[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 516 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 516

  To benefit consumers by promoting competition in the electric power 
                   industry, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 3, 1999

  Mr. Thomas introduced the following bill; which was read twice and 
       referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
  To benefit consumers by promoting competition in the electric power 
                   industry, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electric Utility Restructuring 
Empowerment and Competitiveness Act of 1999''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) the Nation's 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;
            (2) competition will provide greater choices, lower prices, 
        and innovative services and products to all consumers of 
        electricity;
            (3)(A) States have traditionally regulated the rates, 
        terms, and conditions of selling electricity for end-use;
            (B) regulation of the rates, terms, and conditions of 
        selling electricity for end-use is properly the exclusive 
        jurisdiction of States;
            (C) virtually every State is considering reforms to 
        traditional methods of regulating the provision of retail 
        electric service to promote competition;
            (D) many States, through legislation or by administrative 
        decision, have already approved plans to begin retail 
        competition; and
            (E) States should--
                    (i) continue to take the lead in managing the 
                transition to a competitive electricity marketplace; 
                and
                    (ii) determine the retail electric policies that 
                provide the greatest benefits to consumers in a manner 
                that recognizes the unique characteristics of each 
                State;
            (4) all classes of consumers of electric energy should 
        benefit from competition in electricity sales;
            (5) consumers should have access to adequate, reliable, and 
        efficient supplies of electricity;
            (6) the transition to competition among electricity 
        providers should not impair the ability of the States to 
        determine recovery of the substantial investments made by 
        electric utilities to serve their customers;
            (7) reciprocity among competing retail electricity 
        providers will ensure that the States do not obtain undue 
        advantages or disadvantages from the timing of their decisions;
            (8) the Federal Government must address the matters within 
        Federal jurisdiction as necessary to promote competition, but 
        such actions must not be made at the expense of State 
        authority; and
            (9)(A) Congress should consider restricting governmental 
        utilities with respect to facilities financed with tax-exempt 
        debt;
            (B) sales in a service territory in existence before the 
        restriction may continue to be financed using tax-exempt debt; 
        and
            (C) a governmental utility should have to finance sales 
        outside its service territory on the same basis as other 
        competitors.
    (b) Purpose.--The purpose of this Act is to promote competition in 
the electric power industry through empowering the States, 
deregulation, and streamlining.

SEC. 3. STATE PROMOTION OF RETAIL COMPETITION.

    (a) Retained State Jurisdiction.--Part II of the Federal Power Act 
(16 U.S.C. 824 et seq.) is amended by adding at the end the following:

``SEC. 215. STATE PROMOTION OF RETAIL COMPETITION.

    ``(a) Definitions.--In this section:
            ``(1) Nonregulated electric utility.--The term 
        `nonregulated electric utility' has the meaning given the term 
        in section 3 of the Public Utility Regulatory Policies Act of 
        1978 (16 U.S.C. 2602).
            ``(2) Retail electric supply.--
                    ``(A) In general.--The term `retail electric 
                supply' means the production, generation, manufacture, 
                aggregation, retail marketing, retail brokering, retail 
                selling, or other retail supplying of electricity.
                    ``(B) Exclusion.--The term `retail electric supply' 
                does not include the transmission of electricity in 
                interstate commerce.
            ``(3) Retail sale.--The term `retail sale' means any sale 
        of electric energy for ultimate consumption.
            ``(4) State regulated electric utility.--The term `State 
        regulated electric utility' has the meaning given the term in 
        section 3 of the Public Utility Regulatory Policies Act of 1978 
        (16 U.S.C. 2602).
    ``(b) Jurisdiction.--A State may regulate the provision of any 
retail electric supply (including self-generation) or any local 
distribution service provided to an ultimate consumer of electricity in 
the State.
    ``(c) Performance Standards.--A State may establish and enforce 
performance standards for the retail sale, marketing, or delivery of 
electric energy to ensure system reliability, protect human health and 
public safety, and protect retail consumers from unfair business 
practices.
    ``(d) State Authority Over Retail Transactions.--Notwithstanding 
any other provision of this Act, a State or a nonregulated electric 
utility may require, as a condition of the purchase by any person or 
municipality located in the State or service area of the nonregulated 
electric utility, as appropriate, of a retail electric supply or local 
distribution service, the payment of a charge determined by the State 
or nonregulated electric utility to further public policy goals, 
including--
            ``(1) recover electric industry transition costs;
            ``(2) ensure that adequate electric service is available to 
        all customers served by a retail electricity distribution 
        system;
            ``(3) ensure and enhance the reliability of retail electric 
        service;
            ``(4) fund assistance to low-income consumers of 
        electricity;
            ``(5) encourage environmental programs, renewable-energy 
        programs, energy-efficiency programs, or conservation programs;
            ``(6) provide for transition costs of electric utility 
        workers adversely affected by restructuring; and
            ``(7) encourage research and development on electric 
        technologies.
    ``(e) Wholesale Reciprocity.--An electric utility may not provide 
any wholesale electric supply in commerce using open and 
nondiscriminatory transmission access unless the electric utility, and 
every affiliate of the electric utility, provides comparable open and 
nondiscriminatory transmission access over any facility owned, 
controlled, or operated by the person or affiliate.
    ``(f) Retail Reciprocity.--A State may provide that a nonregulated 
electric utility, a State regulated electric utility, or a cooperative 
utility in the State may deny local distribution access to any other 
nonregulated electric utility, State regulated electric utility, or 
cooperative utility (or affiliate of any such utility) that is offering 
electric energy for sale (referred to in this subsection as the 
`seller') to a customer of the in-State utility if the seller or an 
affiliate of the seller is not providing comparable access to any local 
distribution facility owned, controlled, or operated by the seller or 
affiliate.''.
    (b) State Authority Over Sales of Electricity to Federal 
Facilities.--Section 201 of the Federal Power Act (16 U.S.C. 824) is 
amended by adding at the end the following:
    ``(h) State Authority Over Sales of Electricity to Federal 
Facilities.--The purchase of electricity for ultimate consumption by a 
Federal department, agency, authority, instrumentality, facility, 
enclave, installation, establishment, or mixed-ownership government 
corporation shall be subject to the laws (including regulations) of the 
State in which the consumption of electricity occurs with respect to 
the choice of supplier and rules, rates, terms and conditions, if any, 
applicable to such a purchase.''.
    (c) Universal Service.--Section 201(b) of the Federal Power Act (16 
U.S.C. 824(b)) is amended by adding at the end the following:
            ``(3) Universal service.--Nothing in this Act deprives a 
        State of the authority to require, in accordance with State 
        law, all electricity providers that sell electricity to retail 
        customers in the State to assist in providing universal 
        service.''.

SEC. 4. DEREGULATION OF WHOLESALE SALES OF ELECTRIC ENERGY.

    (a) Deregulation of Wholesale Sales of Electric Energy.--Section 
205 of the Federal Power Act (16 U.S.C. 824d) is amended by adding at 
the end the following:
    ``(g) Deregulation of Wholesale Sales of Electric Energy.--
            ``(1) In general.--A contract or agreement for the sale of 
        electric energy for resale made after the date of enactment of 
        this subsection shall be exempt from regulation of rates and 
        charges under parts II and III of this Act.
            ``(2) State authority over retail sales unaffected.--
        Nothing in this subsection affects the authority of a State or 
        State commission to regulate sales to an ultimate customer.''.
    (b) Open Access Transmission From All Transmitting Utilities.--Part 
II of the Federal Power Act (16 U.S.C. 824 et seq.) (as amended by 
section 3(a)) is amended by adding at the end the following:

``SEC. 216. OPEN ACCESS TRANSMISSION FROM ALL TRANSMITTING UTILITIES.

