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Federal Register / Vol. 70, No. 172 / Wednesday, September 7, 2005 / Proposed Rules
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[FR Doc. 05–17605 Filed 9–6–05; 8:45 am]
BILLING CODE 4910–62–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 38
[Docket No. RM05–30–000]
Rules Concerning Certification of the
Electric Reliability Organization; and
Procedures for the Establishment,
Approval, and Enforcement of Electric
Reliability Standards
September 1, 2005.
AGENCY: Federal Energy Regulatory
Commission.
ACTION: Notice of proposed rulemaking.
SUMMARY: Pursuant to Subtitle A
(Reliability Standards) of the Electricity
Modernization Act of 2005, which
added a new section 215 to the Federal
Power Act (FPA), the Commission is
proposing to amend its regulations to
incorporate:
(1) Criteria that an entity must satisfy
in order to qualify to be the Electric
Reliability Organization (ERO) that will
propose and enforce Reliability
Standards for the Bulk-Power System in
the United States, subject to
Commission approval;
(2) Procedures governing enforcement
actions by the ERO and the
Commission;
(3) Criteria under which the ERO may
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;
(4) Procedures for the establishment
of Regional Advisory Bodies that may
provide advice to the Commission, the
ERO or a Regional Entity on matters of
governance, applicable Reliability
Standards, the reasonableness of
proposed fees within a region, and any
other responsibilities requested by the
Commission;
(5) Regulations governing the issuance
of periodic reliability reports by the
ERO that assess the reliability and
adequacy of the Bulk-Power System in
North America; and
(6) Regulations pertaining to the
funding of the ERO.
DATES: Comments are due October 7,
2005.
Commission’s Web site at http://
www.ferc.gov. Commenters unable to
file comments electronically must send
an original and fourteen (14) copies of
their comments to: Federal Energy
Regulatory Commission, Office of the
Secretary, 888 First Street, NE.,
Washington, DC 20426. Refer to the
Comment Procedures section of the
preamble for additional information on
how to file comments.
FOR FURTHER INFORMATION CONTACT:
William Longenecker (Technical
Information), Office of Markets, Tariffs
and Rates, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–8570.
David Miller (Technical Information),
Office of Markets, Tariffs and Rates,
Division of Reliability, Federal Energy
Regulatory Commission, 888 First
Street, NE., Washington, DC 20426,
(202) 502–6473. Jonathan First (Legal
Information), Office of the General
Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–8529.
Christy Walsh (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426,
(202) 502–6523.
SUPPLEMENTARY INFORMATION:
I. Introduction
1. Pursuant to Subtitle A (Reliability
Standards) of the Electricity
Modernization Act of 2005,1 which
added a new section 215 to the Federal
Power Act (FPA), the Commission is
proposing to amend its regulations to
incorporate:
(1) Criteria that an entity must satisfy
in order to qualify to be the Electric
Reliability Organization (ERO), which
the Commission will certify as the
organization that will propose and
enforce Reliability Standards for the
Bulk-Power System in the United States,
subject to Commission approval;
(2) Procedures under which the ERO
may propose new or modified
Reliability Standards and procedures to
enforce such standards, for Commission
review;
(3) Procedures governing enforcement
actions by the ERO and the
Commission;
(4) Criteria under which the ERO may
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;
(5) Procedures for the establishment
of Regional Advisory Bodies that may
ADDRESSES: Comments may be filed
electronically via the eFiling link on the
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1 H.R. 6, Title XII, Subtitle A, 109th Cong. (2005).
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provide advice to the Commission, the
ERO or a Regional Entity on matters of
governance, applicable Reliability
Standards, the reasonableness of
proposed fees within a region, and any
other responsibilities requested by the
Commission;
(6) Regulations governing the issuance
of periodic reliability reports by the
ERO that assess the reliability and
adequacy of the Bulk-Power System in
North America; and
(7) Regulations pertaining to the
funding of the ERO.
II. Background
A. Commission Reliability Activity Prior
to the Electricity Modernization Act of
2005
2. The Electricity Modernization Act
of 2005 was enacted into law by
President George W. Bush on August 8,
2005. Subtitle A of the Electricity
Modernization Act amended the FPA by
adding a new section 215, titled
‘‘Electric Reliability.’’ Prior to
enactment of section 215, the
Commission had acted primarily as an
economic regulator of wholesale power
markets and the interstate transmission
grid. In this regard, the Commission
acted to promote a more reliable electric
system by promoting regional
coordination and planning of the
interstate grid through regional
independent system operators (ISOs)
and regional transmission organizations
(RTOs), adopting transmission pricing
policies that provide price signals for
the most reliable and efficient operation
and expansion of the grid, and
providing pricing incentives at the
wholesale level for investment in grid
improvements and assuring recovery of
costs in wholesale transmission rates.
Section 215 of the FPA buttresses the
Commission’s efforts to strengthen the
reliability of the interstate grid through
the grant of new authority which
provides for a system of mandatory
Reliability Standards developed by the
ERO and reviewed and approved by the
Commission. The ERO can initiate an
enforcement action and impose
penalties for the violation of Reliability
Standards, subject to Commission
review; or the Commission can initiate
its own enforcement action.
B. Voluntary Reliability Standards
3. In the aftermath of the 1965
blackout in the northeast United States,
the electric industry established the
North American Electric Reliability
Council (NERC), a voluntary reliability
organization. Since its inception, NERC
has developed Operating Policies and
Planning Standards that provide
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Federal Register / Vol. 70, No. 172 / Wednesday, September 7, 2005 / Proposed Rules
voluntary guidelines for operating and
planning the North American bulkpower system. In April 2005, NERC
adopted ‘‘Version 0’’ reliability
standards that translated the NERC
Operating Policies, Planning Standards
and compliance requirements into a
comprehensive set of measurable
standards. While NERC has developed a
compliance enforcement program to
ensure compliance with the reliability
standards it has developed, industry
compliance is still voluntary and not
subject to mandatory enforcement
penalties. Although NERC’s efforts have
been important in maintaining the
reliability of the nation’s bulk-power
system, NERC itself has recognized the
need for mandatory, enforceable
reliability standards and has been a
proponent of legislation to establish a
Commission-jurisdictional ERO that
would propose and enforce mandatory
reliability standards.
4. A common cause of the past three
major regional blackouts was violation
of NERC’s then Operating Policies and
Planning Standards. During July and
August 1996, the west coast of the
United States experienced two
cascading blackouts caused by
violations of voluntary Operating
Policies.2 In response to the outages, the
Secretary of Energy convened a task
force to advise the U.S. Department of
Energy (DOE) on issues needed to be
addressed to maintain the reliability of
the bulk-power system. In a September
1998 report, the task force
recommended, among other things, that
federal legislation should grant more
explicit authority for the Commission to
approve and oversee an organization
having responsibility for bulk-power
reliability standards.3 Further, the task
force recommended that such legislation
provide for Commission jurisdiction for
reliability of the bulk-power system and
Commission implementation of
mandatory, enforceable reliability
standards.
5. On August 14, 2003, a blackout
affected significant portions of the
Midwest and Northeast United States,
and Ontario, Canada. This blackout
affected an area with an estimated 50
million people and 61,800 megawatts of
2 The Electric Power Outages in the Western
United States, July 2–3, 1996, at 76 (ftp://
www.nerc.com/pub/sys/all_updl/docs/pubs/
doerept.pdf) and WSCC Disturbance Report, For the
Power System Outage that Occurred on the Western
Interconnection August 10, 1996, at 4 (ftp://
www.nerc.com/pub/sys/all_updl/docs/pubs/
AUG10FIN.pdf).
3 Maintaining Reliability in a Competitive U.S.
Electricity Industry, Final Report of the Task Force
on Electric System Reliability, Secretary of Energy
Advisory Board, U.S. Department of Energy
(September 1998), at 25–27, 65–67.
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electric load. A joint U.S.-Canada task
force studied the causes of the August
14, 2003 blackout and determined that
several entities violated NERC’s then
Operating Policies and Planning
Standards, and those violations directly
contributed to the start of the blackout.4
The joint task force, in its
recommendations to prevent or
minimize the scope of future blackouts,
identified the need for legislation to
make reliability standards mandatory
and enforceable, with penalties for noncompliance.5
6. In the wake of the August 14, 2003
blackout, the Commission has taken a
more direct and pro-active role in
transmission reliability matters.
Commission staff helped to lead and
conduct the joint U.S.-Canada
investigation of the August 2003
blackout. In April 2004, the Commission
issued a Reliability Policy Statement,6
which clarified its power grid reliability
policies and objectives, and completed
several Commission-designated
recommendations of the 2003 Task
Force.
7. Also, as part of the Commission’s
efforts to promote grid reliability, the
Commission has created a new Division
of Reliability within the Office of
Markets, Tariffs and Rates. One task of
this new division has been to participate
in NERC’s Reliability Readiness
Reviews of balancing authorities,
transmission operators and reliability
coordinators in North America to
determine their readiness to maintain
safe and reliable operations. The
Commission also directed transmission
owners to report, by June 2004, on the
vegetation management practices they
use for transmission lines and rights-ofway.7 The Commission’s Reliability
Division has also engaged in studies and
other activities to assess the longer-term
and strategic needs and issues related to
power grid reliability. The Commission
4 The joint team, known as the U.S.-Canada
Power System Outage Task Force, issued a Final
Report on the August 14, 2003 Blackout In the
United States and Canada: Causes and
Recommendations (Final Blackout Report) on April
5, 2004, which presented an in-depth analysis of
the causes of the blackout and recommendations for
avoiding future blackouts.
5 Final Blackout Report, at 140–42.
6 Policy Statement on Matters Related to Bulk
Power System Reliability, 107 FERC ¶ 61,052, order
on clarification, 108 FERC ¶ 61,288 (2004).
7 Reporting By Transmission Providers on
Vegetation Management Practices Related To
Designated Transmission Facilities, 107 FERC
¶ 61,053 (2004). This order was issued pursuant to
FPA section 311, which authorizes the Commission
to secure information necessary or appropriate as a
basis for recommending legislation. The
Commission submitted a report to Congress in
September 2004 that set forth the Commission’s
findings and recommendations, including the need
for mandatory, enforceable reliability rules.
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has held several workshops and
technical conferences to address
reliability issues including transition to
the NERC reliability standards, operator
tools, and reactive power.
8. Stakeholders in the electric utility
industry have also participated in
dialogues on the international
implications of the ERO and CrossBorder Regional Entities during three
public bilateral workshops held in the
United States and Canada. On August 9,
2005, the Federal-Provincial-Territorial
(FPT) Working Group in Canada and
DOE jointly submitted to the
Commission ‘‘Principles for an Electric
Reliability Organization that Can
Function on an International Basis’’
(bilateral principles) based on these
stakeholder dialogues 8 A number of
bilateral principles are incorporated into
the NOPR, and the Commission asks
questions and seeks comment on the
bilateral principles. In this regard, we
note that the Commission’s proposed
rule would allow the approved ERO or
a Cross-Border Regional Entity to take
appropriate steps to be recognized in
Mexico or Canada as embedded in the
principles. For example, in accordance
with section 215(c)(2)(E) of the FPA, we
expect the ERO and any Regional
Entities to take such steps as relevant
Mexican and Canadian authorities may
require to have standing in those
nations.9
C. Electric Reliability Legislation
9. Electric reliability legislation was
first proposed after issuance of the
September 1998 task force report,10 and
was a common feature of
comprehensive electricity bills since
that time. A stand-alone electric
reliability bill was passed by the Senate
unanimously in 2000.11 In 2001,
President Bush proposed making
electric Reliability Standards mandatory
and enforceable as part of the National
Energy Policy.12 On August 8, 2005, the
Electricity Modernization Act of 2005
8 A copy of these principles has been placed in
the public record of this docket. We invite
comments on these principles.
9 In addition, this proposed rule is consistent
with many of the other bilateral principles, such as
the requirement for the independence of the ERO’s
board; the requirement that all owners, users and
operators of the bulk-power system must comply
with approved reliability standards; and a number
of the suggested Enforcement Principles. Also, the
fact that the statute does not authorize the U.S.
Government to appoint members to the ERO’s board
is consistent with the bilateral principles. Similarly,
we propose to preclude Commission officials from
serving on the board.
10 See supra n. 3.
11 S. 2071, 106th Cong. (2000). An identical bill,
H.R. 4881, was not voted on by the House of
Representatives.
12 Report of the National Energy Policy
Development Group, May 2001, at p. 7–6.
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was enacted into law by President Bush.
This important new energy legislation
adds to the FPA a new provision which
buttresses the Commission’s efforts to
strengthen the reliability of the
interstate transmission grid.
