[Congressional Record Volume 146, Number 12 (Thursday, February 10, 2000)]
[Senate]
[Pages S627-S632]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GORTON:
  S. 2071. A bill to benefit electricity consumers by promoting the 
reliability

[[Page S628]]

of the bulk-power system; to the Committee on Energy and Natural 
Resources.


                     electric reliability 2000 act

 Mr. GORTON. Mr. President, today I introduce the Electric 
Reliability 2000 Act, a measure that deals with the somewhat mysterious 
world of the bulk electricity system. Although most Americans are not 
experts on the intricacies of interstate electric transmission grids, 
they need to have confidence that the system will work and their lights 
and heat will be there when they need them.
  This nation's interstate electric transmission system is an extremely 
complex network that connects with Canada and Mexico. It has developed 
over decades with various voluntary agreements that allow areas to work 
together depending on changing power needs that vary from day to day 
and hour to hour and sometimes minute to minute. These voluntary 
agreements were developed after a disastrous event in 1965 led to a 
blackout in New York City and throughout other parts of the Northeast.
  Yet a fundamental change has made this voluntary system unworkable 
for the future. With the expansion of competition in the wholesale 
electricity market--starting with the 1992 Energy Policy Act--the 
system of buying and selling wholesale power is now many times more 
complex than it was just a decade ago. With a stronger economy, 
electricity usage has increased while thousands of new electricity 
marketers and buyers have created new stresses on the system.
  These stresses to the system have affected many parts of the country. 
In August 1996, a sagging power line in Oregon made contact with a 
tree, and combined with other factors led to a power outage that 
affected over 7 million consumers along the West Coast. Other outages 
have occurred in different parts of the country since that time.
  To address this situation, more than a year ago a group of 
electricity industry officials began meeting to develop legislative 
language needed in this new era in electricity. They developed 
provisions that have been included as a small part of several bills, 
including the larger restructuring bills developed in the House and by 
the Clinton administration.
  Events in recent months have lent urgency to this issue. I believe it 
is time to separate the issue of electricity reliability from the 
larger issue of restructuring. Our continued economic growth is fueled 
by electricity, and we need to assure the public that the power will be 
there for their homes and their jobs when they count on it.
  The stresses in the system continue to mount. In the summer of 1999, 
Americans experienced a wide-range of severe electricity outages. The 
Department of Energy created a team of experts to investigate these 
outages, and it submitted its report last month. I quote from the 
report's summary:

       In anticipation of competitive markets, some utilities have 
     adopted a strategy of cost cutting that involves reduced 
     spending on reliability. In addition, responsibility for 
     reliability management has been disaggregated to multiple 
     institutions, with utilities, independent system operators, 
     independent power producers, customers, and markets all 
     playing a role. The overall effect has been that the 
     infrastructure for reliability assurance has been 
     considerably eroded.

  The report continues:

       Moreover, historical levels of electric reliability may not 
     be adequate for the future. The quality of electric power and 
     the assurance that it will always be available are 
     increasingly important in a society that is ever more 
     dependent on electricity.

  The report includes several findings that suggest a range of policy 
questions that need to be addressed in order to assure the reliability 
of the Nation's bulk power system.
  The bill I introduce today includes what has been termed the 
``consensus language'' that was developed over the past year by these 
experts who work on the reliability side of the electricity industry. 
This bill is not the complete solution to the reliability issue for 
this industry. It is a good starting point. It creates a process to 
develop enforceable rules for the bulk-power system, while giving 
various regions the ability to tailor these rules in ways that make 
sense for their individual systems and their specific geography.
  In addition to setting up rules and a referee to enforce these rules, 
``reliability'' also involves many other facets of the electricity 
industry that are not addressed in this bill: full and open access to 
transmission systems, effective conservation programs that can help 
reduce peak system demands, the ability to site electricity generation 
plants closer to the loads they serve, promoting small-scale 
distributed generation, such as fuel-cells, throughout the grid, and 
many other wide-ranging actions. Until we can gain a greater consensus 
of the need to address these issues, this bill provides the opportunity 
to begin these discussions.
  Despite being described as a consensus bill, there may need to be 
changes to this legislative language so that it is effective. For 
example, there are ongoing discussions about the appropriate role for 
State regulators as their responsibilities relate to the interstate 
transmission system. Therefore I respectfully request Chairman 
Murkowski to conduct hearings on this serious issue of the reliability 
of the bulk power system and also to hold hearings on this bill as the 
starting point for solving this problem.
  Mr. President, I ask that a copy of the bill be printed in the 
Record.
  The bill follows:

                                S. 2071

       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 Reliability 2000 
     Act''.