    ``A transmitting utility and any other entity that owns, operates, 
or controls transmission of electricity in interstate commerce--
            ``(1) shall be subject to the jurisdiction of the 
        Commission under this Act regarding any wholesale transmission 
        service; and
            ``(2) shall comply with all requirements applicable to a 
        public utility regarding the provision of any wholesale 
        transmission service.''.

SEC. 5. TAX BENEFITS TO UTILITIES.

    Not later than 1 year after the date of enactment of this Act, the 
Inspector General of the Treasury shall submit to Congress a report 
detailing whether and how Internal Revenue Code provisions relating to 
the following benefits should be addressed in order to foster a 
competitive retail electricity market:
            (1) Benefits received as a result of the Internal Revenue 
        Code by an investor-owned electric utility that is not received 
        by other nonutility private corporations under the Internal 
        Revenue Code.
            (2) Benefits received as a result of the Internal Revenue 
        Code by a utility providing electric service to the public that 
        is--
                    (A) an instrumentality of a State;
                    (B) a political subdivision of a State;
                    (C) a corporation that has at any time received a 
                loan from the Rural Utilities Service or the Rural 
                Electrification Administration under the Rural 
                Electrification Act of 1936 (17 U.S.C. 901 et seq.) for 
                the purposes of providing electric service; or
                    (D) an entity that is owned, directly or 
                indirectly, by an entity described in subparagraph (A), 
                (B), or (C).

SEC. 6. PURPA REFORM.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 824a-3) is amended by adding at the end the following:
    ``(m) Limitation on Rules.--
            ``(1) Definition of facility.--In this subsection, the term 
        `facility' means a facility for the generation of electric 
        energy or an addition to or expansion of the generating 
        capacity of a facility for the generation of electric energy.
            ``(2) Limitation.--This section shall not apply to a 
        facility that begins commercial operation after the date of 
        enactment of this subsection, except for a facility for which a 
        power purchase contract was entered into under this section 
        before the date of enactment of this subsection.
            ``(3) Contracts.--After the date of enactment of this 
        subsection, an electric utility shall not be required to enter 
        into a new contract or obligation to purchase or sell electric 
        energy under this section.''.

SEC. 7. REPEAL OF PUHCA.