Specifically, the new section 215 of the
FPA provides for a system of
mandatory, enforceable Reliability
Standards. Reliability Standards are to
be developed by the ERO, subject to
Commission review and approval; and,
once approved, standards may be
enforced by the ERO, subject to the
Commission’s review.
10. The statute directs the
Commission to issue a final rule to
implement the requirements of section
215 no later than 180 days after
enactment, or by February 5, 2006.
Below, we summarize the provisions of
Subtitle A of the Electricity
Modernization Act of 2005:
11. Section 215(a) defines relevant
terms used in the Act.
12. Section 215(b) (Jurisdiction and
Applicability) provides that, for
purposes of approving Reliability
Standards and enforcing compliance
with such standards, the Commission
shall have jurisdiction over the certified
ERO, any Regional Entities, and all
users, owners and operators of the bulkpower system, including but not limited
to the public and governmental entities
described in section 201(f) of the FPA.13
Section 215(b)(2) requires the
Commission to issue a final rule to
implement the requirements of the
section no later than 180 days after the
date of enactment.
13. Section 215(c) (Certification)
authorizes the Commission to certify a
person as an ERO, provided that the
applicant meets specified criteria.
14. Section 215(d) (Reliability
Standards) provides the process for the
ERO to propose Reliability Standards,
subject to Commission review and
approval. This subsection also directs
the Commission to adopt rules to
provide fair processes for the
identification and timely resolution of
any conflict between a Reliability
Standard and any function, rule, order,
13 Section 201(f) of the FPA, 16 U.S.C. 824(f), as
modified by Subtitle H, section 1291(c) of the
Energy Policy Act of 2005, states that ‘‘[n]o
provision in this Part shall apply to, or be deemed
to include, the United States, a state or any political
subdivision of a State, an electric cooperative that
receives financing under the Rural Electrification
Act of 1936 (7 U.S.C. 901 et seq.) or that sells less
than 4,000,000 megawatt hours of electricity per
year, or any agency, authority, or instrumentality of
any one or more of the foregoing, or any corporation
which is wholly owned, directly or indirectly, by
any one or more of the foregoing, or any officer,
agent, employee of any of the foregoing acting as
such in the course of his official duty, unless such
provision makes specific reference thereto.’’
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tariff, rate schedule, or agreement
accepted, approved, or ordered by the
Commission applicable to a
transmission organization.
15. Section 215(e) (Enforcement)
authorizes the ERO, after notice and
opportunity for hearing, to impose a
penalty for a violation of a Reliability
Standard; subject to review by the
Commission. This section also provides
for enforcement initiated by the
Commission on its own motion. This
subsection also requires that the
Commission issue regulations under
which the ERO will be authorized to
enter into an agreement to delegate
authority to a qualified Regional Entity
for the purpose of proposing Reliability
Standards to the ERO and enforcing
such standards. Further, section 215(e)
requires that any penalty imposed shall
bear a reasonable relation to the
seriousness of the violation and take
into consideration timely remedial
efforts.
16. Section 215(f) (Changes In Electric
Reliability Organization Rules) requires
Commission approval of any proposed
ERO rule or proposed rule change.
17. Section 215(g) (Reliability
Reports) requires that the ERO conduct
periodic assessments of the reliability
and adequacy of the North American
bulk-power system.
18. Section 215(h) (Coordination With
Canada and Mexico) urges the President
to negotiate international agreements
with the governments of Canada and
Mexico to provide for effective
compliance with Reliability Standards
and the effectiveness of the ERO in the
United States and Canada or Mexico.
19. Section 215(i) (Savings Provisions)
states that the ERO shall have authority
to develop and enforce compliance with
Reliability Standards for only the bulkpower system and makes clear that
section 215 of the FPA shall not be
construed to preempt 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 inconsistent with
any Reliability Standard.
20. Section 215(j) (Regional Advisory
Bodies) requires the Commission to
establish Regional Advisory Bodies
upon petition of at least 2⁄3 of the states
within a region that have more than 1⁄2
of their electric load served within the
region; such Regional Advisory Bodies
may provide advice to the ERO, a
Regional Entity, or the Commission.
21. Section 215(k) (Application to
Alaska and Hawaii) provides that
section 215 of the FPA does not apply
to Alaska or Hawaii.
22. Subtitle A of the Electricity
Modernization Act of 2005 also includes
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53119
two reliability-related provisions that
are not part of new section 215 of the
FPA. First, section 1211(b) of the Act
provides that the ERO certified by the
Commission as well as Regional Entities
are not departments, agencies or
instrumentalities of the United States
Government. Second, section 1211(c)
provides that federal agencies
responsible for approving access to
electric transmission or distribution
facilities located on lands within the
United States shall, in accordance with
applicable law, expedite any federal
agency approvals that are necessary to
allow the owners or operators of such
facilities to comply with a Commissionapproved Reliability Standard that
pertains to vegetation management,
electric service restoration, or resolution
of situations that imminently endanger
the reliability or safety of the facilities.
III. Discussion
A. The Commission’s Reliability
Proposal
23. The Commission’s proposed
reliability regulation is entitled, Rules
Concerning Certification of the Electric
Reliability Organization; and
Procedures for the Establishment,
Approval and Enforcement of Electric
Reliability Standards. The proposed
regulation is generally limited to
developing and implementing the
processes and procedures that section
215 of the FPA directs the Commission
to develop and undertake with regard to
the formation and functions of the ERO
and Regional Entities. Section 215(b)
obligates all users, owners and operators
of the bulk-power system to comply
with Reliability Standards that become
effective pursuant to the processes set
forth in the statute. The complete text of
the proposed rule is provided in the
Attachment to this notice of proposed
rulemaking (NOPR).
24. The proposed regulation is
organized into twelve sections:
Section 38.1—Definitions;
Section 38.2—Jurisdiction and
Applicability;
Section 38.3—Electric Reliability
Organization Certification;
Section 38.4—Approval of Reliability
Standards;
Section 38.5—Enforcement of
Reliability Standards;
Section 38.6—Enforcement of
Commission Rules and Orders;
Section 38.7—Delegation of Certain
Electric Reliability Organization
Authority to Regional Entities;
Section 38.8—Changes in Electric
Reliability Organization Rules and
Regional Entity Rules;
Section 38.9—Process for Resolution of
Conflicts With a Reliability Standard;
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Section 38.10—Procedures for
Establishment and Recognition of
Regional Advisory Bodies;
Section 38.11—Reliability Reports;
Section 38.12—Review of State Action,
and
Section 38.13—Funding of the Electric
Reliability Organization.
B. Summary of the Commission’s
Reliability Rule Proposal
1. Definitions—Section 38.1
25. Section 38.1 of the proposed
regulations defines relevant terms used
in the Act. Each definition is based on
a corresponding definition contained in
section 215 of the FPA, except as
otherwise noted.
26. The term ‘‘Bulk-Power System’’
means facilities and control systems
necessary for operating an
interconnected electric energy
transmission network (or any portion
thereof), and electric energy from
generating facilities needed to maintain
transmission system reliability. The
term does not include facilities used in
the local distribution of electric energy.
27. The term ‘‘Cross-Border Regional
Entity’’ means a Regional Entity for
which the size and scope includes a
portion of Canada or Mexico.
28. The term ‘‘Cybersecurity Incident’’
means a malicious act or suspicious
event that disrupts, or was an attempt to
disrupt, the operation of those
programmable electronic devices and
communications networks including
hardware, software and data that are
essential to the Reliable Operation of the
Bulk-Power System.
29. The term ‘‘Electric Reliability
Organization’’ or ‘‘ERO’’ means the
organization certified by the
Commission the purpose of which is to
establish and enforce Reliability
Standards for the Bulk-Power System,
subject to Commission review.
30. The legislation distinguishes
between the terms ‘‘Reliability
Standards’’ and ‘‘rules.’’ The former
refers to Commission-approved,
substantive standards that provide for
Reliable Operation of the Bulk-Power
System. In contrast, ‘‘rules’’ refer to the
internal procedures of the ERO or any
particular Regional Entity. Accordingly,
to maintain this distinction, the
Commission proposes the following
definition of the term ‘‘ERO Rules’’ for
purposes of this NOPR: the bylaws,
rules of procedure and other
organizational rules and protocols of the
ERO. The Commission proposes to
define the term ‘‘Regional Entity Rules’’
as the bylaws, rules of procedure and
other organizational rules and protocols
of a Regional Entity.
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31. The term ‘‘Interconnection’’
means a geographic area in which the
operation of Bulk-Power System
components is synchronized such that
the failure of one or more of such
components may adversely affect the
ability of the operators of other
components within the system to
maintain Reliable Operation of the
facilities within their control.
32. The term ‘‘Regional Advisory
Body’’ is used in the statute but not
defined. For purposes of our
regulations, the Commission proposes to
define the term as follows: an entity
established upon petition to the
Commission pursuant to section 215(j)
of the FPA that is organized to advise
the ERO, a Regional Entity, or the
Commission regarding certain
reliability-related matters in accordance
with section 38.9 of the proposed
regulation.
33. The term ‘‘Regional Entity’’ means
an entity having enforcement authority
pursuant to section 38.6 of the proposed
regulation.
34. The term ‘‘Reliable Operation’’
means operating the elements of the
Bulk-Power System within equipment
and electric system thermal, voltage,
and stability limits so that instability,
uncontrolled separation, or cascading
failures of such system will not occur as
a result of a sudden disturbance,
including a Cybersecurity Incident, or
unanticipated failure of system
elements.
35. The term ‘‘Reliability Standard’’
means a requirement, approved by the
Commission under the instant proposed
regulation, to provide for Reliable
Operation of the Bulk-Power System.
The term includes requirements for the
operation of existing Bulk-Power
System facilities, including
cybersecurity protection, and the design
of planned additions or modifications to
such facilities to the extent necessary to
provide for Reliable Operation of the
Bulk-Power System. The term does not
include any requirement to enlarge such
facilities or to construct new
transmission capacity or generation
capacity.
36. The term ‘‘Transmission
Organization’’ means an RTO, ISO,
independent transmission provider, or
other Transmission Organization finally
approved by the Commission for the
operation of transmission facilities.
2. Jurisdiction and Applicability—
Section 38.2
37. Proposed regulation section 38.2
provides for Commission jurisdiction
over the ERO, any Regional Entities, and
all users, owners and operators of the
Bulk-Power System within the United
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States (other than Alaska and Hawaii)
including, but not limited to, the
entities described in section 201(f) of
the FPA, for the purposes of approving
and enforcing Reliability Standards
established by the Commission in
accordance with this new regulation.
3. Electric Reliability Organization
Certification—Section 38.3
38. Proposed regulation section 38.3
provides that any person may submit an
application to the Commission for
certification as the ERO within sixty
(60) days following the issuance of a
new final regulation. This provision
provides for the Commission to certify
one applicant as the ERO, if the
Commission determines such applicant
meets certain criteria. Paragraph (b)(1)
of proposed section 38.3 provides that
the applicant must demonstrate that it
has the ability to develop and enforce
Reliability Standards that provide for an
adequate level of reliability of the BulkPower System.
39. The Commission interprets
section 215 of the FPA to mean that an
ERO certified by the Commission shall
comply with the certification criteria on
an ongoing basis, and that a violation of
the certification criteria constitutes a
violation of the FPA. Accordingly, as
discussed below with respect to section
38.6(a) and (b), the Commission will
conduct periodic compliance audits
and, if it finds a violation of the ERO
certification criteria, the Commission
may suspend the ERO’s certification or
decertify the ERO and solicit new
applications for ERO certification.
40. Section 38.3(b)(2) provides that
the applicant must document that it has
established rules that assure its
independence of the users, owners and
operators of the Bulk-Power System
while assuring stakeholder
representation in the selection of its
directors and balanced decisionmaking
in any ERO committee or subordinate
organizational structure. Pursuant to
section 215(c)(2)(B) of the FPA, section
38.3(b)(2)also provides that such ERO
rules allocate equitably reasonable dues,
fees and charges among end users for all
activities under this new reliability
regulation. Section 38.3(b)(2) further
provides that such ERO rules are to be
fair and impartial procedures for
enforcement of Reliability Standards
through the imposition of penalties,
including limitations on activities,
functions or operations, or other
appropriate sanctions.
41. In addition, section 38.3(b)(2)
provides that such ERO rules are to
provide for reasonable notice and
opportunity for public comment, due
process, openness, and balance of
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interests in developing Reliability
Standards, and otherwise exercising its
duties. Paragraph (b)(2) of proposed
section 38.3 provides that such ERO
rules must include appropriate steps,
after certification by the Commission as
the ERO, to gain recognition in Canada
and Mexico.
