[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4432 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4432

 To enhance the reliability of the electric power supply system of the 
   United States by reducing barriers to the construction of needed 
 generation and transmission facilities, to increase the efficiency of 
the Nation's interstate transmission grid, and to reduce discrimination 
               in the provision of transmission services.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 6, 1998

 Mr. DeLay (for himself and Mr. Markey) introduced the following bill; 
            which was referred to the Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
 To enhance the reliability of the electric power supply system of the 
   United States by reducing barriers to the construction of needed 
 generation and transmission facilities, to increase the efficiency of 
the Nation's interstate transmission grid, and to reduce discrimination 
               in the provision of transmission services.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION. 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Electric System 
Reliability Act of 1998''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings.
    TITLE I--FERC AUTHORITY TO CERTIFY SELF-REGULATING RELIABILITY 
                             ORGANIZATIONS

Sec. 101. Electric reliability organization and oversight.
Sec. 102. Statutory presumptions.
 TITLE II--FERC AUTHORITY TO REQUIRE INDEPENDENT SYSTEM OPERATORS, TO 
     REQUIRE DIVESTITURE OF GENERATION FACILITIES, AND TO PROHIBIT 
                   PREFERENTIAL TRANSMISSION SERVICE

Sec. 201. Authority to establish and require independent system 
                            operation.
Sec. 202. Single siting authority and independent system operator 
                            siting authority.
Sec. 203. Eminent domain.
                       TITLE III--INTERCONNECTION

Sec. 301. Interconnection.
                TITLE IV--EXEMPT TRANSMITTING UTILITIES

Sec. 401. Exempt transmitting utilities.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Electricity is used in virtually every home, commercial 
        enterprise, and manufacturing facility in the United States; is 
        a basic element of the interstate and foreign commerce of the 
        United States; and immediately, directly and substantially 
        affects interstate and foreign commerce.
            (2) The Nation's interconnected electricity generation, 
        transmission, and local distribution systems critically affect 
        the economy and productivity of the United States, and the 
        health, safety, welfare, and security of all Americans.
            (3) Difficulties associated with the siting of new 
        generation and transmission plants threaten to jeopardize the 
        future supply and reliability of the Nation's electric bulk 
        power supply system.
            (4) The restructuring of the electric utility may result in 
        ambiguity regarding the ultimate responsibility for maintenance 
        of reliability.
            (5) The retirement and early shut-down of nuclear plants 
        has and is likely to continue to further reduce the reserve 
        margins and adequacy of generating capacity to satisfy regional 
        demand for electricity.
            (6) Maintaining an adequate and reliable supply of electric 
        power is vital for the preservation and growth of the Nation's 
        economy and the safety of its citizens.
            (7) The ability of private reliability associations to 
        promote and insure reliability of the Nation's electric supply 
        by establishing binding standards and procedures may be 
        hampered by exposure to antitrust liability;
            (8) Granting additional authority to the Federal Energy 
        Regulatory Commission over the activities of private 
        reliability associations can avoid the risk of such antitrust 
        liability.
            (9) Congestion and discrimination regarding the use of the 
        transmission systems of the nation's utilities can threaten the 
        reliability of electric supply and result in economic 
        inefficiency and higher costs of electricity to consumers.
            (10) Market concentration and vertical integration of the 
        generation and transmission functions of electric utilities can 
        result in discrimination in favor of the transmission owner's 
        or its affiliate's generation and prices in excess of the 
        prices that would be charged in the competitive market.
            (11) Preventing or curing such discrimination can require 
        the establishment of an Independent System Operator or the 
        divestiture of ownership of generation facilities by utilities 
        that own transmission facilities.
            (12) Constraints on the use of the Nation's interstate 
        transmission system imposed by regulatory policies that provide 
        unfair advantages to vertically integrated transmission owners 
        have balkanized the wholesale power marketplace and resulted in 
        power supply shortages and extreme price ``spikes''.