    (a) Findings and Purposes.--
            (1) Findings.--Congress finds that--
                    (A) the Public Utility Holding Company Act of 1935 
                (15 U.S.C. 79a et seq.) was intended to facilitate the 
                work of Federal and State regulators by placing certain 
                constraints on the activities of holding company 
                systems;
                    (B) developments since 1935, including changes in 
                other regulation and in the electric and gas 
                industries, have called into question the continued 
                relevance of the model of regulation established by 
                that Act;
                    (C) there is a continuing need for State regulation 
                in order to ensure the rate protection of utility 
                customers; and
                    (D) limited Federal regulation is necessary to 
                supplement the work of State commissions for continued 
                rate protection for electric and gas utility customers.
            (2) Purposes.--The purposes of this section are--
                    (A) to eliminate unnecessary regulation, yet 
                continue to provide for consumer protection by 
                facilitating existing rate regulatory authority through 
                improved Federal and State commission access to books 
                and records of all companies in a holding company 
                system, to the extent that such information is relevant 
                to rates paid by utility customers, while affording 
                companies the flexibility required to compete in the 
                energy markets; and
                    (B) to address protection of electric and gas 
                utility customers by providing for Federal and State 
                access to books and records of all companies in a 
                holding company system that are relevant to utility 
                rates.
    (b) Definitions.--In this section:
            (1) Affiliate.--The term ``affiliate'' means any company, 5 
        percent or more of the outstanding voting securities of which 
        are owned, controlled, or held with power to vote, directly or 
        indirectly, by a parent company.
            (2) Associate company.--The term ``associate company'' 
        means any company in the same holding company system with 
        another company.
            (3) Commission.--The term ``Commission'' means the Federal 
        Energy Regulatory Commission.
            (4) Company.--The term ``company'' means a corporation, 
        partnership, association, joint stock company, business trust, 
        or any organized group of persons, whether incorporated or not, 
        or a receiver, trustee, or other liquidating agent of any such 
        entity.
            (5) Electric utility company.--The term ``electric utility 
        company'' means any company that owns or operates facilities 
        used for the generation, transmission, or distribution of 
        electric energy for sale.
            (6) Exempt wholesale generator.--The term ``exempt 
        wholesale generator'' has the meaning given the term in section 
        32(a) of the Public Utility Holding Company Act of 1935 (15 
        U.S.C. 79z-5a(a)), as in effect on the day before the effective 
        date of this section.
            (7) Foreign utility company.--The term ``foreign utility 
        company'' has the meaning given the term in section 33(a) of 
        the Public Utility Holding Company Act of 1935 (15 U.S.C. 79z-
        5b(a)), as in effect on the day before the effective date of 
        this section.
            (8) Gas utility company.--The term ``gas utility company'' 
        means any company that owns or operates facilities used for 
        retail distribution (other than the distribution only in 
        enclosed portable containers or distribution to tenants or 
        employees of the company operating such facilities for their 
        own use and not for resale) of natural or manufactured gas for 
        heat, light, or power.
            (9) Holding company.--The term ``holding company'' means--
                    (A) a company that directly or indirectly owns, 
                controls, or holds, with power to vote, 10 percent or 
                more of the outstanding voting securities of a public 
                utility company or of a holding company of any public 
                utility company; and
                    (B) any person, determined by the Commission, after 
                notice and opportunity for hearing, to exercise 
                directly or indirectly (either alone or under an 
                arrangement or understanding with 1 or more persons) 
                such a controlling influence over the management or 
                policies of any public utility company or holding 
                company as to make it necessary or appropriate for rate 
                protection for utility customers with respect to rates 
                that such person be subject to the obligations, duties, 
                and liabilities imposed by this Act upon holding 
                companies.
            (10) Holding company system.--The term ``holding company 
        system'' means a holding company and all subsidiary companies 
        of the holding company.
            (11) Jurisdictional rate.--The term ``jurisdictional rate'' 
        means a rate established by the Commission for the transmission 
        of electric energy in interstate commerce, the sale of electric 
        energy at wholesale in interstate commerce, the transportation 
        of natural gas in interstate commerce, and the sale in 
        interstate commerce of natural gas for resale for ultimate 
        public consumption for domestic, commercial, industrial, or any 
        other use.
            (12) Natural gas company.--The term ``natural gas company'' 
        means a person engaged in the transportation of natural gas in 
        interstate commerce or the sale of natural gas in interstate 
        commerce for resale.
            (13) Person.--The term ``person'' means an individual or 
        company.
            (14) Public utility.--The term ``public utility'' means any 
        person that owns or operates facilities used for transmission 
        of electric energy in interstate commerce or sales of electric 
        energy at wholesale in interstate commerce.
            (15) Public utility company.--The term ``public utility 
        company'' means an electric utility company or a gas utility 
        company.
            (16) State commission.--The term ``State commission'' means 
        any commission, board, agency, or officer, by whatever name 
        designated, of a State, municipality, or other political 
        subdivision of a State that, under the laws of such State, has 
        jurisdiction to regulate public utility companies.
            (17) Subsidiary company.--The term ``subsidiary company'', 
        in reference to a subsidiary company of a holding company, 
        means--
                    (A) a company, 10 percent or more of the 
                outstanding voting securities of which are directly or 
                indirectly owned, controlled, or held with power to 
vote, by the holding company; and
                    (B) any person, the management or policies of which 
                the Commission, after notice and opportunity for 
                hearing, determines to be subject to a controlling 
                influence, directly or indirectly, by the holding 
                company (either alone or under an arrangement or 
                understanding with 1 or more other persons) so as to 
                make it necessary for the rate protection of utility 
                customers with respect to rates that the person be 
                subject to the obligations, duties, and liabilities 
                imposed by this section on subsidiary companies of 
                holding companies.
            (18) Voting security.--The term ``voting security'' means 
        any security entitling the owner or holder of the security to 
        vote in the direction or management of the affairs of a 
        company.
    (c) Repeal of the Public Utility Holding Company Act of 1935.--The 
Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) is 
repealed.
    (d) Federal Access to Books and Records.--
            (1) In general.--Each holding company and each associate 
        company of a holding company shall maintain, and shall make 
        available to the Commission, such books, accounts, memoranda, 
        and other records as the Commission considers to be relevant to 
        costs incurred by a public utility or natural gas company that 
        is an associate company of the holding company and necessary or 
        appropriate for the protection of utility customers with 
        respect to jurisdictional rates for the transmission of 
        electric energy in interstate commerce, the sale of electric 
        energy at wholesale in interstate commerce, the transportation 
        of natural gas in interstate commerce, and the sale in 
        interstate commerce of natural gas for resale for ultimate 
        public consumption for domestic, commercial, industrial, or 
        other use.
            (2) Affiliate companies.--Each affiliate of a holding 
        company or of any subsidiary company of a holding company shall 
        maintain, and make available to the Commission, such books, 
        accounts, memoranda, and other records with respect to any 
        transaction with another affiliate, as the Commission considers 
        relevant to costs incurred by a public utility or natural gas 
        company that is an associate company of the holding company and 
        necessary or appropriate for the protection of utility 
        customers with respect to jurisdictional rates.
            (3) Holding company systems.--The Commission may examine 
        the books, accounts, memoranda, and other records of any 
        company in a holding company system, or any affiliate of a 
        company in a holding company system, as the Commission 
        considers relevant to costs incurred by a public utility or 
        natural gas company in the holding company system and necessary 
        or appropriate for the protection of utility customers with 
        respect to jurisdictional rates.
            (4) Confidentiality.--No member, officer, or employee of 
        the Commission shall divulge any fact or information that may 
        come to the knowledge of the member, officer, or employee 
        during the course of examination of a book, account, 
        memorandum, or other record under this section, except as may 
        be directed by the Commission or by a court of competent 
        jurisdiction.
    (e) State Access to Books and Records.--
            (1) In general.--On the written request of a State 
        commission having jurisdiction to regulate a public utility 
        company in a holding company system, a holding company or an 
        associate or affiliate of a holding company, wherever located, 
        shall produce for inspection any book, account, memorandum, or 
        other record that--
                    (A) has been identified in reasonable detail in a 
                proceeding before the State commission;
                    (B) the State commission considers relevant to 
                costs incurred by the company; and
                    (C) is necessary for the effective discharge of the 
                responsibilities of the State commission with respect 
                to the proceeding.
            (2) Limitation.--Paragraph (1) does not apply to any person 
        that is a holding company solely by reason of ownership of 1 or 
        more qualifying facilities under the Public Utility Regulatory 
        Policies Act of 1978 (16 U.S.C. 2601 et seq.).
            (3) Confidentiality of information.--The production of 
        books, accounts, memoranda, and other records under paragraph 
        (1) shall be subject to such terms and conditions as are 
        necessary to safeguard against unwarranted disclosure to the 
        public of any trade secrets or sensitive commercial 
        information.
            (4) Effect on state law.--Nothing in this section preempts 
        applicable State law concerning the provision of books, 
        records, or any other information, or in any way limit the 
        rights of any State to obtain books, records, or any other 
information under Federal law, contract, or otherwise.
            (5) Court jurisdiction.--Any United States district court 
        located in the State in which the State commission referred to 
        in paragraph (1) is located shall have jurisdiction to enforce 
        compliance with this section.
    (f) Exemption Authority.--
            (1) Rulemaking.--Not later than 90 days after the effective 
        date of this section, the Commission shall promulgate a final 
        rule to exempt from the requirements of subsection (d) any 
        person that is a holding company, solely with respect to 1 or 
        more--
                    (A) qualifying cogeneration facilities or 
                qualifying small power production facilities under 
                section 210 of the Public Utility Regulatory Policies 
                Act of 1978 (16 U.S.C. 824a-3 et seq.);
                    (B) exempt wholesale generators; or
                    (C) foreign utility companies.
            (2) Other authority.--If, on application or on its own 
        motion, the Commission finds that the books, records, accounts, 
        memoranda, and other records of any person are not relevant to 
        the jurisdictional rates of a public utility company, or if the 
        Commission finds that any class of transactions is not relevant 
        to the jurisdictional rates of a public utility company, the 
        Commission shall exempt the person or transaction from the 
        requirements of subsection (d).
    (g) Affiliate Transactions.--Nothing in this section precludes the 
Commission or a State commission from exercising its jurisdiction under 
otherwise applicable law to determine whether a public utility company 
may recover in rates any costs of an activity performed by an associate 
company, or any costs of goods or services acquired by the public 
utility company from an associate company.
    (h) Applicability.--This section does not apply to--
            (1) the United States;
            (2) a State or a political subdivision of a State;
            (3) a foreign governmental authority not operating in the 
        United States;
            (4) an agency, authority, or instrumentality of an entity 
        referred to in paragraph (1), (2), or (3); or
            (5) an officer, agent, or employee of an entity referred to 
        in paragraph (1), (2), or (3) acting as such in the course of 
        the official duties of the officer, agent, or employee.
    (i) Effect on Other Regulations.--Nothing in this section precludes 
the Commission or a State commission from exercising jurisdiction under 
other law to protect utility customers.
    (j) Enforcement.--The Commission shall have the powers set forth in 
sections 306 through 317 of the Federal Power Act (16 U.S.C. 825d et 
seq.) to enforce this section.
    (k) Savings Provisions.--
            (1) In general.--Nothing in this section prohibits a person 
        from engaging in or continuing to engage in an activity or 
        transaction in which the person was legally engaged or 
        authorized to engage (whether by rule, order, or otherwise) on 
        the day before the effective date of this section, if the 
        person continues to comply with the terms of any authorization.
            (2) Effect on other commission authority.--Nothing in this 
        section limits the authority of the Commission under the 
        Federal Power Act (16 U.S.C. 791a et seq.) or the Natural Gas 
        Act (15 U.S.C. 717 et seq.).
    (l) Implementation.--Not later than 18 months after the date of 
enactment of this Act, the Commission shall--
            (1) promulgate such regulations as are necessary or 
        appropriate to implement this section (other than subsection 
        (c)); and
            (2) submit to Congress detailed recommendations on 
        technical and conforming amendments to Federal law necessary to 
        carry out this section and the amendments made by this section.
    (m) Transfer of Resources.--All books and records that relate 
primarily to responsibilities of the Commission under this section 
shall be transferred from the Securities and Exchange Commission to the 
Commission.
    (n) Conforming Amendment to the Federal Power Act.--Section 318 of 
the Federal Power Act (16 U.S.C. 825q) is repealed.
    (o) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.
    (p) Effective Date.--This section and the amendments made by this 
section take effect on the date that is 18 months after the date of 
enactment of this Act.