42. Paragraph (c) of section 38.3
requires an ERO certified by the
Commission to periodically submit to
the Commission an application to be
recertified as the ERO. We seek
comments on what would constitute a
reasonable length of time for such
periodic certification to be effective. For
example, is a five-year certification
period appropriate? How far in advance
should an ERO be required to submit its
application for recertification before its
current certification period expires?
43. In addition to seeking comment on
the above proposal, we seek comments
on whether the term ‘‘end users’’ should
be defined for purposes of the ERO’s
equitable allocation of reasonable dues,
fees and charges among end users?
Should ‘‘end users’’ be defined as
customers using net energy for load?
Should the term ‘‘end users’’ be defined
in terms of those who directly or
indirectly use the transmission system
since ‘‘Bulk-Power System’’ is defined
to exclude facilities used in local
distribution of electric energy? Should
‘‘end users’’ be limited to entities
transmitting electricity through the
transmission facilities of others? Or,
might ‘‘end users’’ include the
transmission facility owners and
operators whose businesses depend on
the reliable operations of the
interconnected Bulk-Power System?
4. Approval of Reliability Standards—
Section 38.4
44. Paragraph (a) of proposed
regulation section 38.4 provides that the
ERO must consider and develop
Reliability Standards and modifications
to be applicable to the entire BulkPower System or a particular region or
Interconnection. The ERO shall file each
Reliability Standard or modification to a
Reliability Standard that it proposes to
be made effective under this section
with the Commission. The ERO’s filing
shall state the purpose of the standard
and a summary of its development.
45. Section 215(d)(2) of the FPA
requires that the Commission give due
weight to the technical expertise of the
ERO with respect to the content of a
proposed Reliability Standard or
modification to a Reliability Standard.
Likewise, the statute requires that the
Commission give due weight to the
technical expertise of a Regional Entity
organized on an Interconnection-wide
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basis with respect to a Reliability
Standard to be applicable within that
Interconnection. Further, section
215(d)(3) of the FPA provides for a
rebuttable presumption that a Reliability
Standard or a modification to a
Reliability Standard to be applicable on
an Interconnection-wide basis is just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest, if such proposal is from a
Regional Entity organized on an
Interconnection-wide basis.
46. The statute, however, is silent
regarding deference to Regional Entities
not organized on an Interconnectionwide basis. Accordingly, the
Commission interprets sections
215(d)(2) and (3) as not requiring the
Commission to give due weight to the
technical determinations of Regional
Entities not organized on an
Interconnection-wide basis or creating a
presumption with regard to the
reasonableness of any Reliability
Standard proposed by such Regional
Entities for consideration by the ERO. In
addition, the Commission expects a
greater level of uniformity among
Reliability Standards approved for
Regional Entities not organized on an
Interconnection-wide basis.
47. Paragraph (b) provides that that
the Commission may approve by rule or
order a proposed Reliability Standard or
a modification to a Reliability Standard
if it determines that the standard is just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest. The Commission generally
anticipates that it will provide notice
and opportunity for hearing of any
proposed Reliability Standard or a
modification to a Reliability Standard.
The Commission shall give due weight
to the technical expertise of the ERO
with respect to the content of a
proposed Reliability Standard or
modification to a Reliability Standard
and give due weight to the technical
expertise of a Regional Entity organized
on an Interconnection-wide basis with
respect to a Reliability Standard to be
applicable within that Interconnection.
48. Proposed Section 38.4(b)(3)
provides that the Commission will not
defer to the ERO or a Regional Entity
with respect to the effect of a Reliability
Standard or modification to a Reliability
Standard on competition. How should
the Commission define ‘‘competition’’
in this context? Commenters are asked
to provide examples regarding the effect
of a Reliability Standard on
competition.
49. Paragraph (c) provides that an
approved Reliability Standard or a
modification to a Reliability Standard
shall take effect as approved by the
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Commission. Paragraph (d) provides
that the ERO shall rebuttably presume
that a proposal from a Regional Entity
organized on an Interconnection-wide
basis for a Reliability Standard or a
modification to a Reliability Standard to
be applicable on an Interconnectionwide basis is just, reasonable, not
unduly discriminatory or preferential,
and in the public interest, if such
proposal is from a Regional Entity
organized on an Interconnection-wide
basis.
50. Consistent with section 215(d)(4)
of the FPA, paragraph (e) of proposed
regulation section 38.4 provides that the
Commission shall remand to the ERO
for further consideration a proposed
Reliability Standard or modification to a
Reliability Standard that the
Commission disapproves in whole or
part.
51. Paragraph (f) provides that the
Commission may, upon its own motion
or a complaint, order the ERO to submit
a proposed Reliability Standard or
modification to a Reliability Standard
that addresses a specific matter if the
Commission considers such a new or
modified Reliability Standard
appropriate to carry out section 215 of
the FPA.
52. Paragraph (g) provides that the
Commission may, upon its own motion
or complaint, review a previouslyapproved Reliability Standard. If, after
notice and opportunity for hearing, the
Commission determines that the
Reliability Standard, or any provision of
the Reliability Standard, no longer
meets the statutory (and regulatory)
standard for approval of Reliability
Standards, i.e., it is found to be unjust
or unreasonable, unduly discriminatory
or preferential, or not in the public
interest, the Commission may remand it
to the ERO or the relevant Regional
Entity. The statute allows us to order the
ERO to submit a modification to a
Reliability Standard, and we construe
this authority as allowing a remand of
a previously-approved Reliability
Standard.
53. Because the Commission’s options
are limited by FPA section 215 to either
accepting or remanding a proposed
Reliability Standard, the Commission is
concerned that, while a circumstance
may arise where it is necessary to
remand a proposed Reliability Standard
to the ERO, this may result in a period
of time in which there is no mandatory,
enforceable standard in place for a
particular area of bulk system reliability.
Accordingly, to minimize this
possibility, paragraph (h) provides that
the Commission, when remanding a
Reliability Standard, may state a
deadline by which the ERO must
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resubmit the proposed Reliability
Standard with revisions that address the
reasons for the remand. Failure to meet
such a deadline would constitute a
violation of the FPA.
54. In addition to seeking comment on
the above proposal, the Commission
seeks comment on whether the
Commission has authority to void a
previously-accepted Reliability
Standard. If the Commission has such
authority, is it beneficial to have such a
provision in the Commission’s
regulations?
55. Section 215(d) of the FPA and
proposed regulation section 38.4
provide that the Commission may
approve a proposed Reliability Standard
or modification to a proposed Reliability
Standard if it determines that the
standard is ‘‘just, reasonable, not unduly
discriminatory or preferential, and in
the public interest.’’ The Commission
seeks comment on how this standard
should be applied in the context of
reviewing proposed Reliability
Standards.
56. We note that the bilateral
principles specify that membership in
the ERO should not be a condition for
participation in the ERO’s reliability
development process. We seek
comments on whether membership in
the ERO or a Regional Entity should not
be a condition for participation in the
ERO’s or a Regional Entity’s standards
development processes.
57. The Commission notes that the
bilateral principles include a provision
that if a standard is remanded by a
regulatory authority, the ERO should
notify all relevant regulatory authorities
and should work to ensure that all
concerns of such regulatory authorities
are addressed prior to resubmission of
the standard to the Commission and
authorities in Canada. (1) Should the
proposed rule specify this process? (2)
What are the implications of the remand
by a Canadian authority of a Reliability
Standard that has been approved by the
Commission? Also, should the ERO
certification criteria specify that the
number of board members representing
each participating country in the ERO,
and the opportunities for each country
to have an equitable number of members
on all committees, must be in rough
proportion to total load?
5. Enforcement of Reliability
Standards—Section 38.5
58. Paragraph (a) of proposed
regulation section 38.5 provides that the
ERO or a Regional Entity meeting the
requirements of section 215(e)(4)(A), (B)
and (C) may impose, subject to
paragraph (d), a penalty on a user,
owner or operator of the Bulk-Power
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System for a violation of a Reliability
Standard approved by the Commission
if the ERO or the Regional Entity, after
notice and opportunity for hearing,
finds that the user, owner or operator
has violated a Reliability Standard
approved by the Commission and files
notice and the record of the ERO’s or the
Regional Entity’s proceeding with the
Commission.
59. Paragraph (b) provides that a
Regional Entity shall file notice with the
ERO of any enforcement action it takes.
Paragraph (c) provides that any notice of
an enforcement action, whether by the
ERO or a Regional Entity, shall consist
of the name of the entity against whom
the action was taken, and include
statements describing the enforcement
action and findings of fact with respect
to the act or practice that led to the
enforcement action, the sanction
imposed, the record of the proceeding
and other relevant matters.
60. Paragraph (d) provides that a
penalty imposed under paragraph (a)
may take effect not earlier than the
thirty-first (31st) day after the ERO files
with the Commission notice of penalty
and the record of the proceedings. Such
penalty shall be subject to review by the
Commission, either on its own motion
or upon application by the user, owner
or operator of the Bulk-Power System
that is the subject of the penalty filed
within thirty (30) days after the date
such notice is filed with Commission. If
the review process is not initiated
during the 30-day period, the
enforcement action will be confirmed by
operation of law.
61. Paragraph (d) also provides that an
application to the Commission for
review, or the initiation of review by the
Commission on its own motion, shall
not operate as a stay of such penalty
unless the Commission otherwise 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 (a),
the Commission, after notice and
opportunity for hearing (which hearing
may consist solely of the record before
the ERO and the opportunity for the
presentation of supporting reasons to
affirm, modify, or set aside the penalty),
shall by order affirm, set aside or modify
the penalty and, if appropriate, remand
to the ERO for further proceedings.
62. Section 215(e) of the FPA as well
as proposed section 38.5 of our
regulations regarding enforcement of
Reliability Standards provides for
public notice and opportunity for a
hearing with respect to both the ERO (or
Regional Entity) enforcement
proceedings and proceedings before the
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Commission involving review of a
proposed penalty. Paragraph (d)(8) of
proposed section 38.5 would provide a
limited exception to this notice
requirement and allow non-public
proceedings for enforcement actions
that involve a Cybersecurity Incident,
unless the Commission determines on a
case-by-case basis that such protection
is not necessary. The Commission has in
place procedures to prevent the
disclosure of sensitive information, such
as the use of protective orders and rules
establishing critical energy
infrastructure information (CEII).
However, the Commission believes that
the specific, limited area of
Cybersecurity Incidents requires
additional protections because it is
possible that system security and
reliability would be further jeopardized
by the public dissemination of
information involving incidents that
compromise the cybersecurity system of
a specific user, owner or operator of the
Bulk-Power System. The specific user,
owner or operator would be notified of
the enforcement action and provided an
opportunity for a hearing. The
Commission believes that this will
provide acceptable due process to the
specific owner, user or operator while
preventing a further compromise in
reliability.
63. The Commission seeks comment
on this proposal and, in addition, seeks
comment on (1) whether the proposal
provides sufficient due process and (2)
the identification of other specific
events that should be subject to nonpublic hearing procedures.
64. Further, section 215(e)(2) of the
FPA directs the Commission to
implement expedited hearing
procedures for the review of penalties
imposed by the ERO or Regional
Entities. Accordingly, paragraph (d),
subparagraphs (5) through (7), set forth
expedited procedures for Commission
review of penalties.
65. Paragraph (e) of proposed
regulation section 38.5 provides that, on
its own motion or upon complaint, the
Commission may order compliance with
a Reliability Standard and may impose
a penalty against a user, owner or
operator of the Bulk-Power System, if
the Commission finds, after notice and
opportunity for hearing, that the user,
owner or operator of the Bulk-Power
System has engaged or is about to
engage in any acts or practices that
constitute or will constitute a violation
of a Reliability Standard.
66. Paragraph (f) provides that any
penalty imposed for the violation of a
Reliability Standard shall bear a
reasonable relation to the seriousness of
the violation and shall take into
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consideration efforts of such user,
owner or operator of the Bulk-Power
System to remedy the violation in a
timely manner. The Commission
believes that the imposition of penalties
should not be limited to monetary
penalties and may include limitations
on activities, functions, operations, or
other appropriate sanctions, including
the establishment of a publicly available
reliability watch list composed of major
violators. Monetary penalties shall be
paid in a timely manner. The
Commission may also consider
intensive compliance audits for entities
that have a high incidence of violations
or whose violations are serious or the
installation of Commission staff onsite
to monitor entities that have a high
incidence of violations or whose
violations are particularly serious.
