adopted by the electric reliability organization
to provide for the reliable operation of a bulk-
power system.
‘‘(B) INCLUSIONS.—The term ‘organiza-
tion standard’ includes—
‘‘(i) an entity rule approved by the
electric reliability organization; and
‘‘(ii) a variance approved by the elec-
tric reliability organization.
‘‘(10) PUBLIC INTEREST GROUP.—
‘‘(A) IN GENERAL.—The term ‘public in-
terest group’ means a nonprofit private or pub-
lic organization that has an interest in the ac-
tivities of the electric reliability organization.
‘‘(B) INCLUSIONS.—The term ‘public in-
terest group’ includes—
‘‘(i) a ratepayer advocate;
‘‘(ii) an environmental group; and
‘‘(iii) a State or local government or-
ganization that regulates participants in,
and promulgates government policy with
respect to, the market for electric energy.
‘‘(11) SYSTEM OPERATOR.—
‘‘(A) IN GENERAL.—The term ‘system op-
erator’ means an entity that operates or is re-
sponsible for the operation of a bulk-power sys-
tem.
‘‘(B) INCLUSIONS.—The term ‘system op-
erator’ includes—
‘‘(i) a control area operator;
‘‘(ii) an independent system operator;
‘‘(iii) a transmission company;
‘‘(iv) a transmission system operator;
and
‘‘(v) a regional security coordinator.
‘‘(12) VARIANCE.—The term ‘variance’ means
an exception from the requirements of an organiza-
tion standard (including a proposal for an organiza-
tion standard in a case in which there is no organi-
zation standard) that is adopted by an affiliated re-
gional reliability entity and is applicable to all or a
part of the region for which the affiliated regional
reliability entity is responsible.
‘‘(b) COMMISSION AUTHORITY.—
‘‘(1) JURISDICTION.—Notwithstanding section
201(f), within the United States, the Commission
shall have jurisdiction over the electric reliability or-
ganization, all affiliated regional reliability entities,
all system operators, and all bulk-power system
users, including entities described in section 201(f),
for purposes of approving organization standards
and enforcing compliance with this section.
‘‘(2) DEFINITION OF TERMS.—The Commission
may by regulation define any term used in this sec-
tion consistent with the definitions in subsection (a)
and the purpose and intent of this Act.
‘‘(c) EXISTING RELIABILITY STANDARDS.—
‘‘(1) SUBMISSION
TO
THE
COMMISSION.—Be-
fore designation of an electric reliability organization
under subsection (d), any person, including the
North American Electric Reliability Council and its
member Regional Reliability Councils, may submit
to the Commission any reliability standard, guid-
ance, practice, or amendment to a reliability stand-
ard, guidance, or practice that the person proposes
to be made mandatory and enforceable.
‘‘(2) REVIEW BY THE COMMISSION.—The Com-
mission, after allowing interested persons an oppor-
tunity to submit comments, may approve a proposed
mandatory standard, guidance, practice, or amend-
ment submitted under paragraph (1) if the Commis-
sion finds that the standard, guidance, or practice is
just, reasonable, not unduly discriminatory or pref-
erential, and in the public interest.
‘‘(3) EFFECT OF APPROVAL.—A standard, guid-
ance, or practice shall be mandatory and applicable
according to its terms following approval by the
Commission and shall remain in effect until it is—
‘‘(A) withdrawn, disapproved, or super-
seded by an organization standard that is
issued or approved by the electric reliability or-
ganization and made effective by the Commis-
sion under section (e); or
‘‘(B) disapproved by the Commission if, on
complaint or upon motion by the Commission
and after notice and an opportunity for com-
ment, the Commission finds the standard, guid-
ance, or practice to be unjust, unreasonable,
unduly discriminatory or preferential, or not in
the public interest.
‘‘(4) ENFORCEABILITY.—A standard, guidance,
or practice in effect under this subsection shall be
enforceable by the Commission.
‘‘(d) DESIGNATION OF ELECTRIC RELIABILITY OR-
GANIZATION.—
‘‘(1) REGULATIONS.—
‘‘(A) PROPOSED REGULATIONS.—Not later
than 90 days after the date of enactment of
this section, the Commission shall propose regu-
lations specifying procedures and requirements
for an entity to apply for designation as the
electric reliability organization.
‘‘(B) NOTICE AND COMMENT.—The Com-
mission shall provide notice and opportunity for
comment on the proposed regulations.
‘‘(C) FINAL REGULATION.—Not later than
180 days after the date of enactment of this
section, the Commission shall promulgate final
regulations under this subsection.
‘‘(2) APPLICATION.—
‘‘(A) SUBMISSION.—Following the promul-
gation of final regulations under paragraph (1),
an entity may submit an application to the
Commission for designation as the electric reli-
ability organization.
‘‘(B) CONTENTS.—The applicant shall de-
scribe in the application—
‘‘(i) the governance and procedures of
the applicant; and
‘‘(ii) the funding mechanism and ini-
tial funding requirements of the applicant.
‘‘(3) NOTICE AND COMMENT.—The Commission
shall—
‘‘(A) provide public notice of the applica-
tion; and
‘‘(B) afford interested parties an oppor-
tunity to comment.