SEC. 8. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    (a) In General.--Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) (as amended by section 4(b)) is amended by adding at the end the 
following:

``SEC. 217. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    ``(a) Definitions.--In this section:
            ``(1) Affiliated regional reliability entity.--The term 
        `affiliated regional reliability entity' means an entity 
        delegated authority under subsection (h).
            ``(2) Bulk-power system.--
                    ``(A) In general.--The term `bulk-power system' 
                means an interconnected transmission grid in which 
                electric power is transmitted over transmission lines 
                with a capacity of more than 115 kilovolts.
                    ``(B) Inclusions.--The term `bulk-power system' 
                includes--
                            ``(i) transmission lines, substations, 
                        control centers, communications, data, 
                        operations planning facilities, control 
                        systems, and all other facilities necessary for 
                        the operation of all or any part of the 
                        transmission grid; and
                            ``(ii) the output of generating units 
                        necessary to maintain the reliability of the 
                        transmission grid.
            ``(3) Bulk-power system user.--The term `bulk-power system 
        user' means an entity that--
                    ``(A) sells, purchases, or transmits electric power 
                over a bulk-power system; or
                    ``(B) owns, operates, or maintains facilities or 
                control systems that are part of a bulk-power system.
            ``(4) Electric reliability organization.--The term 
        `electric reliability organization' means the organization 
        designated by the Commission under subsection (d).
            ``(5) Entity rule.--The term `entity rule' means a rule 
        adopted by an affiliated regional reliability entity for a 
        specific region and designed to implement or enforce 1 or more 
        organization standards.
            ``(6) Independent director.--The term `independent 
        director' means a person that--
                    ``(A) is not an officer or employee of an entity 
                that would reasonably be perceived as having a direct 
                financial interest in the outcome of a decision by the 
                board of directors of the electric reliability 
                organization; and
                    ``(B) does not have a relationship that would 
                interfere with the exercise of independent judgment in 
                carrying out the responsibilities of a director of the 
                electric reliability organization.
            ``(7) Industry sector.--The term `industry sector' means a 
        group of bulk-power system users with substantially similar 
        commercial interests, as determined by the board of directors 
        of the electric reliability organization.
            ``(8) Interconnection.--The term `interconnection' means a 
        geographic area in which the operation of bulk-power system 
        components is synchronized so that the failure of 1 or more of 
        the components may adversely affect the ability of the 
        operators of other components within the interconnection to 
        maintain safe and reliable operation of the facilities within 
        their control.
            ``(9) Organization standard.--
                    ``(A) In general.--The term `organization standard' 
                means a policy or standard adopted by the electric 
                reliability organization to provide for the reliable 
                operation of a bulk-power system.
                    ``(B) Inclusions.--The term `organization standard' 
                includes--
                            ``(i) an entity rule approved by the 
                        electric reliability organization; and
                            ``(ii) a variance approved by the electric 
                        reliability organization.
            ``(10) Public interest group.--
                    ``(A) In general.--The term `public interest group' 
                means a nonprofit private or public organization that 
                has an interest in the activities of the electric 
                reliability organization.
                    ``(B) Inclusions.--The term `public interest group' 
                includes--
                            ``(i) a ratepayer advocacy group;
                            ``(ii) an environmental group; and
                            ``(iii) a State or local government 
                        organization that regulates participants in and 
                        promulgates government policy with respect to 
                        the market for electric power.
            ``(11) System operator.--
                    ``(A) In general.--The term `system operator' means 
                an entity that operates or is responsible for the 
                operation of a bulk-power system.
                    ``(B) Inclusions.--The term `system operator' 
                includes--
                            ``(i) a control area operator;
                            ``(ii) an independent system operator;
                            ``(iii) a transmission company;
                            ``(iv) a transmission system operator; and
                            ``(v) a regional security coordinator.
            ``(12) Variance.--The term `variance' means an exception 
        from the requirements of an organization standard (including a 
        proposal for an organization standard in a case in which there 
        is no organization standard) that is adopted by an affiliated 
        regional reliability entity and is applicable to all or a part 
        of the region for which the affiliated regional reliability 
        entity is responsible.
    ``(b) Jurisdiction of the Commission.--Within the United States, 
the Commission shall have jurisdiction over the electric reliability 
organization, all affiliated regional reliability entities, all system 
operators, and all bulk-power system users for purposes of approving 
organization standards and enforcing compliance with this section.
    ``(c) Existing Reliability Standards.--
            ``(1) Submission to the commission.--Before designation of 
        an electric reliability organization under subsection (d), any 
        person, including the North American Electric Reliability 
        Council and its member Regional Reliability Councils, may 
        submit to the Commission any reliability standard, guidance, or 
        practice that the person proposes to be made mandatory and 
        enforceable.
            ``(2) Review by the commission.--
                    ``(A) In general.--The Commission, after allowing 
                interested persons an opportunity to submit comments, 
                may approve any such proposed mandatory standard, 
                guidance, or practice if the Commission finds that the 
                standard, guidance, or practice is just, reasonable, 
                not unduly discriminatory or preferential, and in the 
                public interest.
                    ``(B) Summary approval.--The Commission may, 
                without further proceeding or finding, approve any 
                standard, guidance, or practice for which no 
                substantive objections are submitted during the comment 
                period.
            ``(3) Effect of approval.--A standard, guidance, or 
        practice shall be mandatory and applicable according to its 
        terms following approval by the Commission and shall remain in 
        effect until it is--
                    ``(A) withdrawn, disapproved, or superseded by an 
                organization standard that is issued or approved by the 
                electric reliability organization and made effective by 
                the Commission under section (e); or
                    ``(B) disapproved or suspended by the Commission 
                if, on complaint or upon motion by the Commission and 
                after notice and an opportunity for comment, the 
                Commission finds the standard, guidance, or practice to 
                be unjust, unreasonable, unduly discriminatory or 
                preferential or not in the public interest.
            ``(4) Enforceability.--A standard, guidance, or practice in 
        effect under this subsection shall be enforceable by the 
        Commission.
    ``(d) Designation of Electric Reliability Organization.--
            ``(1) Regulations.--
                    ``(A) Proposed regulations.--Not later than 90 days 
                after the date of enactment of this section, the 
                Commission shall propose regulations specifying 
                procedures and requirements for an entity to apply for 
                selection as the electric reliability organization.
                    ``(B) Notice and comment.--The Commission shall 
                provide notice and opportunity for comment on the 
                proposed regulations.
                    ``(C) Final regulation.--Not later than 180 days 
                after the date of enactment of this section, the 
                Commission shall promulgate final regulations under 
                this subsection.
            ``(2) Application.--
                    ``(A) Submission.--Following the promulgation of 
                final regulations under paragraph (1), an entity may 
                submit an application to the Commission for designation 
                as the electric reliability organization.
                    ``(B) Contents.--The applicant shall--
                            ``(i) specify in the application the 
                        governance and procedures of the applicant and 
                        its funding mechanism and initial funding 
                        requirements; and
                            ``(ii) submit any organization standards 
                        proposed to take effect under subsection (e).
            ``(3) Notice and comment.--The Commission shall--
                    ``(A) provide public notice of the application and 
                the proposed organization standards; and
                    ``(B) afford interested parties an opportunity to 
                comment.
            ``(4) Designation of electric reliability organization.--
        The Commission shall designate the applicant as the electric 
        reliability organization if the Commission determines that the 
        applicant--
                    ``(A) has the ability to develop, implement, and 
                enforce standards that provide for an adequate level of 
                reliability of bulk-power systems;
                    ``(B) permits voluntary membership to any bulk-