67. In order that the Commission is
able to perform its oversight function
with regard to Reliability Standards that
are proposed by the ERO and
established by the Commission, it is
essential that the Commission receive
timely information regarding all
potential violations of Reliability
Standards. While section 215 of the FPA
contemplates the filing of the record of
an ERO or Regional Entity enforcement
action, the Commission needs
information regarding violations and
potential violations at or near the time
of occurrence. Accordingly, paragraph
(g) of proposed section 38.5 requires
that the ERO and all Regional Entities
have in place procedures to notify the
Commission of all violations and
potential violations of Reliability
Standards when the ERO or Regional
Entity first notifies the user, owner or
operator of the violation or potential
violation. Such procedures must be
submitted to the Commission within an
application for certification as the ERO
or an agreement to delegate authority to
a Regional Entity. The Commission
intends that notices of violations and
potential violations will be filed
electronically. All such reports of
violations and potential violations shall
include the entity’s name, when the
violation or potential violation
occurred, what standard was violated or
potentially violated, and the name of a
person knowledgeable about the
violation or potential violation to serve
as a point of contact to provide the
Commission with further details on the
matter, as they develop, on an ongoing
basis. The Commission will provide
more details on the format of such
electronic filings in the final rule.
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Enforcement and Penalty Questions for
Public Comment
68. In addition to comment on the
above proposed rules, the Commission
seeks comment on a number of
enforcement and penalty issues. The
ERO’s and Regional Entities’
enforcement role under new section 215
of the FPA is similar in some ways to
the enforcement roles of existing selfregulatory organizations (SROs). For
example, the National Association of
Securities Dealers (NASD) and the
National Futures Association (NFA),
and securities and commodities
exchanges, such as the New York Stock
Exchange (NYSE), New York Mercantile
Exchange (NYMEX), and the Chicago
Board of Trade (CBOT), are SROs in the
securities and commodities industries
that are experienced in the enforcement
of standards, assessment of penalties,
and have penalty appeal processes, as
summarized below.
69. In general terms, individuals or
firms doing securities business with the
American public must register with
NASD. Similarly, all persons and
organizations that intend to do business
as futures professionals must register
with the NFA under the Commodity
Exchange Act. The National
Adjudicatory Council (NAC), the
adjudicatory body of the NASD, has
established the NASD Sanction
Guidelines that provide direction for
adjudicators in imposing sanctions
consistently and fairly.14 The Sanction
Guidelines also provide for nonmonetary sanctions including:
suspensions, bars, and expulsions. The
NFA Compliance Rules also provide for
both monetary and non-monetary
sanctions, which may be imposed at the
conclusion of a disciplinary hearing or
appeal.15
70. The NYSE, NYMEX, NASD, and
the CBOT all have internal disciplinary
procedures and rules, including the
right to appeal a disciplinary decision.16
14 Depending on the violation, the Sanction
Guidelines provide for monetary sanctions up to
$100,000, and in certain egregious cases, the NASD
may consider a monetary sanction in excess of
$100,000. Schedule A to the Sanction Guidelines
specifies that violations are generally not subject to
non-monetary sanctions when monetary sanctions
of $5,000 or less are imposed.
15 The NFA Compliance rules provide for
monetary fines not to exceed $250,000 per violation
and the following non-monetary penalties:
expulsion or suspension for a specified period from
NFA membership; bar or suspension for a specified
period from association with an NFA Member;
censure or reprimand; order to cease and desist; and
any other fitting penalty or remedial action not
inconsistent with the NFA Compliance rules.
16 See NASD Rule 9311: Appeal by Any Party;
NYSE Rule 476: Disciplinary Proceedings Involving
Charges Against Members, Member Organizations,
Allied Members, Approved Persons, Employees, or
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53123
Following a plenary disciplinary
proceeding, the appellate processes at
the above-mentioned SROs are largely
the same. First, the respondent files a
notice of appeal to the SRO within a
specified time which stays any penalty
imposed pending the outcome of the
appellate review. Second the matter
goes before an appellate committee of
the SRO comprised of at least two
disinterested parties who evaluate the
decision, evidence and penalty. Third,
the appellate committee renders its
decision in writing. With the exception
of the CBOT, this decision is the final
determination of the SRO.17 Fourth, the
respondent may appeal the decision of
the appellate committee (the Board of
Directors in the case of CBOT) to the
relevant federal regulatory body. The
notice of appeal to the relevant
regulatory body does not act as a stay of
the complained of determination made
by the self-regulatory organization
unless the regulatory body otherwise
orders. Finally, following a review by
the relevant federal regulatory body, the
respondent may pursue an appeal in the
U.S. Courts of Appeals.
71. With the above discussion in
mind, the Commission invites public
comment on the following questions
regarding penalties or sanctions for
violations of reliability rules:
(1) What is the appropriate appeals
process, if any, of an ERO or Regional
Entity decision to impose a penalty?
Would it be appropriate for the ERO or
a Regional Entity with delegated
enforcement authority to adopt
enforcement, penalty and appeals
processes similar to the SRO processes
discussed above? Should appeals within
the ERO be allowed before appeal to the
Commission; should appeal of a penalty
imposed by a Regional Entity be taken
through the Regional Entity itself, with
further appeal to the Commission; or
should the appeal be through the ERO
in the first instance, then to the
Commission?
(2) Should the Commission approve a
penalty range or guidelines before the
ERO can levy any penalty or sanction
for violations, and, if so, should the
penalty range or guidelines for a
violation be submitted for Commission
approval at the same time that the
corresponding Reliability Standard is
submitted to the Commission for
approval?
Others; NYMEX, NYMEX.com: Exchange Rule
Book, Rule 8.13 Appeals; CBOT, Rules &
Regulations: Chapter 5 Disciplinary Proceedings,
540.05 Appeals from a Decision of a Disciplinary
Committee.
17 A CBOT appellate committee’s decision can be
appealed to the CBOT’s Board of Directors.
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(3) Should a single monetary penalty
be prescribed for a violation of a
particular standard or should a schedule
of monetary penalties be prescribed
from which to select at the time of an
infraction depending upon relevant
circumstances such as the number of
repeat offenses or length of time before
adequate corrections are made to bring
the violator into compliance?
(4) The Commission interprets section
316A of the FPA, as amended by
Congress in the Electricity
Modernization Act of 2005, as
establishing limits on monetary
penalties for violation of Reliability
Standards that may be imposed by the
ERO, Regional Entities and the
Commission. The Commission seeks
comment on this interpretation.
(5) Paragraph (d)(1) of proposed
section 38.5 provides that the
Commission will review a penalty on its
own motion, or upon application of the
entity that is the subject of the penalty.
Should the Commission determine by
rulemaking that certain categories of
penalties should be automatically
subject to Commission review? For
example, should penalties above a
certain dollar threshold automatically
require Commission review?
(6) What types of nonmonetary
penalties, if any, are appropriate?
(7) Who should receive, and what
should be done with monies collected
as monetary penalties? Should the
monetary penalties collected by the ERO
or Regional Entity be used to defray the
cost of its enforcement program, or
allocated to some other use? Would
allowing the ERO or Regional Entity to
use penalty money to fund an
enforcement program create an
appearance of impropriety?
(8) The Commission notes that the
bilateral principles include a provision
calling for rigorous audits by the ERO
and Regional Entities to ensure the
capability to comply with and actual
compliance with the Reliability
Standards. The bilateral principles also
provide for the ERO to take steps to
ensure that auditors are properly trained
and that the same audit standards apply
to all audits conducted by the ERO and
Regional Entities. Should the proposed
rule specify these audits requirements
as part of the ERO certification
requirements and the Regional Entity
certification and delegation
requirements?
(9) The Commission notes that the
bilateral principles provide that RTOs
and ISOs should not become Regional
Entities, and that the Regional Entities
should be distinct from the operators of
the system, such as RTOs and ISOs.
Should the proposed rule mandate this?
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What are the enforcement implications
of an RTO or ISO that is a Regional
Entity? Are there ways for an RTO or
ISO to adequately separate its
enforcement function from its
ownership, use or operation of the BulkPower System to fully ensure the
independence of the enforcement unit?
What process should such an
enforcement unit follow to insulate
itself from its RTO or ISO organization
so that it may undertake any
enforcement actions that become
necessary against the RTO or ISO? How
would this comport with the
requirements of section 215 of the FPA?
(10) Paragraph (e) of proposed section
38.5 states that the Commission may
order compliance with a Reliability
Standard and may impose a penalty if
the Commission finds that the user,
owner or operator of the Bulk-Power
System has engaged or is about to
engage in any acts or practices that
constitute or will constitute a violation
of a Reliability Standard. Should the
Commission clarify in the rule that, in
a situation where an entity is about to
engage in an act that will constitute a
violation of a Reliability Standard,
Commission action will be in the form
of a compliance order with the goal of
preventing the violation from occurring;
and further clarify that an entity that has
engaged in an actual violation may be
subject to both penalties and a
compliance order? Are there situations
that may warrant penalties where an
entity is about to engage in activity that
would violate a Reliability Standard but
the activity was ultimately averted?
(11) Paragraph (g) of proposed section
38.5 requires that the ERO and all
Regional Entities have in place
procedures to notify the Commission of
all violations and potential violations of
Reliability Standards when the ERO or
Regional Entity first notifies the user,
owner or operator of the violation or
potential violation. We seek comment
on what confidentiality protections may
be needed, particularly with regard to
potential violations. For example, the
Commission currently maintains
confidential protection of other types of
enforcement-related investigations
pursuant to section 1b or our
regulations, 18 CFR 1b (2005). Are
similar protections needed here?
72. The Commission recognizes that
the Nuclear Regulatory Commission
(NRC) has developed a nuclear power
plant assessment program to enable it to
arrive at objective conclusions about a
licensee’s safety performance. The
NRC’s assessments of plant performance
are based on inspections, as well as
analysis of certain performance
indicators reported by the licensees.
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With this information, the NRC assigns
each plant to one of five categories in an
Action Matrix. A plant’s position in the
Action Matrix determines the NRC’s
response, which may include actions
ranging from performing supplemental
inspections, to meeting with
management, to ordering a plant to be
shut down. A summary of the Action
Matrix is posted on the NRC website
and is updated quarterly. In addition,
the NRC communicates its assessment
of plant performance in letters to
licensees, typically semi-annually.
These letters are also posted on the
NRC’s website. The Commission seeks
comment on the feasibility and
appropriateness of adopting a reliability
assessment program similar to the
NRC’s nuclear power plant assessment
program. Also, should the Commission
establish a reliability watch list modeled
on the NRC’s Action Matrix? What
features of the NRC program should the
Commission adopt? What other features
might be added?
73. The Commission also recognizes
that the nuclear electric utility industry
has formed the Institute of Nuclear
Power Operations (INPO). The INPO is
a technical organization whose mission
is to promote the highest levels of safety
and reliability—to promote excellence—
in the operation of nuclear electric
generating plants.18 All U.S. utilities
that operate commercial nuclear power
plants are members of the INPO. The
INPO complements the regulatory role
of the NRC by providing a technical
forum for the industry to collectively
ensure reliable and safe nuclear
operations. The INPO’s programs
include an information sharing network,
an equipment failure database, a
national academy for nuclear training,
events analysis, accreditation,
operations evaluations, and monitoring
of performance indicators. The
Commission asks commenters to discuss
which aspects of the INPO’s programs
would serve as useful models for the
ERO. What lessons can be drawn from
INPO’s complementary role with the
NRC?
6. Enforcement of Commission Rules
and Orders—Section 38.6
74. Paragraph (a) of section 38.6
provides that the Commission may take
such action as is necessary and
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. The first clause of this
provision tracks section 215(e)(5) of the
FPA. In addition, paragraph (a) states
18 See http://www.eh.doe.gov/inpo/.
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that the possible remedial action taken
pursuant to this provision includes, but
is not limited to, suspension or
rescission of the ERO’s certification or a
Regional Entity’s delegation of
authority, and violations of the FPA
may mean possible imposition of civil
penalties. Entities will be provided
notice and opportunity for comment
before the Commission takes such
remedial action.
75. Paragraph (b) of proposed section
38.6 provides that the Commission will
periodically audit and review the ERO’s
and Regional Entities’ compliance with
the statutory and regulatory criteria for
certification and delegation of functions,
respectively.
76. What mechanism of review and
methods of oversight should be used to
assure the Commission that the ERO or
a Regional Entity is meeting its
responsibilities for monitoring
compliance with the Reliability
Standards?
77. With respect to any monetary
penalties levied directly by the
Commission against the ERO or a
Regional Entity for violation of the FPA,
should the ERO or a Regional Entity be
able to recover such penalties through
dues, fees, or other charges?
