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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—
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‘‘(i) affirm, set aside, reinstate, or modify the
penalty; and
‘‘(ii) if appropriate, remand to the ERO for fur-
ther proceedings.
‘‘(E) The Commission shall implement expedited pro-
cedures for the hearings described in subparagraph (D).
‘‘(3) On a motion of the Commission or on complaint,
the Commission may order compliance with a reliability
standard and may impose a penalty against a user or
owner or operator of the bulk-power system if the Commis-
sion finds, after notice and opportunity for a hearing, that
the user or owner or operator of the bulk-power system has
engaged or is about to engage in any act or practice that
constitutes or will constitute a violation of a reliability
standard.
‘‘(4)(A) The Commission shall issue 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—
‘‘(i) 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;
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‘‘(ii) the regional entity otherwise meets the re-
quirements of paragraphs (1) and (2) of subsection
(c); and
‘‘(iii) the agreement promotes effective and effi-
cient administration of bulk-power system reliability.
‘‘(B) The Commission may modify a delegation under
this paragraph.
‘‘(C) The ERO and the Commission shall rebuttably
presume that a proposal for delegation to a regional entity
organized on an interconnection-wide basis promotes effec-
tive and efficient administration of bulk-power system reli-
ability and should be approved.
‘‘(D) The regulation issued under this paragraph may
provide that the Commission may assign the authority of
the ERO to enforce reliability standards under paragraph
(1) directly to a regional entity in accordance with this
paragraph.
‘‘(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—
‘‘(A) bear a reasonable relation to the seriousness
of the violation; and
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‘‘(B) take into consideration the efforts of the
user, owner, or operator to remedy the violation in a
timely manner.
‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA-
TION RULES.—(1) The Electric Reliability Organization
shall file with the Commission for approval any proposed
rule or proposed rule change, accompanied by an expla-
nation of the basis and purpose of the rule and proposed
rule change.
‘‘(2) The Commission, upon a motion of the Commis-
sion or upon complaint, may propose a change to the rules
of the ERO.
‘‘(3) A proposed rule or proposed rule change shall take
effect upon a finding by the Commission, after notice and
opportunity for comment, that the change is just, reason-
able, and not unduly discriminatory or preferential, is in
the public interest, and meets the requirements of subsection
(c).
‘‘(g) RELIABILITY REPORTS.—The ERO 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
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the effectiveness of the ERO in the United States and Can-
ada or Mexico.
‘‘(i) SAVINGS PROVISIONS.—(1) The ERO may develop
and enforce compliance with reliability standards for only
the bulk-power system.
‘‘(2) Nothing in this section authorizes the ERO or the
Commission to order the construction of additional genera-
tion or transmission capacity or to set and enforce compli-
ance with standards for adequacy or safety of electric facili-
ties or services.
‘‘(3) Nothing in this section preempts any authority
of any State to take action to ensure the safety, adequacy,
and reliability of electric service within that State, as long
as the action is not inconsistent with any reliability stand-
ard.
‘‘(4) Not later than 90 days after the date of applica-
tion of the Electric Reliability Organization or other af-
fected 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 consideration any recommendation of
the ERO.
‘‘(5) The Commission, after consultation with the ERO
and the State taking action, may stay the effectiveness of
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any State action, pending the issuance by the Commission
of a final order.
‘‘(j) REGIONAL ADVISORY BODIES.—(1) The Commis-
sion shall establish a regional advisory body on the petition
of at least 2⁄3 of the States within a region that have more
than 1⁄2 of the electric load of the States served within the
region.
‘‘(2) A regional advisory body—
‘‘(A) shall be composed of 1 member from each
participating State in the region, appointed by the
Governor of the State; and
‘‘(B) may include representatives of agencies,
States, and provinces outside the United States.
‘‘(3) A regional advisory body may provide advice to
the Electric Reliability Organization, a regional entity, or
the Commission regarding—
‘‘(A) the governance of an existing or proposed
regional entity within the same region;
‘‘(B) whether a standard proposed to apply with-
in the region is just, reasonable, not unduly discrimi-
natory or preferential, and in the public interest;
‘‘(C) whether fees proposed to be assessed within
the region are just, reasonable, not unduly discrimi-
natory or preferential, and in the public interest; and
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‘‘(D) any other responsibilities requested by the
Commission.
‘‘(4) The Commission may give deference to the advice
of a regional advisory body if that body is organized on
an interconnection-wide basis.
‘‘(k) ALASKA
AND HAWAII.—This section does not
apply to Alaska or Hawaii.’’.
(b) STATUS OF ERO.—The Electric Reliability Orga-
nization certified by the Commission under section 215(c)
of the Federal Power Act (as added by subsection (a)) and
any regional entity delegated enforcement authority pursu-
ant to section 215(e)(4) of that Act (as so added) are not
departments, agencies, or instrumentalities of the Federal
Government.
Subtitle B—Transmission
Infrastructure Modernization
SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANS-
MISSION FACILITIES.
(a) IN GENERAL.—Part II of the Federal Power Act
(16 U.S.C. 824 et seq.) (as amended by section 1211(a))
is amended by adding at the end the following:
‘‘SEC. 216. SITING OF INTERSTATE ELECTRIC TRANS-
MISSION FACILITIES.
‘‘(a) DESIGNATION OF NATIONAL INTEREST ELECTRIC
TRANSMISSION CORRIDORS.—(1) Not later than 1 year
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after the date of enactment of this section and every 3 years
thereafter, the Secretary of Energy (referred to in this sec-
tion as the ‘Secretary’), in consultation with affected States,
shall conduct a study of electric transmission congestion.
‘‘(2) After considering alternatives and recommenda-
tions from interested parties (including an opportunity for
comment from affected States), the Secretary shall issue a
report, based on the study, which may designate any geo-
graphic area experiencing electric energy transmission ca-
pacity constraints or congestion that adversely affects con-
sumers as a national interest electric transmission corridor.
‘‘(3) The Secretary shall conduct the study and issue
the report in consultation with any appropriate regional
entity referred to in section 215.
‘‘(4) In determining whether to designate a national
interest electric transmission corridor under paragraph (2),
the Secretary may consider whether—
‘‘(A) the economic vitality and development of
the corridor, or the end markets served by the cor-
ridor, may be constrained by lack of adequate or rea-
sonably priced electricity;
‘‘(B)(i) economic growth in the corridor, or the
end markets served by the corridor, may be jeopard-
ized by reliance on limited sources of energy; and
‘‘(ii) a diversification of supply is warranted;
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‘‘(C) the energy independence of the United
States would be served by the designation;
‘‘(D) the designation would be in the interest of
national energy policy; and
‘‘(E) the designation would enhance national de-
fense and homeland security.
‘‘(b) CONSTRUCTION PERMIT.—Except as provided in
subsection (i), the Commission may, after notice and an
opportunity for hearing, issue 1 or more permits for the
construction or modification of electric transmission facili-
ties in a national interest electric transmission corridor
designated by the Secretary under subsection (a) if the Com-
mission finds that—
‘‘(1)(A) a State in which the transmission facili-
ties are to be constructed or modified does not have
authority to—
‘‘(i) approve the siting of the facilities; or
‘‘(ii) consider the interstate benefits expected
to be achieved by the proposed construction or
modification of transmission facilities in the
State;
‘‘(B) the applicant for a permit is a transmit-
ting utility under this Act but does not qualify to
apply for a permit or siting approval for the pro-