                power system user or public interest group;
                    ``(C) ensures fair representation of its members in 
                the selection of its directors and fair management of 
                its affairs, taking into account the need for 
                efficiency and effectiveness in decisionmaking and 
                operations and the requirements for technical 
                competency in the development of organization standards 
                and the exercise of oversight of bulk-power system 
                reliability;
                    ``(D) ensures that no 2 industry sectors have the 
                ability to control, and no 1 industry sector has the 
                ability to veto, the applicant's discharge of its 
                responsibilities as the electric reliability 
                organization (including actions by committees 
                recommending standards for approval by the board or 
                other board actions to implement and enforce 
                standards);
                    ``(E) provides for governance by a board wholly 
                comprised of independent directors;
                    ``(F) provides a funding mechanism and requirements 
                that--
                            ``(i) are just, reasonable, not unduly 
                        discriminatory or preferential and in the 
                        public interest; and
                            ``(ii) satisfy the requirements of 
                        subsection (l);
                    ``(G) has established procedures for development of 
                organization standards that--
                            ``(i) provide reasonable notice and 
                        opportunity for public comment, taking into 
                        account the need for efficiency and 
                        effectiveness in decisionmaking and operations 
                        and the requirements for technical competency 
                        in the development of organization standards; 
                        and
                            ``(ii) ensure openness, a balancing of 
                        interests, and due process, subject to the 
                        application of alternative procedures when 
                        necessitated by a need to respond to an 
                        emergency;
                    ``(H) has established fair and impartial procedures 
                for implementation and enforcement of organization 
                standards, either directly or through delegation to an 
                affiliated regional reliability entity, including the 
                imposition of penalties, limitations on activities, 
                functions, or operations, or other appropriate 
                sanctions;
                    ``(I) has established procedures for notice and 
                opportunity for public observation of all meetings, 
                except that the procedures for public observation may 
                include alternative procedures for emergencies or for 
                the discussion of information that the directors 
                determine should take place in closed session, such as 
                litigation, personnel actions, or commercially 
                sensitive information;
                    ``(J) provides for the consideration of 
                recommendations of States and State commissions; and
                    ``(K) addresses such other matters as the 
                Commission deems necessary or appropriate to ensure 
                that the procedures, governance, and funding of the 
                electric reliability organization are just, reasonable, 
                not unduly discriminatory or preferential, and in the 
                public interest.
            ``(5) Exclusive designation.--
                    ``(A) In general.--The Commission shall designate 
                only 1 electric reliability organization.
                    ``(B) Multiple applications.--If the Commission 
                receives 2 or more timely applications that satisfy the 
                requirements of this subsection, the Commission shall 
                approve only the application that the Commission 
                determines will best implement this section.
    ``(e) Organization Standards.--
            ``(1) Submission of proposals to commission.--
                    ``(A) In general.--If the electric reliability 
                organization proposes a new organization standard or 
                modification to an organization standard, the electric 
                reliability organization shall submit the new 
organization standard or modification to the Commission for review.
                    ``(B) Contents.--A proposal submitted under 
                subparagraph (A) shall include--
                            ``(i) a concise statement of the purpose of 
                        the proposal; and
                            ``(ii) a record of any proceedings 
                        conducted with respect to the proposal.
            ``(2) Review by the commission.--
                    ``(A) Notice and comment.--The Commission shall--
                            ``(i) provide notice of a proposal under 
                        paragraph (1); and
                            ``(ii) allow interested persons 30 days to 
                        submit comments on the proposal.
                    ``(B) Action by the commission.--After taking into 
                consideration any submitted comments, the Commission 
                shall approve or disapprove a proposed organization 
                standard or modification not later than the end of the 
                60-day period beginning on the date of the deadline for 
                the submission of comments, except that the Commission 
                may extend the 60-day period for an additional 90 days 
                for good cause.
                    ``(C) Failure to act.--If the Commission does not 
                act to approve or disapprove a proposed organization 
                standard or modification within the period specified by 
                subparagraph (B), the proposed organization standard or 
                modification shall take effect subject to its terms, 
                without prejudice to the authority of the Commission 
                thereafter to suspend or modify the organization 
                standard or modification in accordance with this 
                section.
                    ``(D) Effective date.--An organization standard or 
                modification approved by the Commission shall take 
                effect--
                            ``(i) not earlier than 30 days after the 
                        date of the Commission's order of approval; or
                            ``(ii) if the organization standard is to 
                        take effect under subparagraph (C), on the date 
                        that is 30 days after the end of the applicable 
                        period under subparagraph (B).
                    ``(E) Standards for approval or suspension.--
                            ``(i) In general.--The Commission shall 
                        approve a proposed new organization standard or 
                        modification if the Commission determines the 
                        organization standard or modification to be 
                        just, reasonable, not unduly discriminatory or 
                        preferential, and in the public interest.
                            ``(ii) Suspension.--The Commission, on 
                        complaint or upon the motion of the Commission, 
                        shall suspend an organization standard or 
                        modification if the Commission determines the 
                        standard to be unjust, unreasonable, unduly 
                        discriminatory or preferential, or not in the 
                        public interest.
                            ``(iii) Considerations.--In the exercise of 
                        its review responsibilities under this 
                        subsection, the Commission--
                                    ``(I) shall give due weight to the 
                                technical expertise of the electric 
                                reliability organization with respect 
                                to the content of a new organization 
                                standard or modification; but
                                    ``(II) shall not defer to the 
                                electric reliability organization with 
                                respect to the effect of the 
                                organization standard on competition.
                    ``(F) Remand.--
                            ``(i) In general.--An existing or proposed 
                        organization standard that is disapproved or 
                        suspended in whole or in part by the Commission 
                        shall be remanded to the electric reliability 
                        organization for further consideration.
                            ``(ii) Guidance.--The Commission may offer 
                        guidance to the electric reliability 
                        organization as to how to cure the determined 
                        deficiency.
            ``(3) Orders to develop or modify organization standards.--
        The Commission, on complaint or on motion of the Commission, 
        may order the electric reliability organization to develop and 
        submit to the Commission, by a date specified in the order, an 
        organization standard or modification to an existing 
        organization standard to address a specific matter if the 
        Commission considers a new organization standard or 
        modification appropriate to carry out this section.
            ``(4) Variances and entity rules.--
                    ``(A) Proposal.--An affiliated regional reliability 
                entity may propose a variance or entity rule to the 
                electric reliability organization.
                    ``(B) Expedited consideration.--If expedited 
                consideration is necessary to provide for bulk-power 
                system reliability, the affiliated regional reliability 
                entity may--
                            ``(i) request that the electric reliability 
                        organization expedite consideration of the 
                        proposal; and
                            ``(ii) file a notice of the request with 
                        the Commission.
                    ``(C) Failure to act.--
                            ``(i) In general.--If the electric 
                        reliability organization fails to adopt the 
                        variance or entity rule, in whole or in part, 