78. Section 215(e)(5) of the FPA
provides that, ‘‘[t]he Commission may
take such action as is necessary or
appropriate against the ERO or a
Regional Entity to ensure compliance
with a Reliability Standard or any
Commission order affecting the ERO or
Regional Entity.’’ Since the ERO and
Regional Entity provisions of the
Electricity Modernization Act of 2005
are modeled on the SRO provisions of
the securities law, and under those
provisions, the Securities and Exchange
Commission can impose monetary and
nonmonetary penalties on SRO board
members, should the Commission adopt
the same approach with respect to the
board members of the ERO and Regional
Entities?
7. Delegation of Certain Electric
Reliability Organization Authority to
Regional Entities—Section 38.7
79. Paragraph (a) of proposed
regulation section 38.7 provides that the
ERO may 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 section
38.5. Paragraph (b) provides that a
delegation agreement shall not be
effective until it is approved by the
Commission. Paragraph (c) provides that
the ERO must file the delegation
agreement with the Commission for
approval. Such filing must also
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demonstrate that: the Regional Entity is
governed by an independent board, a
balanced stakeholder board, or a
combination independent and balanced
stakeholder board; the Regional Entity
otherwise satisfies the ERO certification
provisions of proposed regulation
section 38.3; and the agreement
promotes for effective and efficient
administration of Bulk-Power System
reliability.
80. The Commission interprets
Subtitle A as meaning the only
delegated authority a Regional Entity
would possess would be the authority to
enforce Reliability Standards approved
by the Commission in a specific region.
That interpretation is consistent with
section 215(a)(7). A Regional Entity may
also propose Reliability Standards to the
ERO, that, if ultimately approved by the
Commission, would become regional
variances in a specific region. Any such
regional variances would be ERO
variances, not Regional Entity
Reliability Standards, since it would be
the ERO, not the Regional Entity, that
submits the proposed Reliability
Standard to the Commission for its
review. The Commission anticipates
that any such regional variances would
supplement ERO Reliability Standards,
not substitute for them. The
Commission seeks comment on this
interpretation.
81. The Commission interprets
section 215 of the FPA to mean that a
Regional Entity shall comply with the
relevant ERO certification and
delegation criteria on an ongoing basis,
and that a violation of the certification
or delegation criteria constitutes a
violation of the FPA. Accordingly, as
the Commission explained above with
respect to the ERO in section 38.6(a) and
(b), it will conduct periodic compliance
audits of the Regional Entities and, if it
finds a violation of the relevant ERO
certification as it applies to the Regional
Entities or the ERO delegation criteria,
the Commission may suspend a
Regional Entity’s certification or
delegation agreement, or decertify a
Regional Entity. In addition, the ERO
may petition the Commission or file a
complaint if it believes that a Regional
Entity is no longer in compliance with
the relevant ERO certification or
delegation criteria.
82. Paragraph (d) provides that the
Commission may modify such
delegation; however, the ERO and
Commission shall rebuttably presume
that a proposal 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.
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83. Paragraph (e) provides that, if an
entity seeking to enter into a delegation
agreement is unable within 180 days
after proposing a delegation agreement
to the ERO to reach an agreement with
the ERO, and it can demonstrate that
continued negotiations with the ERO
would not likely result in a delegation
agreement within a reasonable amount
of time, such entity may request that the
Commission assign the ERO’s authority
to enforce Reliability Standards within
a region to such entity. Paragraph (f)
requires that an approved Regional
Entity shall periodically submit to the
Commission an application to be reapproved as a Regional Entity.
84. In addition to seeking comments
on the rules relating to the delegation of
ERO authority to Regional Entities
discussed above, the Commission seeks
comment on the following related
issues:
(1) Should the Commission prescribe
a size, scope, or configuration
requirement for the Regional Entities?
And, if so, what should it be?
(2) What is the role of the Regional
Entities in relationship to the ERO?
(3) Beyond enforcement and the
proposal of Reliability Standards to the
ERO, what, if any, additional authority
should the Regional Entities be given?
(4) Should the ERO be required to
submit a standardized form of
delegation agreement concurrently with
the ERO application that would
delineate a uniform relationship
between the ERO and all Regional
Entities or should delegation agreements
be tailored to the individual needs and
circumstances of each region and the
ERO and submitted for approval as they
are executed by the parties?
(5) To what extent should the ERO,
when delegating responsibility to
Regional Entities, require uniform
processes in matters including, but not
limited to, governance, collection of
dues and fees, compliance monitoring,
and enforcement action procedures?
(6) What role, if any, should the ERO
play in the approval or appeal of an
enforcement action undertaken by a
Regional Entity?
(7) What, if any, responsibility or
involvement should the ERO have with
regard to the funding of the Regional
Entities?
(8) Should the certification and
delegation criteria for a Cross-Border
Regional Entity specify that each
country represented in the region
should have the opportunity to have
members from the country on the board
of the Regional Entity in numbers that
reflect the country’s approximate
percentage of net energy for load in that
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region, similar to that provided in the
bilateral principles?
(9) Should the Commission set the
standard by which Regional Entity
applications to the ERO will be
reviewed or should the ERO be allowed
to determine this standard? Given that
section 215(e)(4) of the FPA requires
that the ERO and the Commission shall
rebuttably presume that a proposal for a
Regional Entity organized on an
Interconnection-wide basis promotes
effective and efficient administration of
bulk-power reliability, should a higher
standard apply to Regional Entities that
are not organized on an Interconnectionwide basis? What should the higher
standard specify? Should a Regional
Entity not organized on an
Interconnection-wide basis have the
burden to demonstrate that it has
appropriate regional scope and
configuration to promote effective and
efficient administration of Bulk-Power
System reliability?
(10) Paragraph (f) of section 38.7
requires a Regional Entity approved by
the Commission to periodically submit
to the Commission an application to be
re-approved as a Regional Entity. We
seek comments on what would
constitute a reasonable length of time
for such periodic re-approval to be
effective. For example, is a five-year
approval period appropriate? How far in
advance should a Regional Entity be
required to submit its application for reapproval before its current approval
period expires? What role, if any,
should the ERO have in the re-approval
process? Would the ERO have to
resubmit a delegation agreement?
(11) Section 215(e)(4) of the FPA and
proposed regulation section 38.7(c)(3)
require that the ERO, when filing a
delegation agreement, include a
statement demonstrating that the
agreement promotes effective and
efficient administration of Bulk-Power
System reliability. What standards,
guidelines, measures or criteria should
the Commission apply in determining
whether a delegation agreement
promotes effective and efficient
administration of Bulk-Power System
reliability? If the primary function of a
Regional Entity is enforcement of
Reliability Standards, in what ways will
Regional Entities bring effective and
efficient administration in the
enforcement function?
8. Changes in Electric Reliability
Organization Rules and Regional Entity
Rules—Section 38.8
85. Paragraph (a) of proposed
regulation section 38.8 provides that the
ERO shall file with the Commission for
approval any proposed ERO rule or rule
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change, accompanied by an explanation
of its basis and purpose. It also provides
that a Regional Entity shall submit a
Regional Entity Rule or rule change with
the ERO and, upon approval by the
ERO, the ERO shall file with the
Commission for approval of any
proposed Regional Entity Rule or rule
change accompanied by an explanation
of its basis and purpose. Paragraph (b)
provides that the Commission, upon its
own motion or complaint, may propose
changes to the rules of the ERO or a
Regional Entity.
86. Paragraph (c) provides that a
proposed ERO rule or rule change, or
Regional Entity rule or rule change,
shall take effect upon a finding by
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 section 38.3.
9. Process for Resolution of Conflicts
With a Reliability Standard—Section
38.9
87. Section 215(d)(6) of the FPA
requires that the Commission’s final
rule 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
accepted, approved, or ordered by the
Commission applicable to a
Transmission Organization. If a
participant in the ERO’s standards
development process perceives a
potential conflict, the participant should
inform the ERO of the potential conflict
to help assure that proposed standards
do not contain any such conflicts.
However, if any person believes that a
proposed standard that the ERO has
submitted to the Commission for
approval includes such a conflict, such
person should inform the Commission
of such conflict by intervening and
commenting in the Commission
proceeding to review the proposed
Reliability Standard.
88. If, after the Commission has
approved a Reliability Standard, a
Transmission Organization becomes
aware of a conflict between a Reliability
Standard and any function, rule, order,
tariff, rate schedule, or agreement
accepted, approved, or ordered by the
Commission applicable to such
Transmission Organization, the
Transmission Organization would be
required to utilize the process set forth
in this proposed regulation to resolve
the conflict. Specifically, paragraph (a)
of proposed regulation section 38.9
provides that, if a Transmission
Organization determines that a
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Reliability Standard may conflict with a
function, rule, order, tariff, rate
schedule, or agreement accepted,
approved, or ordered by the
Commission with respect to such
Transmission Organization, the
Transmission Organization shall
expeditiously notify the Commission,
the ERO and the relevant Regional
Entity of the conflict. If any person
believes that an approved Reliability
Standard includes such a conflict, such
person should notify the Commission of
such conflict.
89. Paragraph (b) provides that, unless
the Commission orders otherwise, after
notice and opportunity for hearing,
within sixty (60) days after the date that
a notice was filed, the Commission will
issue an order determining whether a
conflict does, in fact, exist. If the
Commission finds that there is a
conflict, it will seek to resolve the
conflict by either directing the
Transmission Organization to file a
modification to the conflicting function,
rule, order, tariff, rate schedule, or
agreement pursuant to section 206 of the
FPA (as set forth in the statute) or, if
appropriate, directing the ERO to
develop for Commission review a
proposed modification to the conflicting
Reliability Standard.
90. Paragraph (c) provides that, until
a determination is made by the
Commission and any ordered change
becomes effective, the Transmission
Organization shall continue to follow
the function, rule, order, tariff, rate
schedule, or agreement accepted,
approved, or ordered by the
Commission with respect to such
Transmission Organization.
91. The Commission seeks examples
of situations or areas of concern in
which commenters believe that conflicts
between reliability standards and
Transmission Organization tariffs exist
or may arise.
10. Procedures for Establishment and
Recognition of Regional Advisory
Bodies—Section 38.10
92. Paragraph (a) of proposed
regulation section 38.10 provides that
the Commission shall consider a
petition to establish a Regional Advisory
Body that is submitted by at least twothirds of the states within a region that
have more than one-half of their electric
load served within the region. Paragraph
(b) provides that a petition shall include
all organizational documents and a
statement that the Regional Advisory
Body is composed of one member from
each state in the region, appointed by
the governor of each state, and may
include representatives of agencies,
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states and provinces outside the United
States.
93. Paragraph (c) provides that a
Regional Advisory Body may provide
advice to the Commission, ERO or a
Regional Entity with respect to the
governance of an existing or proposed
Regional Entity within the same region;
whether a Reliability Standard proposed
to apply within the region is just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest; whether fees for all activities
under this section 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.
Paragraph (d) provides that the
Commission may give deference to the
advice of any such Regional Advisory
Body if it is organized on an
Interconnection-wide basis.
94. In addition to comment on the
proposed regulation discussed above,
the Commission seeks comment on the
scope of the term ‘‘region’’ as used in
section 38.10. In particular, should the
region represented by a Regional
Advisory Body correspond to that of an
existing or proposed Regional Entity?
11. Reliability Reports—Section 38.11
95. Paragraph (a) of section 38.11 of
the proposed regulations provides that
the ERO shall conduct periodic
assessments of the reliability and
adequacy of the Bulk-Power System in
North America. This first phrase of this
subsection tracks the statutory language
of section 215(g) of the FPA. In addition,
this subsection would set forth the
frequency of such periodic assessments
and identify the entities to which the
ERO must report the results of the
periodic assessments, including the
Commission, DOE, Regional Entities,
and Regional Advisory Bodies.
Paragraph (b) of this subsection would
require either annual or quarterly
reporting by the ERO and Regional
Entities on their enforcement actions
and the associated penalties assessed, in
a manner to be prescribed by the
Commission.
12. Review of State Action—Section
38.12
96. Consistent with section 215(i)(3)
of the FPA, paragraph (a) of proposed
regulation section 38.12 provides that
nothing in this regulation shall be
construed to preempt 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 inconsistent with
any reliability standard.
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97. Paragraph (b) of proposed
regulation section 38.12 provides that,
where a state takes action to ensure the
safety, adequacy and reliability of
electric service, the ERO, a Regional
Entity or other party may apply to the
Commission for an order determining
whether such state action is inconsistent
with a Reliability Standard. The
Commission will, after notice and
opportunity for hearing, and taking into
consideration any recommendation of
the ERO, issue a final order determining
the matter within ninety (90) days.