     SEC. 2. ELECTRIC RELIABILITY ORGANIZATION.

       (a) In General.--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. ELECTRIC RELIABILITY ORGANIZATION.

       ``(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 all 
     facilities and control systems necessary for operating an 
     interconnected electric power transmission grid or any 
     portion of an interconnected transmission grid.
       ``(B) Inclusions.--The term `bulk-power system' includes--
       ``(i) high voltage transmission lines, substations, control 
     centers, communications, data, and operations planning 
     facilities necessary for the operation of all or any part of 
     the interconnected 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 energy over a 
     bulk-power system; or
       ``(B) owns, operates, or maintains facilities or control 
     systems that are part of a bulk-power system; or
       ``(C) is a system operator.
       ``(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.--

[[Page S629]]

       ``(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 advocate;
       ``(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 energy.
       ``(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) Commission Authority.--
       ``(1) Jurisdiction.--Notwithstanding section 201(f), 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, including entities described in 
     section 201(f), for purposes of approving organization 
     standards and enforcing compliance with this section.
       ``(2) Definition of terms.--The Commission may by 
     regulation define any term used in this section consistent 
     with the definitions in subsection (a) and the purpose and 
     intent of this Act.
       ``(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, 
     practice, or amendment to a reliability standard, guidance, 
     or practice that the person proposes to be made mandatory and 
     enforceable.
       ``(2) Review by the commission.--The Commission, after 
     allowing interested persons an opportunity to submit 
     comments, may approve a proposed mandatory standard, 
     guidance, practice, or amendment submitted under paragraph 
     (1) if the Commission finds that the standard, guidance, or 
     practice is just, reasonable, not unduly discriminatory or 
     preferential, and in the public interest.
       ``(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 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 designation 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 describe in the 
     application--
       ``(i) the governance and procedures of the applicant; and
       ``(ii) the funding mechanism and initial funding 
     requirements of the applicant.
       ``(3) Notice and comment.--The Commission shall--
       ``(A) provide public notice of the application; 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;
       ``(ii) ensure openness, a balancing of interests, and due 
     process; and
       ``(iii) includes alternative procedures to be followed in 
     emergencies;
       ``(H) has established fair and impartial procedures for 
     implementation and enforcement of organization standards, 
     either directly or through delegation to an affiliated 
     regional 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 reasonably 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 other matters that the Commission considers 
     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.--The electric reliability organization 
     shall submit to the Commission proposals for any new or 
     modified organization standards.
       ``(B) Contents.--A proposal submitted under subparagraph 
     (A) shall include--
       ``(i) a concise statement of the 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.--
       ``(i) In general.--After taking into consideration any 
     submitted comments, the Commission shall approve or 
     disapprove a proposed organization standard not later than 
     the end of the 60-day period 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.
       ``(ii) Failure to act.--If the Commission does not approve 
     or disapprove a proposal within the period specified in 
     clause (i), the proposed organization standard shall go into 
     effect subject to its terms, without prejudice to the 
     authority of the Commission to modify the organization 
     standard in accordance with the standards and requirements of 
     this section.
       ``(C) Effective date.--An organization standard approved by 
     the Commission shall take effect not earlier than 30 days 
     after the date of the Commission's order of approval.
       ``(D) Standards for approval.--
       ``(i) In general.--The Commission shall approve a proposed 
     new or modified organization standard if the Commission 
     determines the organization standard to be just,

[[Page S630]]

     reasonable, not unduly discriminatory or preferential, and in 
     the public interest.
       ``(ii) 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 or modified organization standard; but
       ``(II) shall not defer to the electric reliability 
     organization with respect to the effect of the organization 
     standard on competition.

