organization standard or amend-
ment is not necessary, the Commission may suspend such
emergency organization standard or amendment.
‘‘(4) All users of the bulk-power system shall comply
with any organization standard that takes effect under
this section.
‘‘(f) COORDINATION WITH CANADA AND MEXICO.—
The electric reliability organization shall take all appro-
priate steps to gain recognition in Canada and Mexico.
The United States shall use its best efforts to enter into
international agreements with the appropriate govern-
ments of Canada and Mexico to provide for effective com-
pliance with organization standards and to provide for the
effectiveness of the electric reliability organization in car-
rying out its mission and responsibilities. All actions taken
by the electric reliability organization, any affiliated re-
gional reliability entity, and the Commission shall be con-
sistent with the provisions of such international agree-
ments.
‘‘(g) CHANGES IN PROCEDURES, GOVERNANCE, OR
FUNDING.—(1) The electric reliability organization shall
file with the Commission any proposed change in its proce-
dures, governance, or funding, or any changes in the affili-
ated regional reliability entity’s procedures, governance, or
funding relating to delegated functions, and shall include
with the filing an explanation of the basis and purpose
for the change.
‘‘(2) A proposed procedural change may take effect
90 days after filing with the Commission if the change
constitutes a statement of policy, practice, or interpreta-
tion with respect to the meaning or enforcement of an ex-
isting procedure. Otherwise, a proposed procedural change
shall take effect only upon a finding by the Commission,
after notice and opportunity for comments, that the
change is just, reasonable, not unduly discriminatory or
preferential, is in the public interest, and satisfies the re-
quirements of subsection (d)(4).
‘‘(3) A change in governance or funding shall not
take effect unless the Commission finds that the change
is just, reasonable, not unduly discriminatory or pref-
erential, in the public interest, and satisfies the require-
ments of subsection (d)(4).
‘‘(4)(A) The Commission, either upon complaint or
upon its own motion, may suspend a procedure or govern-
ance or funding provision if it determines the procedure
or provision does not meet the requirements of subsection
(d)(4) or is unjust, unreasonable, unduly discriminatory
or preferential, or otherwise not in the public interest.
‘‘(B) The Commission, upon complaint or upon its
own motion, may require the electric reliability organiza-
tion to amend the procedures, governance, or funding if
the Commission determines that the amendment is nec-
essary to meet the requirements of this section. The elec-
tric reliability organization shall file the amendment in ac-
cordance with paragraph (1) of this subsection.
‘‘(h) DELEGATIONS OF AUTHORITY.—(1) The elec-
tric reliability organization shall, upon request by an enti-
ty, enter into an agreement with such entity for the dele-
gation of authority to implement and enforce compliance
with organization standards in a specified geographic area
if the organization finds that the entity requesting the del-
egation satisfies the requirements of subparagraphs (A),
(B), (C), (D), (F), and (K) of subsection (d)(4), and if
the delegation promotes the effective and efficient imple-
mentation and administration of bulk-power system reli-
ability. The electric reliability organization may enter into
an agreement to delegate to the entity any other authority,
except that the electric reliability organization shall re-
serve the right to set and approve standards for bulk-
power system reliability.
‘‘(2) The electric reliability organization shall file
with the Commission any agreement entered into under
this subsection and any information the Commission re-
quires with respect to the affiliated regional reliability en-
tity to which authority is to be delegated. The Commission
shall approve the agreement, following public notice and
an opportunity for comment, if it finds that the agreement
meets the requirements of paragraph (1), and is just, rea-
sonable, not unduly discriminatory or preferential, and is
in the public interest. A proposed delegation agreement
with an affiliated regional reliability entity organized on
an interconnection-wide basis shall be rebuttably pre-
sumed by the Commission to promote the effective and
efficient implementation and administration of bulk-power
system reliability. No delegation by the electric reliability
organization shall be valid unless approved by the Com-
mission.
‘‘(3)(A) A delegation agreement entered into under
this subsection shall specify the procedures for an affili-
ated regional reliability entity to propose entity rules or
variances for review by the electric reliability organization.
With respect to any such proposal that would apply on
an interconnection-wide basis, the electric reliability orga-
nization shall presume such proposal valid if made by an
interconnection-wide affiliated regional reliability entity
unless the electric reliability organization makes a written
finding that the proposal—
‘‘(i) was not developed in a fair and open proc-
ess that provided an opportunity for all interested
parties to participate;
‘‘(ii) has a significant adverse impact on reli-
ability or commerce in other interconnections;
‘‘(iii) fails to provide a level of reliability of the
bulk-power system within the interconnection such
that it would constitute a serious and substantial
threat to public health, safety, welfare, or national
security; or
‘‘(iv) creates a serious and substantial burden
on competitive markets within the interconnection
that is not necessary for reliability.