98. Paragraph (c) provides that the
Commission, after consultation with the
ERO and the state taking action, may
stay the effectiveness of the state action,
pending the Commission’s issuance of a
final order.
13. Funding of the Electric Reliability
Organization—Section 38.13
99. FPA section 215 does not contain
any specific requirements regarding the
mechanism for funding the ERO, other
than stating that the Commission may
certify an ERO if it determines that such
ERO, inter alia, has established rules
that ‘‘allocate equitably reasonable dues,
fees, and other charges among end users
* * *’’ (FPA section 215(c)(2)(B)). The
Commission believes that certainty
regarding the funding of the ERO is
essential for the stability and ultimate
success of the organization.
Accordingly, proposed section 38.13
provides requirements related to the
funding and budget oversight of the
ERO. In particular, paragraphs (a) and
(b) of proposed regulation section 38.13,
which are intended to make the ERO
accountable to the Commission for its
budget for activities within the United
States, provide that the ERO must file its
proposed annual budget for these
activities and supporting materials in
sufficient detail to justify the requested
funding requirement 130 days in
advance of the beginning of each fiscal
year, and the Commission, after public
notice and opportunity for comment,
shall issue an order accepting, rejecting
or remanding and modifying the
proposed ERO budget no later than sixty
(60) days in advance of the beginning of
the ERO’s fiscal year.
100. Paragraphs (c) and (d) of section
38.13 are intended to provide a
Commission-approved mechanism for
mandatory ERO funding. However,
rather than the Commission dictating a
funding mechanism, the NOPR would
allow an ERO applicant the discretion to
propose the funding mechanism for
Commission approval. Specifically,
paragraph (c) states that any person who
submits an application for certification
as the ERO must include a plan, formula
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53127
and/or methodology for the allocation
and assessment of ERO dues, fees and
charges; and the certified ERO may
subsequently file with the Commission
a request to modify the plan, formula
and/or methodology from time-to-time
in the ERO’s discretion. Paragraph (d)
provides that all entities within the
Commission’s jurisdiction as set forth in
section 215(b) of the FPA are required
to pay the ERO’s assessment of dues,
fees and charges in a timely manner
reasonably designated by the ERO.
101. Finally, paragraph (e) provides
that any person who submits an
application for certification as the ERO
may include a plan for a transitional
funding mechanism that would allow
such person, if certified as the ERO, to
continue existing operations without
interruption as it transitions from one
method of funding to another. The
maximum duration of any proposed
transitional funding mechanism is not
to exceed eighteen (18) months from the
date of certification.
102. The Commission notes that
NERC currently is funded based on ‘‘net
energy for load,’’ which represents the
aggregate annual energy consumption of
end use customers in a region, with
costs of certain programs and tools
which benefit only specific regions or
parties billed only to the beneficiaries of
the programs or tools. The Commission
believes that a funding method based on
net energy for load meets the standard
of section 215(c)(3) of the FPA and
would be appropriate for the allocation
and assessment of ERO dues, fees and
charges.
103. In addition to comments on the
proposed ERO funding regulations, the
Commission asks for comments on the
following questions:
(1) Should the proposed funding
requirements be extended to the
Regional Entities?
(2) The Commission notes the
bilateral principles include several
funding principles: (a) A principle
specifying that net energy for load
should be the primary basis upon which
the costs of the ERO are assigned and
that costs for one region or entity should
be directly assigned to that region or
entity; (b) a principle specifying that
funding mechanisms, budget direction
and budget levels should reflect
consultations with appropriate
stakeholders and authorities in each
country; and (c) a principle specifying
that the appropriate authorities in each
country should be responsible for
approving and ensuring cost recovery by
the ERO and Regional Entities within
their respective jurisdictions in a timely
manner. Should the proposed rule
address these types of funding-related
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details or should the ERO and CrossBorder Regional Entities have the
discretion to address these matters at a
later time?
14. Other Matters
104. While the Electricity
Modernization Act of 2005 can be read
to suggest a two-step process in which
an applicant will apply for ERO
certification and then submit proposed
Reliability Standards after certification
as the ERO, the Commission interprets
the statute as allowing an applicant to
simultaneously apply for ERO
certification and submit proposed
Reliability Standards for Commission
review. The Commission believes that a
one-step process would allow for
quicker implementation of Reliability
Standards. Although the Commission is
allowing an applicant to submit
multiple Reliability Standards at the
same time, the Commission interprets
section 215 of the FPA as allowing the
Commission to review each Reliability
Standard individually, rather than as a
package. Therefore, the Commission
interprets section 215 as allowing it to
reject or require modification of some
individual Reliability Standards while
at the same time affirming other
individual standards submitted
concurrently.
IV. Information Collection Statement
105. The Commission estimates the
number of applicants to be recognized
by the Commission under the proposed
rule as the single ERO or as a Regional
Entity as up to three (3) and up to eight
(8), respectively. As these entities are
select, special purpose entities of the
new federal law and do not yet exist, it
is not feasible to survey candidate
organizations to project the anticipated
burden of complying with the proposed
rule.
Title:
Action: Proposed Information
Collection.
OMB Control No: To be determined.
The applicant will not be penalized
for failure to respond to this information
collection unless the information
collection displays a valid OMB control
number or the Commission has
provided justification as to why the
control number should not be
displayed.
Respondents: Non-profit service
organizations.
Necessity of the Information: The
information collected from the ERO or
Regional Entities under the
requirements of FERC–725 is used by
the Commission to implement the
statutory provisions of section 215 of
the FPA and implemented by the
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Commission in the Code of Federal
Regulations under 18 Part 38. As noted
above, prior to the enactment of section
215 of the FPA under the Electricity
Modernization Act of 2005, the
Commission had acted primarily as an
economic regulator of wholesale power
markets and the interstate transmission
grid promoting a more reliable
electricity system by promoting regional
coordination and planning of the
interstate grid through ISOs and RTOs,
adopting transmission pricing policies
that provide price signals for the most
reliable and efficient operation and
expansion of the grid, and providing
pricing incentives at the wholesale level
for investment in grid improvements.
The Electricity Modernization Act of
2005 buttresses the Commission’s efforts
to strengthen the interstate transmission
grid through the grant of new authority
pursuant to section 215 of the FPA
which provides for a system of
mandatory reliability rules developed
by the ERO, established by the
Commission, and enforced by the
Commission, subject to Commission
review.
106. Section 215 of the FPA provides
that all users, owners and operators of
the Bulk-Power System are subject to
the jurisdiction of the Commission for
the purposes of approving Reliability
Standards and enforcing compliance
with such standards. However, the
NOPR is limited to developing and
implementing the processes and
procedures which section 215 of the
FPA directs the Commission to develop
and undertake with regard to the
formation and functions of the ERO and
Regional Entities.
Internal Review: The Commission has
reviewed these requirements pertaining
to the certification of an ERO, the
establishment of Reliability Standards
and Regional Entities and has
determined the proposed requirements
are necessary for the Commission to
meet the statutory provisions of the
Electricity Modernization Act of 2005.
These requirements conform to the
Commission’s plan for efficient
information collection, communication,
and management within the bulk power
system.
107. For submitting comments
concerning the collection of information
and the associated burden estimates,
please send your comments to: (1)
Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC
20426 [Attention: Michael Miller, Office
of the Executive Director, Phone (202)
502–8415, fax (202) 273–0873, e-mail:
michael.miller@ferc.gov] and (2) the
Office of Management and Budget
[Attention: Desk Officer for the Federal
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Energy Regulatory Commission, fax
(202) 395–7285, e-mail
oira_submission@omb.eop.gov].
V. Environmental Analysis
108. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.19 The Commission
concludes that neither an
Environmental Assessment or an
Environmental Impact Statement is
required for this NOPR pursuant to
section 380.4(a)(2)(ii) of the Commission
regulations, which provides a
‘‘categorical exclusion’’ for rules that do
not substantively change the effect of
legislation.20
VI. Regulatory Flexibility Act
Certification
109. The Regulatory Flexibility Act of
1980 (RFA) 21 requires that a rulemaking
contain either a description and analysis
of the effect that the proposed rule will
have on small entities or a certification
that the rule will not have a significant
economic impact on a substantial
number of small entities. However, the
RFA does not define ‘‘significant’’ or
‘‘substantial’’ instead leaving it up to an
agency to determine the impact of its
regulations on small entities.
110. In drafting this rule, the
Commission has followed the
provisions of both the RFA and the
Paperwork Reduction Act to consider
the potential impact of regulations on
small business and other small entities.
Specifically, the RFA directs agencies to
consider four regulatory alternatives to
lessen the impact on small entities:
Tiering or establishment of different
compliance or reporting requirements
for small entities; classification,
consolidation, clarification or
simplification of compliance and
reporting requirements; performance
rather than design standards; and
exemptions.
111. As noted above, the Electricity
Modernization Act of 2005 directs the
Commission to issue a final rule to
implement the requirements of section
215 of the FPA within 180 days after the
date of its enactment. In accordance
with this directive, the proposed rule is
intended to implement section 215 of
the FPA. In particular, the proposed rule
implements the statutory authority and
responsibilities assigned to the ERO,
19 Order No. 486, Regulations Implementing the
National Environmental Policy Act, 52 Fed. Reg.
47,897 (Dec. 17, 1987), FERC Stats. & Regs.,
Regulations Preambles 1986–1990 ¶ 30,783 (1987).
20 18 CFR 380.4(a)(2)(ii) (2005).
21 5 U.S.C. 601–12 (2000).
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Regional Entities, and Regional
Advisory Bodies within the United
States except Alaska and Hawaii. The
Electricity Modernization Act specifies
that the ERO and Regional Entities are
not departments, agencies or
instrumentalities of the United States
Government.
However, the ERO and Regional
Entities will not be like most other
businesses, profit or not-for-profit.
Congress created the concept of the ERO
and Regional Entities as the select,
special purpose entities that will
transition the oversight of Bulk-Power
System reliability from voluntary,
industry organizations to independent
organizations subject to Commission
jurisdiction and oversight. As such, the
ERO and Regional Entities should not be
considered a small entity under the
RFA. Accordingly, the proposed
reliability rule is not likely to impact
certain small entities.
VII. Comment Procedures
112. The Commission invites
interested persons to submit comments
on the matters and issues proposed in
this notice to be adopted, including any
related matters or alternative proposals
that commenters may wish to discuss.
Comments are due October 7, 2005.
Comments must refer to Docket No.
RM05–30–000, and must include the
commenter’s name, the organization
represented, if applicable, and the
commenter’s address. Comments may be
filed either in electronic or paper
format.
113. Comments may be filed
electronically via the eFiling link on the
Commission’s Web site at http://
www.ferc.gov. The Commission accepts
most standard word processing formats
and commenters may attach additional
files with supporting information in
certain other file formats. Commenters
filing electronically do not need to make
a paper filing. Commenters that are not
able to file comments electronically
must send an original and fourteen (14)
copies of their comments to: Federal
Energy Regulatory Commission, Office
of the Secretary, 888 First Street NE.,
Washington, DC 20426.
114. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this proposal are not required to
serve copies of their comments on other
commenters.
VIII. Document Availability
115. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
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interested persons an opportunity to
view and/or print the contents of this
document via the Internet through
FERC’s Home Page (http://www.ferc.gov)
and in FERC’s Public Reference Room
during normal business hours (8:30 a.m.
to 5 p.m. eastern time) at 888 First
Street, NE., Room 2A, Washington, DC
20426.
116. From the Commission’s Home
Page on the Internet, this information is
available in the Commission’s document
management system, eLibrary. The full
text of this document is available on
eLibrary in PDF and Microsoft Word
format for viewing, printing, and/or
downloading. To access this document
in eLibrary, type the docket number
excluding the last three digits of this
document in the docket number field.
117. User assistance is available for
eLibrary and the FERC’s Web site during
normal business hours. For assistance,
please contact FERC Online Support at
1–866–208–3676 (toll free) or 202–502–
6652 (e-mail at
FERCOnlineSupport@FERC.gov), or the
Public Reference Room at 202–502–
8371, TTY 202–502–8659 (e-mail at
public.referenceroom@ferc.gov).
List of Subjects in 18 CFR Part 38
Administrative practice and
procedure, Electric power, Electric
utilities, Reporting and recordkeeping
requirements.
By direction of the Commission.
Magalie R. Salas,
Secretary.
In consideration of the foregoing, the
Commission proposes to amend Chapter
I, Title 18, Code of Federal Regulations,
by adding Part 38 to read as follows:
PART 38—RULES CONCERNING
CERTIFICATION OF THE ELECTRIC
RELIABILITY ORGANIZATION; AND
PROCEDURES FOR THE
ESTABLISHMENT, APPROVAL, AND
ENFORCEMENT OF ELECTRIC
RELIABILITY STANDARDS
Sec.