    TITLE I--FERC AUTHORITY TO CERTIFY SELF-REGULATING RELIABILITY 
                             ORGANIZATIONS

SEC. 101. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    (a) In General.--The Federal Power Act is amended by adding the 
following new section after section 214 (16 U.S.C. 824m):

``SEC. 215. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    ``(a) Definitions.--As used in this section:
            ``(1) The term `bulk-power system' means all facilities and 
        control systems necessary for operating the interconnected 
        transmission grids, including high-voltage transmission lines; 
        substations; control centers; communications, data, and 
        operations planning facilities; and generating units necessary 
        to maintain transmission system reliability.
            ``(2) The term `electric reliability organization' or 
        `organization' means the organization registered by the 
        Commission under subsection (d)(4).
            ``(3) The term `system operator' means any entity that 
        operates or is responsible for the operation of the bulk-power 
        system, including control area operators, independent system 
        operators, transmission companies, transmission system 
        operators, and regional security coordinators.
            ``(4) The term `users of the bulk-power system' means any 
        entity that sells, purchases, or transmits electric power over 
        the bulk-power system; owns, operates or maintains facilities 
        of the bulk-power system; or is a system operator.
    ``(b) Commission Authority.--(1) The Commission has jurisdiction 
over the electric reliability organization, all system operators, and 
all users of the bulk-power system for purposes of approving and 
enforcing compliance with standards in the United States.
    ``(2) The Commission may register an electric reliability 
organization and approve and oversee the activities in the United 
States of that electric reliability organization.
    ``(c) Compliance With Existing Reliability Standards.--Users of the 
bulk-power system shall comply with standards established by the North 
American Electric Reliability Council and the regional reliability 
councils that exist on the date of enactment of this section, 
consistent with any agreement entered into under subsection (f). Each 
standard remains in effect until modified under this subsection or 
superseded by standards approved under subsection (e). The Commission, 
upon its own motions or upon request and consistent with any agreements 
entered into pursuant to subsection (f), may modify or suspend the 
application of a standard and may enforce a standard exercising the 
same authority that the electric reliability organization may exercise 
under subsection (k). The North American Electric Reliability Council 
and the regional reliability councils may monitor compliance with these 
standards.
    ``(d) Organization Registration and Establishment of Standards.--
(1) Not less than 90 days after the date of enactment of this section, 
the Commission shall issue proposed rules specifying the procedures and 
requirements for an organization to apply for registration and file 
reliability standards. The Commission shall provide adequate 
opportunity for comment on the proposed rules. The Commission shall 
issue final rules under this subsection within 180 days after the date 
of enactment of this section.
    ``(2) Following the issuance of final Commission rules under 
paragraph (1), an electric reliability organization may apply for 
registration with the Commission. The organization shall include in its 
application its governance, procedures, and funding mechanism, and 
shall file the standards in effect under subsection (c).
    ``(3) The Commission shall provide public notice of the application 
and the standards filed under this subsection and afford interested 
parties an opportunity to comment on the application and filing.
    ``(4) The Commission shall register the organization if the 
Commission determines that the organization--
            ``(A) has the capacity to provide for an adequate level of 
        reliability of the bulk-power system;
            ``(B) permits voluntary membership to any users of the 
        bulk-power system or interested customer class or public 
        interest group;
            ``(C) assures fair representation of its members in the 
        selection of its directors and fair management of its affairs, 
        taking into account the need for efficiency and effectiveness 
        in decision making and operations and the requirements for 
        technical competency in the development of standards and the 
        exercise of oversight of the reliability system, and assures 
        that no single class of market participants has the ability to 
        control the organization's discharge of its responsibilities;
            ``(D) assesses reasonable dues, fees, or other charges 
        necessary to support the organization and the purposes of this 
        section and has a funding mechanism that is fair and not unduly 
        discriminatory;
            ``(E) establishes procedures for standards development that 
        provide reasonable notice and opportunity for public comment, 