                        the affiliated regional reliability entity may 
                        request that the Commission review the 
                        proposal.
                            ``(ii) Action by the commission.--If the 
                        Commission determines, after a review of the 
                        request, that the action of the electric 
                        reliability organization did not conform to the 
                        applicable standards and procedures approved by 
                        the Commission, or if the Commission determines 
                        that the variance or entity rule is just, 
                        reasonable, not unduly discriminatory or 
                        preferential, and that the electric reliability 
                        organization has unreasonably rejected or 
                        failed to act on the proposal, the Commission 
                        may--
                                    ``(I) remand the proposal for 
                                further consideration by the electric 
                                reliability organization; or
                                    ``(II) order the electric 
                                reliability organization or the 
                                affiliated regional reliability entity 
                                to develop a variance or entity rule 
                                consistent with that requested by the 
                                affiliated regional reliability entity.
                    ``(D) Procedure.--A variance or entity rule 
                proposed by an affiliated regional reliability entity 
                shall be submitted to the electric reliability 
                organization for review and submission to the 
                Commission in accordance with the procedures specified 
                in paragraph (2).
            ``(5) Immediate effectiveness.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, a proposed organization 
                standard or modification shall take effect according to 
                its terms if the electric reliability organization 
                determines that an emergency exists requiring that the 
                proposed organization standard or modification take 
                effect without advance notice or comment.
                    ``(B) Notification.--The electric reliability 
                organization shall--
                            ``(i) notify the Commission immediately 
                        after making a determination under subparagraph 
                        (A);
                            ``(ii) submit the emergency organization 
                        standard or modification to the Commission not 
                        later than 5 days after making the 
                        determination; and
                            ``(iii) include in the submission an 
                        explanation of the need for the emergency 
                        organization standard.
                    ``(C) Notice and comment.--The Commission shall--
                            ``(i) provide notice of the new 
                        organization standard or modification for 
                        comment; and
                            ``(ii) follow the procedures specified in 
                        paragraphs (2) and (3) for review of the new 
                        organization standard or modification.
                    ``(D) Duration of effectiveness.--An emergency 
                organization standard or modification shall remain in 
                effect unless and until suspended or disapproved by the 
                Commission.
                    ``(E) Suspension or disapproval.--If the Commission 
                determines at any time that the emergency organization 
                standard or modification is not necessary, the 
                Commission may suspend or disapprove the emergency 
                organization standard or modification.
            ``(6) Compliance.--Each bulk power system user shall comply 
        with an organization standard that takes effect under this 
        section.
    ``(f) Coordination With Canada and Mexico.--
            ``(1) Recognition.--The electric reliability organization 
        shall take all appropriate steps to gain recognition by the 
        governments of and the industry in Canada and Mexico.
            ``(2) International agreements.--
                    ``(A) In general.--The United States shall use its 
                best efforts to enter into agreements with the 
                appropriate governments of Canada and Mexico to provide 
                for--
                            ``(i) effective compliance with 
                        organization standards; and
                            ``(ii) the effectiveness of the electric 
                        reliability organization in carrying out its 
                        mission and responsibilities.
                    ``(B) Action consistent with international 
                agreements.--All actions taken by the electric 
                reliability organization, any affiliated regional 
                reliability entity, or the Commission shall be 
                consistent with any international agreements described 
                in subparagraph (A).
    ``(g) Changes in Procedures, Governance, or Funding.--
            ``(1) Submission to the commission.--The electric 
        reliability organization shall submit to the Commission--
                    ``(A) any proposed change in a procedure, 
                governance, or funding provision; or
                    ``(B) any change in an affiliated regional 
                reliability entity's procedure, governance, or funding 
                provision relating to delegated functions.
            ``(2) Contents.--A submission under paragraph (1) shall 
        include an explanation of the basis and purpose for the change.
            ``(3) Effective date.--
                    ``(A) Changes in procedures.--
                            ``(i) Statements with respect to existing 
                        procedures.--A proposed change in a procedure 
                        may take effect 90 days after submission to the 
                        Commission if the change constitutes a 
                        statement of policy, practice, or 
                        interpretation with respect to the meaning or 
                        enforcement of a procedure that the Commission 
                        has determined to meet the requirements of 
                        subparagraph (G), (H), or (I) of subsection 
                        (d)(4).
                            ``(ii) Other changes in procedures.--A 
                        proposed change in procedure other than a 
                        change described in clause (i) shall take 
                        effect if the Commission, after notice and 
                        opportunity for comment, determines that the 
                        change--
                                    ``(I) is just, reasonable, not 
                                unduly discriminatory or preferential, 
                                and in the public interest; and
                                    ``(II) satisfies the requirements 
                                of subsection (d)(4).
                    ``(B) Changes in governance or funding.--A change 
                in governance or funding shall take effect if the 
                Commission, after notice and opportunity for comment, 
                determines that the change--
                            ``(i) is just, reasonable, not unduly 
                        discriminatory or preferential, and in the 
                        public interest; and
                            ``(ii) satisfies the requirements of 
                        subsection (d)(4).
            ``(4) Suspension.--The Commission, on complaint or on the 
        motion of the Commission, may suspend application of a 
        procedure, governance, or funding provision if the Commission 
        determines that the provision--
                    ``(A) is unjust, unreasonable, unduly 
                discriminatory or preferential, or not in the public 
                interest; or
                    ``(B) does not meet the requirements of subsection 
                (d)(4).
            ``(5) Order to amend.--
                    ``(A) In general.--The Commission, on complaint or 
                on the motion of the Commission, may require the 
                electric reliability organization to amend a procedure, 
                governance, or funding provision if the Commission 
                determines that the amendment is necessary to meet the 
                requirements of this section.
                    ``(B) Filing.--The electric reliability 
                organization shall submit the amendment in accordance 
                with paragraph (1).
    ``(h) Delegations of Authority.--
            ``(1) In general.--
                    ``(A) Implementation and enforcement of 
                compliance.--At the request of an affiliated regional 
                reliability entity, the electric reliability 
                organization shall enter into an agreement with the 
                affiliated regional reliability entity for the 
                delegation of authority to implement and enforce 
                compliance with organization standards in a specified 
                geographic area if the electric reliability 
                organization finds that--
                            ``(i) the affiliated regional reliability 
                        entity satisfies the requirements of 
                        subparagraphs (A), (B), (C), (D), (F), and (K) 
                        of subsection (d)(4); and
                            ``(ii) the delegation would promote the 
                        effective and efficient implementation and 
                        administration of bulk-power system 
                        reliability.
                    ``(B) Other authority.--The electric reliability 
                organization may enter into an agreement to delegate to 
                the affiliated regional authority entity any other 
                authority, except that the electric reliability 
                organization shall reserve the right to set and approve 
                standards for bulk-power system reliability.
            ``(2) Approval by the commission.--
                    ``(A) Submission to the commission.--The electric 
                reliability organization shall submit to the 
                Commission--
                            ``(i) any agreement entered into under this 
                        subsection; and
                            ``(ii) any information the Commission 
                        requires with respect to the affiliated 
                        regional reliability entity to which authority 