38.1
38.2
38.3
Definitions.
Jurisdiction and Applicability.
Electric Reliability Organization
certification.
38.4 Approval of Reliability Standards.
38.5 Enforcement of Reliability Standards.
38.6 Enforcement of Commission Rules and
Orders.
38.7 Delegation of certain Electric
Reliability Organization Authority to
Regional Entities.
38.8 Changes in Electric Reliability
Organization Rules and Regional Entity
Rules.
38.9 Process for Resolution of Conflicts
With a Reliability Standard.
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38.10 Procedures for Establishment and
Recognition of Regional Advisory
Bodies.
38.11 Reliability Reports.
38.12 Review of State Action.
38.13 Funding of the Electric Reliability
Organization.
Authority: Section 215 of the Federal
Power Act.
§ 38.1
Definitions.
As used in this part:
Bulk-Power System means facilities
and control systems necessary for
operating an interconnected electric
energy transmission network (or any
portion thereof), and electric energy
from generating facilities needed to
maintain transmission system
reliability. The term does not include
facilities used in the local distribution
of electric energy.
Cross-Border Regional Entity means a
Regional Entity for which the size and
scope includes a portion of Canada or
Mexico.
Cybersecurity Incident means a
malicious act or suspicious event that
disrupts, or was an attempt to disrupt,
the operation of those programmable
electronic devices and communications
networks including hardware, software
and data that are essential to the
Reliable Operation of the Bulk-Power
System.
Electric Reliability Organization or
‘‘ERO’’ means the organization certified
by the Commission under § 38.3 the
purpose of which is to establish and
enforce Reliability Standards for the
Bulk-Power System, subject to
Commission review.
ERO Rules means, for purposes of this
section, the bylaws, rules of procedure
and other organizational rules and
protocols of the Electric Reliability
Organization.
Interconnection means a geographic
area in which the operation of BulkPower System components is
synchronized such that the failure of
one or more of such components may
adversely affect the ability of the
operators of other components within
the system to maintain Reliable
Operation of the facilities within their
control.
Regional Advisory Body means an
entity established upon petition to the
Commission pursuant to section 215(j)
of the FPA that is organized to advise
the Electric Reliability Organization, a
Regional Entity, or the Commission
regarding certain matters in accordance
with § 38.10.
Regional Entity means an entity
having enforcement authority pursuant
to section 38.7.
Regional Entity Rules means, for
purposes of this Part, the bylaws, rules
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of procedure and other organizational
rules and protocols of a Regional Entity.
Reliability Standard means a
requirement approved by the
Commission under this section, to
provide for Reliable Operation of the
Bulk-Power System. The term includes
requirements for the operation of
existing Bulk-Power System facilities,
including cybersecurity protection, and
the design of planned additions or
modifications to such facilities to the
extent necessary to provide for Reliable
Operation of the Bulk-Power System,
but the term does not include any
requirement to enlarge such facilities or
to construct new transmission capacity
or generation capacity.
Reliable Operation means operating
the elements of the Bulk-Power System
within equipment and electric system
thermal, voltage, and stability limits so
that instability, uncontrolled separation,
or cascading failures of such system will
not occur as a result of a sudden
disturbance, including a Cybersecurity
Incident, or unanticipated failure of
system elements.
Transmission Organization means a
regional transmission organization,
independent system operator,
independent transmission provider, or
other transmission organization finally
approved by the Commission for the
operation of transmission facilities.
§ 38.2
Jurisdiction and applicability.
Within the United States (other than
Alaska and Hawaii), the Electric
Reliability Organization, any Regional
Entities, and all users, owners and
operators of the Bulk-Power System,
including but not limited to entities
described in section 201(f) of the
Federal Power Act, shall be subject to
the jurisdiction of the Commission for
the purposes of approving Reliability
Standards established under this section
and enforcing compliance with this
section.
§ 38.3 Electric Reliability Organization
certification.
(a) Any person may submit an
application to the Commission for
certification as an Electric Reliability
Organization no later than sixty (60)
days following Commission issuance of
the final rule. Such application shall
include a form of notice and an original
and fourteen (14) copies of the
application.
(b) The Commission may certify one
such applicant as an Electric Reliability
Organization, if the Commission
determines such applicant:
(1) Has the ability to develop and
enforce, subject to § 38.5, Reliability
Standards that provide for an adequate
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level of reliability of the Bulk-Power
System, and
(2) Has established rules that:
(i) Assure its independence of users,
owners and operators of the Bulk-Power
System while assuring fair stakeholder
representation in the selection of its
directors and balanced decisionmaking
in any Electric Reliability Organization
committee or subordinate organizational
structure;
(ii) Allocate equitably reasonable
dues, fees and charges among end users
for all activities under this section;
(iii) Provide fair and impartial
procedures for enforcement of
Reliability Standards through the
imposition of penalties in accordance
with § 38.5, including limitations on
activities, functions, operations, or other
appropriate sanctions or penalties;
(iv) Provide reasonable notice and
opportunity for public comment, due
process, openness, and balance of
interests in developing Reliability
Standards, and otherwise exercising its
duties; and
(v) Provide appropriate steps, after
certification by the Commission as the
Electric Reliability Organization, to gain
recognition in Canada and Mexico.
(c) The approved ERO is required to
periodically submit an application to be
recertified as the ERO, in accordance
with any requirements the Commission
issues in this regard.
§ 38.4
Approval of Reliability Standards.
(a) The Electric Reliability
Organization must consider and develop
Reliability Standards or modifications to
Reliability Standards to be applicable to
the entire Bulk-Power System or a
particular region or Interconnection.
The Electric Reliability Organization
shall file each Reliability Standard or
modification to a Reliability Standard
that it proposes to be made effective
under this section with the Commission.
The filing shall include an original and
fourteen (14) copies, a form of notice, a
concise statement of the basis and
purpose of the standard and a summary
of the standard development
proceedings conducted by the Electric
Reliability Organization.
(b) The Commission may approve by
rule or order a proposed Reliability
Standard or a modification to a
Reliability Standard if it determines,
after notice and opportunity for public
hearing, that the standard is just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest.
(1) The Commission shall give due
weight to the technical expertise of the
Electric Reliability Organization with
respect to the content of a proposed
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Reliability Standard or modification to a
Reliability Standard,
(2) The Commission shall give due
weight to the technical expertise of a
Regional Entity organized on an
Interconnection-wide basis with respect
to a Reliability Standard to be
applicable within that Interconnection,
and
(3) The Commission shall not defer to
the Electric Reliability Organization or a
Regional Entity with respect to the effect
of a Reliability Standard or modification
to a Reliability Standard on
competition.
(c) An approved Reliability Standard
or a modification to a Reliability
Standard shall take effect as approved
by the Commission.
(d) The Electric Reliability
Organization shall rebuttably presume
that a proposal for a Reliability Standard
or a modification to a Reliability
Standard to be applicable on an
Interconnection-wide basis is just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest, if such proposal is from a
Regional Entity organized on an
Interconnection-wide basis.
(e) The Commission shall remand to
the Electric Reliability Organization for
further consideration a proposed
Reliability Standard or modification to a
Reliability Standard that the
Commission disapproves in whole or
part.
(f) The Commission may, upon its
own motion or a complaint, order the
Electric Reliability Organization to
submit a proposed Reliability Standard
or modification to a Reliability Standard
that addresses a specific matter if the
Commission considers such a new or
modified Reliability Standard
appropriate to carry out this section.
(g) The Commission may, upon its
own motion or a complaint, review a
previously-approved Reliability
Standard. If, after notice and
opportunity for hearing, the
Commission determines that the
Reliability Standard, or any provision
thereof, is unjust or unreasonable,
unduly discriminatory or preferential,
or not in the public interest, the
Commission may remand the Reliability
Standard to the Electric Reliability
Organization.
(h) The Commission, when remanding
a Reliability Standard, may state a
deadline by which the Electric
Reliability Organization must submit a
proposed revised Reliability Standard.
§ 38.5 Enforcement of Reliability
Standards.
(a) The Electric Reliability
Organization, or a Regional Entity, may
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impose, subject to paragraph (d) of this
section, a penalty on a user, owner or
operator of the Bulk-Power System for a
violation of a Reliability Standard
approved by the Commission under
§ 38.4 if the Electric Reliability
Organization or the Regional Entity,
after public notice and opportunity for
hearing:
(1) Finds that the user, owner or
operator has violated a Reliability
Standard approved by the Commission
under § 38.4; and
(2) Files notice and the record of the
Electric Reliability Organization’s or
Regional Entity’s proceeding with the
Commission. Simultaneously with the
filing of a notice with the Commission,
the Electric Reliability Organization or
Regional Entity shall serve a copy of the
notice on the entity that is the subject
of the enforcement action.
(b) A Regional Entity shall file notice
with the Electric Reliability
Organization of any enforcement action
it takes.
(c) Any notice of an enforcement
action, whether by the Electric
Reliability Organization or a Regional
Entity, shall consist of:
(1) The name of the entity against
whom the enforcement action was
taken;
(2) A statement describing the
enforcement action taken;
(3) A statement setting forth findings
of fact with respect to the act or practice
that resulted in the enforcement action;
(4) A statement describing any
sanction imposed;
(5) The record of the proceeding;
(6) A form of notice suitable for
publication; and
(7) Other matters the Electric
Reliability Organization or the Regional
Entity, as appropriate, may find
relevant.
(d) A penalty imposed under
paragraph (a) of this section may take
effect not earlier than the thirty-first
(31st) day after the Electric Reliability
Organization or Regional Entity files
with the Commission notice of the
penalty and the record of the
proceedings.
(1) Such penalty shall be subject to
review by the Commission, on its own
motion or upon application by the user,
owner or operator of the Bulk-Power
System that is the subject of the penalty
filed within thirty (30) days after the
date such notice is filed with the
Commission. In the absence of the filing
of an application for review or motion
or other action by the Commission, the
enforcement action shall be affirmed by
operation of law upon the expiration of
the 30-day period for filing of an
application for review.
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(2) Application to the Commission for
review, or the initiation of review by the
Commission on its own motion, shall
not operate as a stay of such penalty
unless the Commission otherwise orders
upon its own motion or upon
application by the user, owner or
operator that is the subject of such
penalty.
(3) In any proceeding to review a
penalty imposed under paragraph (a) of
this section, the Commission, after
public notice and opportunity for
hearing (which hearing may consist
solely of the record before the Electric
Reliability Organization or Regional
Entity and the opportunity for the
presentation of supporting reasons to
affirm, modify, or set aside the penalty),
shall by order affirm, set aside or modify
the penalty and, if appropriate, remand
to the Electric Reliability Organization
or Regional Entity for further
proceedings.
(4) An applicant shall file an original
and fourteen (14) copies of an
application for review and shall comply
with the requirements set forth in the
Commission’s Rules of Practice and
Procedure, unless otherwise directed by
the Commission. An application shall
contain a complete and detailed
explanation of the reasons why the
applicant believes that the Electric
Reliability Organization or Regional
Entity erred when assessing the penalty,
the amount of the penalty or the form
of the penalty, and such application
must provide any additional support for
this contention that is not included in
the record submitted by the Electric
Reliability Organization or Regional
Entity pursuant to this section.
(5) Unless otherwise ordered by the
Commission, answers, interventions,
and comments to an application for
review of a penalty imposed under
paragraph (a) of this section must be
filed within twenty (20) days after the
application is filed.
(6) One of the following procedures
may be used to resolve application for
review of a penalty imposed under
paragraph (a) of this section:
(i) The Commission may issue an
order on the merits to affirm, set aside,
reinstate or modify the penalty and, if
appropriate, remand to the Electric
Reliability Organization or Regional
Entity based upon the pleadings; or
(ii) The Commission may establish a
hearing before an administrative law
judge or initiate such further procedures
as may be appropriate.
(7) Expedited review. Unless
determined otherwise by the
Commission on a case by case basis, the
Commission shall take action on an
application for review of a penalty
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53131
within sixty (60) days of the date the
application is filed. Expedited
procedures shall be established for any
hearing before an administrative law
judge on a case by case basis.
(8) Unless the Commission
determines otherwise, an enforcement
action pursuant to § 38.5 that involves a
Cybersecurity Incident will be nonpublic. The user, owner or operator of
the Bulk-Power System that is the
subject of the enforcement action will be
given timely notice and an opportunity
for hearing. The public will not be
notified and the public will not be
allowed to participate in an enforcement
action before the Electric Reliability
Organization, a Regional Entity or the
Commission.