        taking into account the need for efficiency and effectiveness 
        in decision making and operations and the requirements for 
        technical competency in the development of standards;
            ``(F) establishes fair and impartial procedures for 
        enforcement of standards, including penalties, limitation of 
        activity, function or operations; or other appropriate 
        sanctions;
            ``(G) establishes procedures for notice and opportunity for 
        public observation of all meetings, except that the procedures 
        for public observation may include alternative procedures for 
        emergencies or for the discussion of information the directors 
        determine should take place in closed session, including the 
        discussion of information with respect to proposed enforcement 
        or disciplinary action; and
            ``(H) addresses other matters that the Commission considers 
        necessary or appropriate.
    ``(5) The Commission shall approve only one electric reliability 
organization. If the Commission receives timely applications from two 
or more applicants that satisfy the requirements of this subsection, 
the Commission shall approve only the application that is most likely 
to provide a reliable bulk-power system.
    ``(e) Restrictions on Activities.--A reliability organization shall 
not--
            (1) establish or operate a market for the sale, purchase or 
        exchange of electric energy,
            (2) file any standard under subsection (d)(2) or (f)(3)(A) 
        that directly or indirectly establishes commercial terms for 
        the sale, purchase or exchange of electric energy, or
            (3) impede effective competition.
    ``(f) Review and Changes or Modifications to Standards.--(1) The 
Commission shall review the standards submitted under subsection 
(d)(2), concurrent with its review of the application under subsection 
(d), and each standard becomes effective if the Commission determines 
that it is just, reasonable, and not unduly discriminatory or 
preferential; is in the public interest; and provides for an adequate 
level of reliability of the bulk-power system.
    ``(2) With respect to a standard that does not become effective 
under paragraph (1), the Commission shall refer that standard to the 
electric reliability organization for development of a new or modified 
standard under the organization's procedures for assuring notice and 
opportunity for comment approved by the Commission under subsection 
(d)(4)(E).
    ``(3)(A) The electric reliability organization shall file with the 
Commission any standard developed under paragraph (2) or a new standard 
or modification of a standard effective under paragraph (1) for review 
and approval. A new standard or modification does not take effect 
unless the Commission determines, after notice and opportunity for 
comment, that the standard or modification is just, reasonable, and not 
unduly discriminatory or preferential; is in the public interest; and 
provides for an adequate level of reliability of the bulk-power system, 
taking into account the purposes of this section to assure reliability 
of the bulk-power system and giving due weight to the technical 
competency of the registered electric reliability organization, and is 
consistent with any agreement entered into pursuant to subsection (f).
    ``(B) Any standard or modification that does not become effective 
under this paragraph shall be referred to the electric reliability 
organization for development of a new or modified standard under the 
organization's procedures for assuring notice and opportunity for 
comment approved by the Commission under subsection (d)(4)(E).
    ``(C) The Commission, on its own motion, or upon application or 
complaint, may require that the electric reliability organization 
develop a new or revised standard if the Commission considers a new or 
revised standard necessary or appropriate to further the purposes of 
this section. The organization shall file the new or revised standard 
in accordance with this paragraph.
    ``(D) On its own motion or at the request of the electric 
reliability organization, the Commission may develop and, consistent 
with any agreement under subsection (f), require immediate 
implementation by the organization of a new or revised standard if it 
determines that immediate implementation is required to avoid a 
significant disruption of reliability that would affect public safety 
or welfare. If immediate implementation is required, the Commission 
shall not delay implementation for notice and comment but shall publish 
the standard for notice and comment in a timely manner.
    ``(g) Coordination With Canada and Mexico.--The United States shall 
enter into international agreements with the governments of Canada and 
Mexico determined to be necessary or appropriate to provide for 
effective compliance with standards and to provide for the 
effectiveness of the electric reliability organization in carrying out 
its mission and responsibilities.
    ``(h) Changes in Organization Procedures, Governance, or Funding.--
(1) The electric reliability organization shall file with the 
Commission any proposed change in its procedures, governance, or 
funding and accompany the filing with an explanation of the basis and 