                        is delegated.
                    ``(B) Standards for approval.--The Commission shall 
                approve the agreement, following public notice and an 
                opportunity for comment, if the Commission finds that 
                the agreement--
                            ``(i) meets the requirements of paragraph 
                        (1); and
                            ``(ii) is just, reasonable, not unduly 
                        discriminatory or preferential, and in the 
                        public interest.
                    ``(C) Rebuttable presumption.--A proposed 
                delegation agreement with an affiliated regional 
                reliability entity organized on an interconnection-wide 
                basis shall be rebuttably presumed by the Commission to 
                promote the effective and efficient implementation and 
                administration of the reliability of the bulk-power 
                system.
                    ``(D) Invalidity absent approval.--No delegation by 
                the electric reliability organization shall be valid 
                unless approved by the Commission.
            ``(3) Procedures for entity rules and variances.--
                    ``(A) In general.--A delegation agreement under 
                this subsection shall specify the procedures by which 
                the affiliated regional reliability entity may propose 
                entity rules or variances for review by the electric 
                reliability organization.
                    ``(B) Interconnection-wide entity rules and 
                variances.--In the case of a proposal for an entity 
                rule or variance that would apply on an 
                interconnection-wide basis, the electric reliability 
                organization shall presume that the proposal is valid 
                if the proposal is made by an interconnection-wide 
                affiliated regional reliability entity unless the 
                electric reliability organization makes a written 
                finding that the entity rule or variance--
                            ``(i) was not developed in a fair and open 
                        process that provided an opportunity for all 
                        interested parties to participate;
                            ``(ii) would have a significant adverse 
                        impact on reliability or commerce in other 
                        interconnections;
                            ``(iii) fails to provide a level of 
                        reliability of the bulk-power system within the 
                        interconnection such that the entity rule or 
                        variance would constitute a serious and 
                        substantial threat to public health, safety, 
                        welfare, or national security; or
                            ``(iv) would create a serious and 
                        substantial burden on competitive markets 
                        within the interconnection that is not 
                        necessary for reliability.
                    ``(C) Noninterconnection-wide entity rules and 
                variances.--In the case of a proposal for an entity 
                rule or variance that would apply only to part of an 
                interconnection, the electric reliability organization 
                shall find the proposal valid if the affiliated 
                regional reliability entity making the proposal 
                demonstrates that the proposal--
                            ``(i) was developed in a fair and open 
                        process that provided and opportunity for all 
                        interested parties to participate;
                            ``(ii) would not have an adverse impact on 
                        commerce that is not necessary for reliability;
                            ``(iii) provides a level of bulk-power 
                        system reliability that is adequate to protect 
                        public health, safety, welfare, and national 
                        security and would not have a significant 
                        adverse impact on reliability; and
                            ``(iv) in the case of a variance, is based 
                        on a technical difference between regions or 
                        between subregions within the affiliated 
                        regional reliability entity's geographic area 
                        that necessitates application of different 
                        entity rules in different regions or 
                        subregions.
                    ``(D) Action by the electric reliability 
                organization.--
                            ``(i) In general.--The electric reliability 
                        organization shall approve or disapprove a 
                        proposal under subparagraph (A) within 120 days 
                        after the proposal is submitted.
                            ``(ii) Failure to act.--If the electric 
                        reliability organization fails to act within 
                        the time specified in clause (i), the proposal 
                        shall be deemed to have been approved.
                            ``(iii) Submission to the commission.--
                        After approving a proposal under subparagraph 
                        (A), the electric reliability organization 
                        shall submit the proposal to the Commission for 
                        approval under subsection (e)(1).
                    ``(E) No direct submissions.--An affiliated 
                regional reliability entity may not submit a proposal 
                for approval directly to the Commission except as 
                provided in subsection (e)(4)(C).
            ``(4) Failure to reach delegation agreement.--
                    ``(A) In general.--If an affiliated regional 
                reliability entity requests, consistent with paragraph 
                (1), that the electric reliability organization 
                delegate authority to it, but is unable within 180 days 
                to reach agreement with the electric reliability 
                organization with respect to the requested delegation, 
                the entity may seek relief from the Commission.
                    ``(B) Review by the commission.--The Commission may 
                order the electric reliability organization to make a 
                delegation requested under subparagraph (A) if, after 
                notice and opportunity for comment, the Commission 
                determines that--
                            ``(i) a delegation to the affiliated 
                        regional reliability entity would--
                                    ``(I) meet the requirements of 
                                paragraph (1); and
                                    ``(II) be just, reasonable, not 
                                unduly discriminatory or preferential, 
                                and in the public interest; and
                            ``(ii) the electric reliability 
                        organization unreasonably withheld the 
                        delegation.
            ``(5) Orders to modify delegation agreements.--
                    ``(A) In general.--On compliant, or on motion of 
                the Commission, after notice to the appropriate 
                affiliated regional reliability entity, the Commission 
may order the electric reliability organization to propose a 
modification to a delegation agreement under this subsection if the 
Commission determines that--
                            ``(i) the affiliated regional reliability 
                        entity--
                                    ``(I) no longer has the capacity to 
                                carry out effectively or efficiently 
                                the implementation or enforcement 
                                responsibilities under the delegation 
                                agreement;
                                    ``(II) has failed to meet its 
                                obligations under the delegation 
                                agreement; or
                                    ``(III) has violated this section;
                            ``(ii) the rules, practices, or procedures 
                        of the affiliated regional reliability entity 
                        no longer provide for fair and impartial 
                        discharge of the implementation or enforcement 
                        responsibilities under the delegation 
                        agreement;
                            ``(iii) the geographic boundary of a 
                        transmission entity approved by the Commission 
                        is not wholly within the boundary of an 
                        affiliated regional reliability entity, and the 
                        discrepancy in the boundaries is inconsistent 
                        with the effective and efficient implementation 
                        and administration of bulk-power system 
                        reliability; or
                            ``(iv) the agreement is inconsistent with 
                        another delegation agreement as a result of 
                        actions taken under paragraph (4).
                    ``(B) Suspension.--
                            ``(i) In general.--Following an order to 
                        modify a delegation agreement under 
                        subparagraph (A), the Commission may suspend 
                        the delegation agreement if the electric 
                        reliability organization or the affiliated 
                        regional reliability entity does not propose an 
                        appropriate and timely modification.
                            ``(ii) Resumption of responsibilities.--If 
                        a delegation agreement is suspended, the 
                        electric reliability organization shall resume 
                        the responsibilities delegated under the 
                        delegation agreement.
                            ``(iii) Appeal.--The Commission shall allow 
                        the electric reliability organization and the 
                        affiliated regional reliability entity an 
                        opportunity to appeal a suspension under clause 
                        (i).
    ``(i) Organization Membership.--Each system operator shall be a 
member of--
            ``(1) the electric reliability organization; and
            ``(2) any affiliated regional reliability entity operating 
        under an agreement effective under subsection (h) applicable to 
        the region in which the system operator operates or is 
        responsible for the operation of bulk-power system facilities.