(e) On its own motion or upon
complaint, the Commission may order
compliance with a Reliability Standard
and may impose a penalty against a
user, owner or operator of the BulkPower System, if the Commission finds,
after public notice and opportunity for
hearing, that the user, owner or operator
of the Bulk-Power System has engaged
or is about to engage in any acts or
practices that constitute or will
constitute a violation of a Reliability
Standard.
(f) Any penalty imposed for the
violation of a Reliability Standard shall
bear a reasonable relation to the
seriousness of the violation and shall
take into consideration efforts of such
user, owner or operator of the BulkPower System to remedy the violation
in a timely manner. The imposition of
penalties is not limited to monetary
penalties and may include, but is not
limited to, limitations on activities,
functions, operations, or other
appropriate sanctions, including the
establishment of a reliability watch list
composed of major violators. Monetary
penalties shall be paid in a timely
manner.
(g) Reporting of Violations and
Potential Violations: The Electric
Reliability Organization and all
Regional Entities shall have in place
procedures to immediately notify the
Commission of all violations and
potential violations of Reliability
Standards when the Electric Reliability
Organization or Regional Entity first
notifies the user, owner or operator of
the violation or potential violation.
(1) Any person that submits an
application to the Commission for
certification as an Electric Reliability
Organization shall include in such
application a proposal for the
notification and reporting to the
Commission of all violations and
potential violations of Reliability
Standards.
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(2) Any agreement for the delegation
of authority to a Regional Entity shall
include a proposal for the notification
and reporting to the Commission of all
violations and potential violations of
Reliability Standards.
(3) All reports of violations and
potential violations shall include the
entity’s name, when the violation or
potential occurred, what standard was
violated or potentially violated and the
name of a person knowledgeable about
the violation or potential violation to
serve as a point of contact to provide the
Commission with further details on the
matter, as they develop, on an ongoing
basis.
(4) All reports of violations and
potential violations shall be filed
electronically with the Commission.
§ 38.6 Enforcement of Commission Rules
and Orders.
(a) The Commission may take such
action as is necessary and appropriate
against the Electric Reliability
Organization or a Regional Entity to
ensure compliance with a Reliability
Standard or any Commission order
affecting the Electric Reliability
Organization or a Regional Entity,
including, but not limited to:
(1) Upon notice and opportunity for
hearing, suspension or rescission of the
Commission’s grant of certification to
the Electric Reliability Organization, if
the Electric Reliability Organization no
longer meets the statutory standards for
certification.
(2) Upon notice and opportunity for
hearing, suspension or rescission of the
Commission’s approval of an agreement
to delegate certain Electric Reliability
Organization authority to a Regional
Entity.
(3) Imposition of civil penalties under
the Federal Power Act.
(b) The Commission will periodically
audit and review the Electric Reliability
Organization’s and Regional Entities’
compliance with the statutory and
regulatory criteria for certification and
delegation of functions.
§ 38.7 Delegation of certain Electric
Reliability Organization authority to
Regional Entities.
(a) The Electric Reliability
Organization may enter into an
agreement to delegate authority to a
Regional Entity for the purpose of
proposing Reliability Standards to the
Electric Reliability Organization and
enforcing Reliability Standards under
§ 38.5(a).
(b) A delegation agreement shall not
be effective until it is approved by the
Commission.
(c) The Electric Reliability
Organization shall file an original and
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fourteen (14) copies of a delegation
agreement. In addition, such filing shall
include a detailed statement
demonstrating that:
(1) The Regional Entity is governed by
an independent board, a balanced
stakeholder board, or a combination
independent and balanced stakeholder
board,
(2) The Regional Entity otherwise
satisfies the provisions of § 38.3, and
(3) The agreement promotes effective
and efficient administration of BulkPower System reliability.
(d) The Commission may modify such
delegation; however, the Electric
Reliability Organization and
Commission shall rebuttably presume
that a proposal 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.
(e) If an entity seeking to enter into a
delegation agreement is unable to reach
an agreement with the Electric
Reliability Organization within 180 days
after proposing a delegation agreement
to the Electric Reliability Organization,
and it can demonstrate that continued
negotiations with the Electric Reliability
Organization would not likely result in
a delegation agreement within a
reasonable period of time, such entity
may request that the Commission assign
the Electric Reliability Organization’s
authority to enforce Reliability
Standards within a region to such
entity.
(f) An approved Regional Entity shall
be required to periodically submit an
application to be re-approved as a
Regional Entity, in accordance with any
requirements the Commission issues in
this regard.
§ 38.8 Changes in Electric Reliability
Organization Rules and Regional Entity
Rules.
(a) The Electric Reliability
Organization shall file with the
Commission for approval any proposed
Electric Reliability Organization Rule or
rule change. A Regional Entity shall
submit a Regional Entity Rule or rule
change with the Electric Reliability
Organization and, upon approval by the
Electric Reliability Organization, the
Electric Reliability Organization shall
file with the Commission for approval of
any proposed Regional Entity Rule or
rule change. Such filing by the Electric
Reliability Organization shall be
accompanied by an explanation of the
basis and purpose for the rule or rule
change, together with a description of
the proceedings conducted by the
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Electric Reliability Organization or
Regional Entity to develop the proposal.
(b) The Commission upon its own
motion or complaint may propose
changes to the Electric Reliability
Organization rules or Regional Entity
rules.
(c) A proposed Electric Reliability
Organization rule or rule change or
Regional Entity rule or rule change shall
take effect upon a finding by
Commission, after notice and
opportunity for public comment, that
the change is just, reasonable, not
unduly discriminatory or preferential, is
in the public interest, and satisfies the
requirements of § 38.3.
§ 38.9 Process for resolution of conflicts
with a Reliability Standard.
(a) If a Transmission Organization
determines that a Reliability Standard
may conflict with a function, rule,
order, tariff, rate schedule, or agreement
accepted, approved, or ordered by the
Commission with respect to such
Transmission Organization, the
Transmission Organization shall
expeditiously notify the Commission,
the Electric Reliability Organization and
the relevant Regional Entity of the
conflict.
(b) Unless the Commission orders
otherwise, after notice and opportunity
for hearing, within sixty (60) days of the
date that a notice was filed under
paragraph (a) of this section, the
Commission shall issue an order
determining whether a conflict exists
and, if so, resolve the conflict by
directing
(i) The Transmission Organization to
file a modification of the conflicting
function, rule, order, tariff, rate
schedule, or agreement pursuant to
section 206 of the Federal Power Act or
(ii) The Electric Reliability
Organization to propose a modification
to the conflicting Reliability Standard
pursuant to § 38.4 of the Commission’s
regulations.
(c) The Transmission Organization
shall continue to follow the function,
rule, order, tariff, rate schedule, or
agreement accepted, approved, or
ordered by the Commission until the
Commission finds that a conflict exists,
the Commission orders a change to such
provision pursuant to section 206 of the
Federal Power Act, and the ordered
change becomes effective.
§ 38.10 Procedures for establishment and
recognition of Regional Advisory Bodies.
(a) The Commission shall consider a
petition to establish a Regional Advisory
Body that is submitted by at least twothirds of the states within a region that
have more than one-half of their electric
load served within the region.
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(b) A petition to establish a Regional
Advisory Body shall include all
organizational documents and a
statement that the Regional Advisory
Body is composed 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.
(c) A Regional Advisory Body
established by the Commission may
provide advice to the Commission,
Electric Reliability Organization or a
Regional Entity with respect to:
(1) The governance of an existing or
proposed Regional Entity within the
same region;
(2) Whether a Reliability Standard
proposed to apply within the region is
just, reasonable, not unduly
discriminatory or preferential, and in
the public interest;
(3) Whether fees for all activities
under this section proposed to be
assessed within the region are just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest; and
(4) Any other responsibilities
requested by the Commission.
(d) The Commission may give
deference to the advice of a Regional
Advisory Body established by the
Commission if it is organized on an
Interconnection-wide basis.
§ 38.11
Reliability reports.
(a) The Electric Reliability
Organization shall conduct periodic
assessments of the reliability and
adequacy of the Bulk-Power System in
North America and report its findings to
the Commission, the Secretary of
Energy, Regional Entities, and Regional
Advisory Bodies annually or more
frequently if so ordered by the
Commission.
(b) The Electric Reliability
Organization and Regional Entities shall
report on their enforcement actions and
associated penalties to the Commission,
the Secretary of Energy, relevant
Regional Entities, and relevant Regional
Advisory Bodies annually or quarterly,
in a manner to be prescribed by the
Commission.
§ 38.12
Review of state action.
(a) Nothing in this regulation shall be
construed to preempt 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 inconsistent with
any reliability standard.
(b) Where a state takes action to
ensure safety, adequacy, and reliability
of electric service, the Electric
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Reliability Organization, Regional Entity
or other affected party may apply to the
Commission for a determination of
consistency with a Commissionapproved Reliability Standard.
(1) The application shall:
(i) Identify the state action
complained of;
(ii) Identify the Reliability Standard(s)
with which the state action is claimed
to be inconsistent;
(iii) State the basis for the claim that
the state action is inconsistent with a
Reliability Standard; and
(iv) Include a form of notice.
(2) Within ninety (90) days of the
application of the Electric Reliability
Organization or other affected party, and
after notice and opportunity for public
comment, the Commission shall issue a
final order determining whether the
state action is inconsistent with a
Reliability Standard, taking into
consideration any recommendation of
the Electric Reliability Organization.
(c) The Commission, after
consultation with the Electric Reliability
Organization and the state taking action,
may stay the effectiveness of the state
action, pending the Commission’s
issuance of a final order.
§ 38.13 Funding of the Electric Reliability
Organization.
(a) The Electric Reliability
Organization shall file with the
Commission its proposed annual budget
for activities within the United States
and supporting materials in sufficient
detail to justify the requested funding
requirement 130 days in advance of the
beginning of each fiscal year.
(b) The Commission, after public
notice and opportunity for comment,
shall issue an order either accepting,
rejecting or remanding or modifying the
proposed Electric Reliability
Organization budget and business plan
no later than sixty (60) days in advance
of the beginning of the Electric
Reliability Organization’s fiscal year.
(c) Any person who submits an
application for certification as the
Electric Reliability Organization
pursuant to the rules set forth in this
section shall include in such
application a plan, formula and/or
methodology for the allocation and
assessment of Electric Reliability
Organization dues, fees and charges.
The certified Electric Reliability
Organization may subsequently file with
the Commission a request to modify the
plan, formula and/or methodology from
time-to-time in the Electric Reliability
Organization’s discretion.
(d) All entities within the
Commission’s jurisdiction as set forth in
section 215(b) of the Federal Power Act
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53133
are required to pay the Electric
Reliability Organization’s assessment of
dues, fees and charges in a timely
manner reasonably designated by the
Electric Reliability Organization .
(e) Any person who submits an
application for certification as the
Electric Reliability Organization
pursuant to the rules set forth in this
section may include in such application
a plan for a transitional funding
mechanism that would allow such
person, if certified as the Electric
Reliability Organization, to continue
existing operations without interruption
as it transitions from one method of
funding to another. The maximum
duration of any proposed transitional
funding mechanism is not to exceed
eighteen (18) months from the date of
certification.
[FR Doc. 05–17752 Filed 9–6–05; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF JUSTICE
28 CFR Part 16
[AAG/A Order No. 009–2005]
Justice Management Division; Privacy
Act of 1974; Implementation
AGENCY: Justice Management Division,
Justice.
ACTION: Proposed rule.
SUMMARY: The Department of Justice
(DOJ), Justice Management Division
(JMD), proposes to exempt from certain
subsections of the Privacy Act, a new
Privacy Act system of records entitled
‘‘Federal Bureau of Investigation
Whistleblower Case Files, JMD–023,’’ as
described in today’s notice section of
the Federal Register. The system
maintains all documents and evidence
filed with the Director of the Office of
Attorney Recruitment and Management
(OARM), JMD, pertaining to requests for
corrective action by employees of, or
applicants for employment with, the
Federal Bureau of Investigation (FBI) (or
recommendations for corrective action
by the Office of the Inspector General or
Office of Professional Responsibility)
brought under the FBI’s whistleblower
regulations.
DATES: Submit any comments by
October 17, 2005.
ADDRESSES: Address all comments in
writing to Mary Cahill, Management and
Planning Staff, Justice Management
Division, Department of Justice,
Washington, DC 20530 (1400 National
Place Building), Facsimile Number (202)
307–1853. To ensure proper handling,
please reference the AAG/A Order No.
E:\FR\FM\07SEP1.SGM
07SEP1
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.