purpose for the change.
    ``(2)(A) A proposed procedural change may take effect 90 days after 
filing with the Commission if the change--
            ``(i) constitutes a statement of policy, practice, or 
        interpretation with respect to the meaning, administration, or 
        enforcement of an existing procedure; or
            ``(ii) is concerned solely with administration of the 
        organization.
    ``(B) The Commission, by order, either upon complaint or upon its 
own motion, may suspend an existing procedure or procedural change if 
it determines the procedure or the proposed change is unjust, 
unreasonable, unduly discriminatory or preferential, or is otherwise 
not in the public interest.
    ``(3) A change in the organization's governance and funding does 
not take effect unless the Commission finds that the change is 
consistent with any agreement under subsection (f) and is just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest.
    ``(4) The Commission may require that the electric reliability 
organization amend its procedures, governance, or funding if the 
Commission considers the amendment necessary or appropriate to ensure 
the fair administration of the organization, conform the organization 
to the requirements of this section, or further the purposes of this 
section, consistent with any agreement entered into under subsection 
(f). The organization shall file the amendment in accordance with 
paragraph (1).
    ``(i) Organization Delegations of Authority.--(1) The organization 
may enter into an agreement under which it may delegate some or all of 
its authority to any person.
    ``(2) The organization shall file an agreement entered into under 
this subsection with the Commission together with the information on 
the delegated person that the Commission may require. The Commission 
shall approve the agreement, following public notice and an opportunity 
for comment, if it finds that the agreement is consistent with the 
requirements of this section. The Commission shall disapprove and 
prevent the agreement from entering into effect if the Commission finds 
that the agreement is inconsistent with the requirements of this 
section. The agreement takes affect upon Commission approval.
    ``(3) The Commission may direct a modification to or suspend an 
agreement entered into under this subsection if it determines that the 
delegated person no longer has the capacity to carry out its 
implementation responsibilities under that agreement effectively and 
efficiently or that the rules, practices, or procedures of the 
delegated person no longer provide for the fair and impartial discharge 
of its implementation responsibilities. The electric reliability 
organization shall assume the previously delegated responsibilities if 
the agreement is suspended.
    ``(j) Organization Membership.--Every system operator shall be a 
member of the electric reliability organization. The organization rules 
shall provide for voluntary membership to other users of the bulk-power 
system and any interested customer class or public interest group. A 
person required to become a member of the organization who fails to do 
so is subject to sections 314 and 316A of this Act upon notification 
from the organization to the Commission.
    ``(k) Failure to Apply for Registration.--(1) If an organization 
fails to apply for registration with the Commission within six months 
after the issuance date of final Commission rules for such a filing, or 
the Commission does not register an agreement within twelve months 
after the issuance date of final Commission rules for such a filing, 
the Commission shall convene a process to register an electric 
reliability organization.
    ``(2) Until an electric reliability organization is registered, the 
Commission has the same authority to enforce existing standards or 
standards it amends that the electric reliability organization has 
under subsection (k).
    ``(l) Disciplinary Action and Penalties.--(1) The electric 
reliability organization may impose a civil penalty and take injunctive 
action or impose other civil disciplinary action the organization finds 
appropriate against a user of the bulk-power system located in the 
United States if the organization finds, after notice and opportunity 
for a hearing, that the user has violated an organization procedure or 
standard.
    ``(2) An action taken under subparagraph (1) takes effect 30 days 
after the finding unless the Commission, on its own motion or upon 
application by the user of the bulk-power system who was the subject of 
the action, suspends the action. The action shall remain in effect or 
remain suspended until the Commission, after notice and opportunity for 
comment, sets aside, modifies, or reinstates the action.
    ``(m) Adequacy, Reliability, and Reports.--The electric reliability 
organization shall conduct periodic assessments of the reliability and 
adequacy of the interconnected bulk-power system in North America and 
shall report annually to the Commission its findings and 
recommendations for monitoring or improving system reliability or 
adequacy.''.
    (b) Conforming Amendments.--Sections 316(c) and 316A of the Federal 
Power Act (16 U.S.C. 825o(c) and 825o-1) are amended by striking ``or 
214'' each place it appears and inserting ``214, or 215''.

