‘‘(A) the Commission finds a conflict exists be-
tween a reliability standard and any such provision; 
‘‘(B) the Commission orders a change to such 
provision pursuant to section 206 of this part; and 
‘‘(C) the ordered change becomes effective 
under this part. 
If the Commission determines that a reliability standard 
needs to be changed as a result of such a conflict, it shall 
order the ERO to develop and file with the Commission 
a modified reliability standard under paragraph (4) or (5) 
of this subsection. 
‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 
subject to paragraph (2), a penalty on a user or owner 
or operator 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 
Commission under subsection (d); and 
‘‘(B) files notice and the record of the pro-
ceeding with the Commission. 
‘‘(2) A penalty imposed under paragraph (1) may 
take effect not earlier than the 31st day after the electric 
reliability organization files with the Commission notice of
the penalty and the record of proceedings. Such penalty 
shall be subject to review by the Commission, on its own 
motion or upon application by the user, owner or operator 
that is the subject of the penalty filed within 30 days after 
the date such notice is filed with the Commission. Applica-
tion to the Commission for review, or the initiation of re-
view by the Commission on its own motion, shall not oper-
ate as a stay of such penalty unless the Commission other-
wise orders upon its own motion or upon application by 
the user, owner or operator that is the subject of such 
penalty. 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 electric reliability organization and 
opportunity for the presentation of supporting reasons to 
affirm, modify, or set aside the penalty), shall by order 
affirm, set aside, reinstate, or modify the penalty, and, 
if appropriate, remand to the electric reliability organiza-
tion for further proceedings. The Commission shall imple-
ment expedited procedures for such hearings. 
‘‘(3) On its own motion or upon complaint, the Com-
mission may order compliance with a reliability standard 
and may impose a penalty against a user or owner or oper-
ator of the bulk-power system, if the Commission finds, 
after notice and opportunity for a hearing, that the user
or owner or operator of the bulk-power system has en-
gaged or is about to engage in any acts or practices that 
constitute or will constitute a violation of a reliability 
standard. 
‘‘(4) The Commission shall establish regulations au-
thorizing the ERO to enter into an agreement to delegate 
authority to a regional entity for the purpose of proposing 
reliability standards to the ERO and enforcing reliability 
standards under paragraph (1) if—
‘‘(A) the regional entity is governed by—
‘‘(i) an independent board; 
‘‘(ii) a balanced stakeholder board; or 
‘‘(iii) a combination independent and bal-
anced stakeholder board. 
‘‘(B) the regional entity otherwise satisfies the 
provisions of subsection (c)(1) and (2); and 
‘‘(C) the agreement promotes effective and effi-
cient administration of bulk-power system reliability. 
The Commission may modify such delegation. The ERO 
and the Commission shall rebuttably presume that a pro-
posal for delegation to a regional entity organized on an 
Interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should 
be approved. Such regulation may provide that the Com-
mission may assign the ERO’s authority to enforce reli-
ability standards under paragraph (1) directly to a re-
gional entity consistent with the requirements of this para-
graph. 
‘‘(5) The Commission may take such action as is nec-
essary or appropriate against the ERO or a regional entity 
to ensure compliance with a reliability standard or any 
Commission order affecting the ERO or a regional entity. 
‘‘(6) Any penalty imposed under this section shall 
bear a reasonable relation to the seriousness of the viola-
tion and shall take into consideration the efforts of such 
user, owner, or operator to remedy the violation in a time-
ly manner. 
‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA-
NIZATION RULES.—The Electric Reliability Organization 
shall file with the Commission for approval any proposed 
rule or proposed rule change, accompanied by an expla-
nation of its basis and purpose. The Commission, upon 
its own motion or complaint, may propose a change to the 
rules of the Electric Reliability Organization. A proposed 
rule or proposed rule change shall take effect upon a find-
ing by the Commission, after notice and opportunity for 
comment, that the change is just, reasonable, not unduly 
discriminatory or preferential, is in the public interest, and 
satisfies the requirements of subsection (c).
‘‘(g) RELIABILITY REPORTS.—The Electric Reli-
ability Organization shall conduct periodic assessments of 
the reliability and adequacy of the bulk-power system in 
North America. 
‘‘(h) COORDINATION WITH CANADA AND MEXICO.—
The President is urged to negotiate international agree-
ments with the governments of Canada and Mexico to pro-
vide for effective compliance with reliability standards and 
the effectiveness of the Electric Reliability Organization 
in the United States and Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli-
ability Organization shall have authority to develop and 
enforce compliance with reliability standards for only the 
bulk-power system. 
‘‘(2) This section does not authorize the Electric Reli-
ability Organization or the Commission to order the con-
struction of additional generation or transmission capacity 
or to set and enforce compliance with standards for ade-
quacy or safety of electric facilities or services. 
‘‘(3) Nothing in this section shall be construed to pre-
empt any authority of any State to take action to ensure 
the safety, adequacy, and reliability of electric service 
within that State, as long as such action is not incon-
sistent with any reliability standard.
‘‘(4) Within 90 days of the application of the Electric 
Reliability Organization or other affected party, and after 
notice and opportunity for comment, the Commission shall 
issue a final order determining whether a State action is 
inconsistent with a reliability standard, taking into consid-
eration any recommendation of the Electric Reliability Or-
ganization. 
‘‘(5) The Commission, after consultation with the 
Electric Reliability Organization and the State taking ac-
tion, may stay the effectiveness of any State action, pend-
ing the Commission’s issuance of a final order. 
‘‘(j) REGIONAL ADVISORY BODIES.—The Commis-
sion shall establish a regional advisory body on the petition 
of at least two-thirds of the States within a region that 
have more than one-half of their electric load served within 
the region. A regional advisory body shall be composed or 
of one member from each participating State in the region, 
appointed by the Governor of each State, and may include 
representatives of agencies, States, and provinces outside 
the United States. A regional advisory body may provide 
advice to the Electric Reliability Organization, a regional 
entity, or the Commission regarding the governance of an 
existing or proposed regional entity within the same re-
gion, whether a standard proposed to apply within the re-
gion is just, reasonable, not unduly discriminatory or pref-
erential, and in the public interest, whether fees proposed 
to be assessed within the region are just, reasonable, not 
unduly discriminatory or preferential, and in the public 
interest and any other responsibilities requested by the 
Commission. The Commission may give deference to the 
advice of any such regional advisory body if that body is 
organized on an Interconnection-wide basis. 
‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The 
provisions of this section do not apply to Alaska or Ha-
waii.’’.
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