‘‘(4) DESIGNATION OF ELECTRIC RELIABILITY
ORGANIZATION.—The Commission shall designate
the applicant as the electric reliability organization
if the Commission determines that the applicant—
‘‘(A) has the ability to develop, implement,
and enforce standards that provide for an ade-
quate level of reliability of bulk-power systems;
‘‘(B) permits voluntary membership to any
bulk-power system user or public interest
group;
‘‘(C) ensures fair representation of its
members in the selection of its directors and
fair management of its affairs, taking into ac-
count the need for efficiency and effectiveness
in decisionmaking and operations and the re-
quirements for technical competency in the de-
velopment of organization standards and the ex-
ercise of oversight of bulk-power system reli-
ability;
‘‘(D) ensures that no 2 industry sectors
have the ability to control, and no 1 industry
sector has the ability to veto, the applicant’s
discharge of its responsibilities as the electric
reliability organization (including actions by
committees recommending standards for ap-
proval by the board or other board actions to
implement and enforce standards);
‘‘(E) provides for governance by a board
wholly comprised of independent directors;
‘‘(F) provides a funding mechanism and
requirements that—
‘‘(i) are just, reasonable, not unduly
discriminatory or preferential and in the
public interest; and
‘‘(ii) satisfy the requirements of sub-
section (l);
‘‘(G) has established procedures for devel-
opment of organization standards that—
‘‘(i) provide reasonable notice and op-
portunity for public comment, taking into
account the need for efficiency and effec-
tiveness in decisionmaking and operations
and the requirements for technical com-
petency in the development of organization
standards;
‘‘(ii) ensure openness, a balancing of
interests, and due process; and
‘‘(iii) includes alternative procedures
to be followed in emergencies;
‘‘(H) has established fair and impartial
procedures for implementation and enforcement
of organization standards, either directly or
through delegation to an affiliated regional reli-
ability entity, including the imposition of pen-
alties, limitations on activities, functions, or op-
erations, or other appropriate sanctions;
‘‘(I) has established procedures for notice
and opportunity for public observation of all
meetings, except that the procedures for public
observation may include alternative procedures
for emergencies or for the discussion of infor-
mation that the directors reasonably determine
should take place in closed session, such as liti-
gation, personnel actions, or commercially sen-
sitive information;
‘‘(J) provides for the consideration of rec-
ommendations of States and State commissions;
and
‘‘(K) addresses other matters that the
Commission considers appropriate to ensure
that the procedures, governance, and funding of
the electric reliability organization are just, rea-
sonable, not unduly discriminatory or pref-
erential, and in the public interest.
‘‘(5) EXCLUSIVE DESIGNATION.—
‘‘(A) IN GENERAL.—The Commission shall
designate only 1 electric reliability organization.
‘‘(B) MULTIPLE
APPLICATIONS.—If the
Commission receives 2 or more timely applica-
tions that satisfy the requirements of this sub-
section, the Commission shall approve only the
application that the Commission determines will
best implement this section.
‘‘(e) ORGANIZATION STANDARDS.—
‘‘(1) SUBMISSION OF PROPOSALS TO COMMIS-
SION.—
‘‘(A) IN GENERAL.—The electric reliability
organization shall submit to the Commission
proposals for any new or modified organization
standards.
‘‘(B) CONTENTS.—A proposal submitted
under subparagraph (A) shall include—
‘‘(i) a concise statement of the pur-
pose of the proposal; and
‘‘(ii) a record of any proceedings con-
ducted with respect to the proposal.
‘‘(2) REVIEW BY THE COMMISSION.—
‘‘(A) NOTICE AND COMMENT.—The Com-
mission shall—
‘‘(i) provide notice of a proposal under
paragraph (1); and
‘‘(ii) allow interested persons 30 days
to submit comments on the proposal.
‘‘(B) ACTION BY THE COMMISSION.—
‘‘(i) IN GENERAL.—After taking into
consideration any submitted comments, the
Commission shall approve or disapprove a
proposed organization standard not later
than the end of the 60-day period begin-
ning on the date of the deadline for the
submission of comments, except that the
Commission may extend the 60-day period
for an additional 90 days for good cause.
‘‘(ii) FAILURE TO ACT.—If the Com-
mission does not approve or disapprove a
proposal within the period specified in
clause (i), the proposed organization stand-
ard shall go into effect subject to its terms,
without prejudice to the authority of the
Commission to modify the organization
standard in accordance with the standards
and requirements of this section.
‘‘(C) EFFECTIVE DATE.—An organization
standard approved by the Commission shall
take effect not earlier than 30 days after the
date of the Commission’s order of approval.
‘‘(D) STANDARDS FOR APPROVAL.—
‘‘(i) IN GENERAL.—The Commission
shall approve a proposed new or modified
organization standard if the Commission
determines the organization standard to be
just, reasonable, not unduly discriminatory
or preferential, and in the public interest.
‘‘(ii) CONSIDERATIONS.—In the exer-
cise of its review responsibilities under this
subsection, the Commission—
‘‘(I) shall give due weight to the
technical expertise of the electric reli-
ability organization with respect to
the content of a new or modified orga-
nization standard; but
‘‘(II) shall not defer to the elec-
tric reliability organization with re-
‘‘(6) COMPLIANCE.—Each bulk power system
user shall comply with an organization standard that
takes effect under this section.
‘‘(f) COORDINATION WITH CANADA AND MEXICO.—
‘‘(1) RECOGNITION.—The electric reliability or-
ganization shall take all appropriate steps to gain
recognition in Canada and Mexico.
‘‘(2) INTERNATIONAL AGREEMENTS.—
‘‘(A) IN
GENERAL.—The President shall
use best efforts to enter into international
agreements with the appropriate governments
of Canada and Mexico to provide for—
‘‘(i) effective compliance with organi-
zation standards; and
‘‘(ii) the effectiveness of the electric
reliability organization in carrying out its
mission and responsibilities.
‘‘(B) COMPLIANCE.—All actions taken by
the electric reliability organization, an affiliated
regional reliability entity, and the Commission
shall be consistent with any international agree-
ment under subparagraph (A).
‘‘(g) CHANGES IN PROCEDURE, GOVERNANCE, OR
FUNDING.—