SEC. 102. STATUTORY PRESUMPTIONS.

    (a) Federal Power Act.--Any reliability standard developed by the 
reliability organization, and any actions taken in good faith to comply 
with such a reliability standard, under section 215 of the Federal 
Power Act, as added by section 101 of this Act, are rebuttably presumed 
just and reasonable and not unduly discriminatory or preferential for 
purposes of that Act.
    (b) Antitrust Laws.--The following activities are rebuttably 
presumed to be in compliance with the antitrust laws of the United 
States:
            (1) Activities undertaken by the electric reliability 
        organization under section 215 of the Federal Power Act, as 
        added by section 101 of this Act, or a delegated person 
        operating under an agreement in effect under subsection (i) of 
        such section 215.
            (2) Activities of a member of the electric reliability 
        organization in pursuit of organization objectives under such 
        section 215 undertaken in good faith under the rules of the 
        organization.

 TITLE II--FERC AUTHORITY TO REQUIRE INDEPENDENT SYSTEM OPERATORS, TO 
     REQUIRE DIVESTITURE OF GENERATION FACILITIES, AND TO PROHIBIT 
                   PREFERENTIAL TRANSMISSION SERVICE

SEC. 201. AUTHORITY TO ESTABLISH AND REQUIRE INDEPENDENT SYSTEM 
              OPERATION.

    (a) Issuance of Orders.--Section 202 of the Federal Power Act (16 
U.S.C. 824a) is amended by adding at the end the following new 
subsections:
    ``(h)(1) The Commission shall order the establishment of an entity 
for the purpose of independent operation and control of interconnected 
transmission facilities for the broadest feasible geographic region and 
direct the transmitting utility to relinquish control over operation of 
its transmission facilities or other associated facilities to an entity 
established for the purpose of independent operation and control of 
interconnected transmission facilities for the broadest feasible 
geographic region if the Commission, upon its own motion or upon 
application or complaint and after notice and an opportunity for a 
hearing, finds that--
            ``(A) this action is appropriate to promote competitive 
        electricity markets and efficient, economical and reliable 
        operation of the interstate transmission grid;
            ``(B) the entity established for the purpose of independent 
        operation and control of interconnected transmission facilities 
        will operate the transmission facilities in a manner that 
        assures that ownership of transmission facilities provides no 
        advantage in competitive electricity markets; and
            ``(C) the transmitting utility will receive just and 
        reasonable compensation for the use of its transmission 
        facilities.
    ``(2) Any order issued by the Commission under paragraph (1) shall 
provide that the entity to which control over operation of a 
transmitting utility's transmission facilities is relinquished shall 
not establish or operate a market for the sale, purchase or exchange of 
electric energy.
    ``(3) For purposes of this subsection, the entity established for 
the purpose of independent operation and control of interconnected 
transmission facilities may be either a nonprofit or a for-profit 
entity.
    ``(i)(1) The Commission shall order divestiture or other transfer 
of control of the generation or transmission facilities of an electric 
utility that result in the market power described in this paragraph if 
the Commission finds, upon its own motion or upon application or 
complaint and after notice and an opportunity for a hearing, that--
            ``(A) there are markets in which an electric utility that 
        owns or controls generation or transmission facilities has 
        market power in wholesale or retail markets for electric 
        energy;
            ``(B) such market power can result in prices for electric 
        energy that exceed the prices that would be charged in a 
        competitive market;
            ``(C) divestiture or transfer of control of some or all of 
        an electric utility's generation or transmission facilities is 
        necessary to reduce or eliminate such market power;
            ``(D) such divestiture or transfer of control would not 
        unreasonably impair the continued reliability of electric 
        systems affected by such divestiture or transfer of control; 
        and
            ``(E) there is no reasonable probability that the market 
        power of the utility can be constrained by less intrusive 
        means, including, but not limited to--
                    ``(i) directing the electric utility to relinquish 
                control of its transmission system to an entity 
                established for the purpose of independent operation 
                and control of its transmission system, pursuant to 
                section 202(g)(h); or
                    ``(ii) instituting a proceeding under section 206 
                to deny the opportunity of the electric utility and any 
                of its affiliates that is a public utility to engage in 
                sales at market-based rates.
    ``(2) Any order requiring such divestiture or transfer of control 
shall be conditioned upon receipt by the electric utility of just and 
reasonable compensation for such divestiture or transfer of control of 
such generation or transmission facilities.
    ``(3) In the case of a transmitting utility that is an affiliate of 
an electric utility that owns or controls generation facilities, upon 
making the findings in paragraph (1), the Commission may require the 
person that directly or indirectly owns the securities of the electric 
utility that owns or controls generation facilities to sell or 
otherwise dispose of such securities. However, any such divestiture or 
disposition shall be conditioned upon receipt by such person of just 
and reasonable compensation for such divestiture of disposition of 
securities. In the case of an electric utility that owns or controls 
generation facilities and is an affiliate of a transmitting utility, 
upon making the findings in paragraph (1), the Commission may require 
the person that directly or indirectly owns the securities of the 
transmitting utility to sell or otherwise dispose of such securities. 
However, any such divestiture or disposition shall be conditioned upon 
receipt by such person of just and reasonable compensation for such 
divestiture of disposition of securities.''.
    (b) Prohibition of Preferential Transmission Service.--Section 206 
of the Federal Power Act (16 U.S.C. 824e) is amended by adding at the 
end the following new subsection:
    ``(e) For purposes of subsection (a), any rate, charges, or 
classification demanded, observed, charged, or collected by any public 
utility for any transmission subject to the jurisdiction of the 
Commission, or any rule, regulation, or practice that provides for or 
has the effect of providing more favorable transmission service to any 
customer or customer group than is provided to other customers or 
customer groups shall be conclusively deemed to constitute unduly 
discriminatory and preferential service, which the Commission shall fix 
by order under subsection (a).''.