    ``(j) Enforcement.--
            ``(1) Disciplinary actions.--
                    ``(A) In general.--Consistent with procedures that 
                the Commission has determined to meet the requirements 
                of subsection (d)(4)(H) and with any international 
                agreement under subsection (f), the electric 
                reliability organization may impose a penalty, 
                limitation on activities, functions, or operations, or 
                other disciplinary action that the electric reliability 
                organization finds appropriate against a bulk-power 
                system user if the electric reliability organization, 
                after notice and an opportunity for interested parties 
                to be heard, issues a written finding that the bulk-
                power system user has violated an organization 
                standard.
                    ``(B) Notification.--The electric reliability 
                organization shall immediately notify the Commission of 
                any disciplinary action imposed with respect to an act 
                or failure to act of a bulk-power system user that 
                affected or threatened to affect bulk-power system 
                facilities located in the United States.
                    ``(C) Right to petition.--A bulk-power system user 
                that is the subject of disciplinary action under 
                paragraph (1) shall have the right to petition the 
                Commission for a modification or rescission of the 
                disciplinary action.
                    ``(D) Injunctions.--If the electric reliability 
                organization finds it necessary to prevent a serious 
                threat to reliability, the electric reliability 
                organization may seek injunctive relief in the United 
                States district court for the district in which the 
                affected facilities are located.
                    ``(E) Effective date.--
                            ``(i) In general.--Unless the Commission, 
                        on motion of the Commission or on application 
                        by the bulk-power system user that is the 
                        subject of the disciplinary action, suspends 
the effectiveness of a disciplinary action, the disciplinary action may 
take effect not earlier than the 30th day after the date on which--
                                    ``(I) the electric reliability 
                                organization has submitted to the 
                                Commission a written finding under 
                                subparagraph (A) and record of 
                                proceedings before the electric 
                                reliability organization; and
                                    ``(II) the Commission has issued a 
                                written finding.
                            ``(ii) Duration.--A disciplinary action 
                        shall remain in effect or remain suspended 
                        until the Commission, after notice and 
                        opportunity for hearing, affirms, sets aside, 
                        modifies, or reinstates the disciplinary 
                        action.
                            ``(iii) Expedited consideration.--The 
                        Commission shall conduct the hearing under 
                        procedures established to ensure expedited 
                        consideration of the action taken.
            ``(2) Compliance orders.--The Commission, on motion of the 
        Commission, may order compliance with an organization standard 
        and may impose a penalty, limitation on activities, functions, 
        or operations, or take such other disciplinary action as the 
        Commission finds appropriate, against a bulk-power system user 
        with respect to actions affecting or threatening to affect 
        bulk-power system facilities located in the United States if 
        the Commission finds, after notice and opportunity for a 
        hearing, that the bulk-power system user has violated or 
        threatens to violate an organization standard.
            ``(3) Other actions.--The Commission may take such action 
        as is necessary against the electric reliability organization 
        or an affiliated regional reliability entity to ensure 
        compliance with an organization standard, or any Commission 
        order affecting electric reliability organization or affiliated 
        regional reliability entity.
    ``(k) Reliability Reports.--The electric reliability organization 
shall--
            ``(1) conduct periodic assessments of the reliability and 
        adequacy of the interconnected bulk-power system in North 
        America; and
            ``(2) report annually to the Secretary of Energy and the 
        Commission its findings and recommendations for monitoring or 
        improving system reliability and adequacy.
    ``(l) Assessment and Recovery of Certain Costs.--
            ``(1) In general.--The reasonable costs of the electric 
        reliability organization, and the reasonable costs of each 
        affiliated regional reliability entity that are related to 
        implementation or enforcement of organization standards or 
        other requirements contained in a delegation agreement approved 
        under subsection (h), shall be assessed by the electric 
        reliability organization and each affiliated regional 
        reliability entity, respectively, taking into account the 
        relationship of costs to each region and based on an allocation 
        that reflects an equitable sharing of the costs among all end-
        users of electric power in each region.
            ``(2) Rules.--The Commission shall provide by rule for the 
        review of costs and allocations under paragraph (1) in 
        accordance with the standards in this subsection and subsection 
        (d)(4)(F).
    ``(m) Application of Antitrust Laws.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the following activities are rebuttably presumed to be in 
        compliance with the antitrust laws of the United States:
                    ``(A) Activities undertaken by the electric 
                reliability organization under this section or 
                affiliated regional reliability entity operating under 
                a delegation agreement under subsection (h).
                    ``(B) Activities of a member of the electric 
                reliability organization or affiliated regional 
                reliability entity in pursuit of the objectives under 
                this section undertaken in good faith under the rules 
                of the organization.
            ``(2) Applicability of law.--The law relating to the 
        doctrine of primary jurisdiction and to immunities and other 
        affirmative defenses shall be available in any action brought 
        alleging a violation of the antitrust laws to the extent 
        otherwise applicable.
    ``(n) State Authority.--Nothing in this section limits the 
authority of a State to impose requirements necessary to ensure the 
continued reliability and public safety of electric facilities in the 
State.
    ``(o) Regional Advisory Role.--
            ``(1) Establishment.--The Secretary of Energy shall 
        establish a regional advisory body on the petition of the 
        Governors of \2/3\ of the States within a region that have more 
        than \1/2\ of their electrical loads served within the region.
            ``(2) Membership.--A regional advisory body--
                    ``(A) shall be composed of 1 member from each State 
                in the region, appointed by the Governor of each State; 
                and
                    ``(B) may include representatives of agencies, 
                States, and provinces outside the United States, on 
                execution of an appropriate international agreement 
                described in subsection (f).
            ``(3) Functions.--A regional advisory body may provide 
        advice to the Commission, the electric reliability 
        organization, or an affiliated regional reliability entity 
        regarding--
                    ``(A) the governance of an affiliated regional 
                reliability entity existing or proposed within a 
                region;
                    ``(B) whether a standard proposed to apply within 
                the region is just, reasonable, not unduly 
                discriminatory or preferential, and in the public 
                interest; and
                    ``(C) whether fees proposed to be assessed within 
                the region are--
                            ``(i) just, reasonable, not unduly 
                        discriminatory or preferential, and in the 
                        public interest; and
                            ``(ii) consistent with the requirements of 
                        subsection (l).
            ``(4) Deference.--
                    ``(A) Entire interconnection.--
                            ``(i) In general.--In a case in which a 
                        regional advisory body encompasses an entire 
                        interconnection, the Commission shall give 
                        deference to the findings of the regional 
                        advisory body unless the Commission determines 
                        that the findings by the regional advisory body 
                        are not just, not reasonable, unduly 
                        discriminatory or preferential, or not in the 
                        public interest.
                            ``(ii) No precedential value.--Commission 
                        deference to the findings of a regional 
                        advisory body under clause (i) shall not 
                        constitute precedent outside the 
                        interconnection unless the Commission so 
                        indicates.
                    ``(B) In general.--The Commission may give 
                deference to any findings made by a regional advisory 
                body.
    ``(p) Regulations.--The Commission may, by regulation, define any 
term used in this section, so long as the definition is consistent with 
the definitions in, and the purposes and intent of, this Act.''.
    (b) Enforcement.--
            (1) General penalties.--Section 316(c) of the Federal Power 
        Act (16 U.S.C. 825o(c)) is amended--
                    (A) by striking ``subsection'' and inserting 
                ``section''; and
                    (B) by striking ``or 214'' and inserting ``214 or 
                217''.
            (2) Certain provisions.--Section 316A of the Federal Power 
        Act (16 U.S.C. 825o-1) is amended by striking ``or 214'' each 
        place it appears and inserting ``214, or 217''.
                                 <all>