SEC. 202. SINGLE SITING AUTHORITY AND INDEPENDENT SYSTEM OPERATOR 
              SITING AUTHORITY.

    (a) Definitions.--In this section:
            (1) The term ``Single Siting Authority'' means a State 
        governmental agency that has the authority, staffing and 
        funding to issue, on a timely basis, all permits, licenses, and 
        authorizations required under any State, county, municipal, or 
        local law or regulation or pursuant to any federally delegated 
        or approved permit program for the construction and operation 
        of facilities used for the generation of electric energy (other 
        than hydroelectric projects and nuclear generating facilities) 
        or transmission of electric energy (including facilities used 
        to increase or reduce voltage between the local distribution 
        level and the transmission level).
            (2) The term ``Independent System Operators'' means an 
        entity established for the purpose of independent operation and 
        control of interconnected transmission facilities pursuant to 
        section 202(h) of the Federal Power Act, as added by section 
        201(a) of this Act.
            (3) The term ``State'' means each of the several States and 
        the District of Columbia.
    (b) Authority to Establish Single Siting Authority.--Each State may 
elect to establish a Single Siting Authority. The Governor of any State 
that elects to establish a Single Siting Authority or that has already 
created a Single Siting Authority shall notify each Independent System 
Operator that has been established to operate the transmission 
facilities of any transmitting utility the transmission facilities of 
which are located in such State.
    (c) Authority of Independent System Operators.--An Independent 
System Operator shall have the authority, with respect to any State in 
which transmission facilities that it has designated to operate are 
located, to issue certificates of public convenience and necessity for 
the construction and operation of facilities used for the generation or 
transmission of electric energy in such State until such time the 
Governor of such State submits the notification under subsection (b). A 
certificate shall be issued to any qualified applicant therefor, 
authorizing the whole or any part of the construction or operation 
covered by the application, if it is found that the applicant is able 
and willing properly to do the acts and to perform the activities 
proposed, and that the proposed construction or operation, to the 
extent authorized by the certificate, is or will be required by the 
present or future public convenience and necessity; otherwise such 
application shall be denied. The Independent System Operator shall have 
the power to attach to the issuance of the certificate and to the 
exercise rights granted thereunder such reasonable terms and conditions 
as the public convenience and necessity may require. Within 60 days of 
the issuance of a certificate, the Governor of the affected State may 
submit to the Independent System Operator a written statement 
expressing concurrence, rejection, or concurrence with conditions 
regarding the certificate. If such a written statement is submitted to 
the Independent System Operator within this time period, the 
Independent System Operator shall issue an order within 60 days of the 
submission of such statement, which order shall conform with the 
concurrence, rejection, or concurrence with conditions expressed in the 
written statement of such Governor.

SEC. 203. EMINENT DOMAIN.

    (a) Authority to Exercise.--When any holder of a certificate of 
public convenience and necessity cannot acquire by contract, or is 
unable to agree with the owner of property to the compensation to be 
paid for, the necessary site or right-of-way for the construction of 
generation, transmission, or associated equipment necessary to the 
proper operation of such generation or transmission facilities, it may 
acquire the same by the exercise of the right of eminent domain in the 
district court of the United States for the district in which such 
property may be located, or in the State courts. The practice and 
procedure in any action or proceeding for that purpose in the district 
court of the United States shall conform as nearly as may be with the 
practice and procedure in similar action or proceeding in the courts of 
the State where the property is situated.
    (b) Limitation on Jurisdiction.--The United States district courts 
shall only have jurisdiction of cases arising under subsection (a) when 
the amount claimed by the owner of the property to be condemned exceeds 
$3,000.

                       TITLE III--INTERCONNECTION

SEC. 301. INTERCONNECTION.

    The Federal Power Act is amended as follows:
            (1) By striking section 3(23) (16 U.S.C. 796(23)) and 
        inserting the following:
            ``(23) Transmitting utility.--The term `transmitting 
        utility' means any electric utility, qualifying cogeneration 
        facility, qualifying small power production facility, or 
        Federal power marketing agency which owns or operates, or 
        proposes to own or operate, electric power transmission or 
        distribution facilities, including facilities used for the 
        transformation of electric energy between the transmission and 
        distribution level or to enhance the capability of transmission 
        or distribution facilities to operate efficiently.
            (2) In section 210(a)(1) (16 U.S.C. 824i(a)(1))--
                    (A) by inserting ``transmitting utility,'' after 
                ``electric utility,'' ;
                    (B) by inserting ``any transmitting utility,'' 
                after ``small power production facility,'' in 
                subparagraph (A); and
                    (C) by inserting ``or distribution'' after 
                ``transmission'' in subparagraph (D).
            (3) In section 210(b)(2) (16 U.S.C. 824i(b)(2)) by striking 
        ``an evidentiary hearing'' and inserting ``a hearing''.

                TITLE IV--EXEMPT TRANSMITTING UTILITIES

SEC. 401. EXEMPT TRANSMITTING UTILITIES.

    (a) Definitions.--Subsection (a) of section 32 of the Public 
Utility Holding Company Act of 1935 (15 U.S.C. 79z-5a) is amended by 
adding at the end the following new paragraphs:
            ``(5) Exempt transmitting utility.--The term `exempt 
        transmitting utility' means any person determined by the 
        Federal Energy Regulatory Commission to be engaged directly, or 
        indirectly through one or more affiliates as defined in section 
        2(a)(11)(B), and exclusively in the business of owning or 
        operating, or both owning and operating, all or part of one or 
        more eligible transmission facilities. No person shall be 
        deemed to be an exempt transmitting utility unless such person 
        has applied to the Federal Energy Regulatory Commission for a 
        determination under this paragraph. A person applying in good 
        faith for such a determination shall be deemed an exempt 
        transmitting utility under this section, until the Federal 
        Energy Regulatory Commission makes such determination. The 
        Federal Energy Regulatory Commission shall make such 
        determination within 60 days of its receipt of such application 
        and shall notify the Securities and Exchange Commission 
        whenever a determination is made under this paragraph that any 
        person is an exempt transmitting utility. Not later than 12 
        months after the date of enactment of this section, the Federal 
        Energy Regulatory Commission shall promulgate rules 
        implementing the provisions of this paragraph. Applications for 
        determination filed after the effective date of such rules 
        shall be subject thereto.
            ``(6) Eligible transmission facility.--The term `eligible 
        transmission facility' means a facility, wherever located--
                    ``(A) which is used for the transmission or 
                distribution of electric energy, and
                    ``(B) construction of which commenced on or after 
                the date of enactment of this paragraph.''.
    (b) Use of Defined Term.--Subsections (d) through (l) of such 
section are amended--
            (1) by striking ``exempt wholesale generator'' each place 
        it appears and inserting ``exempt wholesale generator or exempt 
        transmitting utility''; and
            (2) by striking ``exempt wholesale generators'' each place 
        it appears and inserting ``exempt wholesale generators or 
        exempt transmitting utilities''.
                                 <all>