       ``(E) Remand.--A proposed organization standard that is 
     disapproved in whole or in part by the Commission shall be 
     remanded to the electric reliability organization for further 
     consideration.
       ``(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 or modified organization 
     standard appropriate to carry out this section, and the 
     electric reliability organization shall develop and submit 
     the organization standard or modification to the Commission 
     in accordance with this subsection.
       ``(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 in the public interest 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 new or modified organization standard 
     shall take effect immediately on submission to the Commission 
     without notice or comment if the electric reliability 
     organization--
       ``(i) determines that an emergency exists requiring that 
     the new or modified organization standard take effect 
     immediately without notice or comment;
       ``(ii) notifies the Commission as soon as practicable after 
     making the determination;
       ``(iii) submits the new or modified organization standard 
     to the Commission not later than 5 days after making the 
     determination; and
       ``(iv) includes in the submission an explanation of the 
     need for immediate effectiveness.
       ``(B) Notice and comment.--The Commission shall--
       ``(i) provide notice of the new or modified organization 
     standard or amendment for comment; and
       ``(ii) follow the procedures set out in paragraphs (2) and 
     (3) for review of the new or modified organization standard.
       ``(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 in 
     Canada and Mexico.
       ``(2) International agreements.--
       ``(A) In general.--The President shall use best efforts to 
     enter into international agreements with the appropriate 
     governments of Canada and Mexico to provide for--
       ``(i) effective compliance with organization standards; and
       ``(ii) the effectiveness of the electric reliability 
     organization in carrying out its mission and 
     responsibilities.
       ``(B) Compliance.--All actions taken by the electric 
     reliability organization, an affiliated regional reliability 
     entity, and the Commission shall be consistent with any 
     international agreement under subparagraph (A).
       ``(g) Changes in Procedure, 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) Effectiveness.--
       ``(A) Changes in procedure.--
       ``(i) Changes constituting a statement of policy, practice, 
     or interpretation.--A proposed change in procedure shall 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 
     the procedure.
       ``(ii) Other changes.--A proposed change in procedure other 
     than a change described in clause (i) shall take effect on a 
     finding by the Commission, after notice and opportunity for 
     comment, 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 proposed change 
     in governance or funding shall not take effect unless the 
     Commission finds 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) 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 procedural, 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 entity, the electric reliability organization 
     shall enter into an agreement with the 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 entity satisfies the requirements of 
     subparagraphs (A), (B), (C), (D), (F), (J), 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 an 
     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 the 
     delegation is 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 approve the entity rule or 
     variance 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;

[[Page S631]]

       ``(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 be likely to cause 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 approve the entity rule or 
     variance if the affiliated regional reliability entity 
     demonstrates that the proposal--
       ``(i) was developed in a fair and open process that 
     provided an 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 justifiable 
     difference between regions or subregions within the 
     affiliated regional reliability entity's geographic area.
       ``(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 the procedures prescribed under subsection 
     (e).
       ``(E) 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).
       ``(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 shall order 
     the electric reliability organization to enter into a 
     delegation agreement under terms specified by the Commission 
     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) would 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 complaint, 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 
     difference in boundaries is inconsistent with the effective 
     and efficient implementation and administration of bulk-power 
     system reliability; or
       ``(iv) the agreement is inconsistent with a delegation 
     ordered by the Commission 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) Assumption of responsibilities.--If a delegation 
     agreement is suspended, the electric reliability organization 
     shall assume the responsibilities delegated under the 
     delegation agreement.
       ``(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, a transmission facility.
       ``(j) Enforcement.--
       ``(1) Disciplinary actions.--
       ``(A) In general.--Consistent with procedures approved by 
     the Commission under subsection (d)(4)(H), 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 finding in writing 
     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 shall take effect on the 30th day after the date on 
     which--

       ``(I) the electric reliability organization submits to the 
     Commission--

       ``(aa) a written finding that the bulk-power system user 
     violated an organization standard; and
       ``(bb) the record of proceedings before the electric 
     reliability organization; and

       ``(II) the Commission posts the written finding on the 
     Internet.

       ``(ii) Duration.--A disciplinary action shall remain in 
     effect or remain suspended unless 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 complaint by 
     any person or 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 electric energy consumers.
       ``(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:

[[Page S632]]

       ``(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 of the electric reliability 
     organization or affiliated regional reliability entity under 
     this section undertaken in good faith under the rules of the 
     organization of the electric reliability organization or 
     affiliated regional reliability entity.
       ``(2) Availability of defenses.--In a civil action brought 
     by any person or entity against the electric reliability 
     organization or an affiliated regional reliability entity 
     alleging a violation of an antitrust law based on an activity 
     under this Act, the defenses of primary jurisdiction and 
     immunity from suit and other affirmative defenses shall be 
     available to the extent applicable.
       ``(n) Regional Advisory Role.--
       ``(1) Establishment of regional advisory body.--The 
     Commission shall establish a regional advisory body on the 
     petition of the Governors of at least two-thirds of the 
     States within a region that have more than one-half 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 the 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 electric reliability organization, an 
     affiliated regional reliability entity, or the Commission 
     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.--In a case in which a regional advisory 
     body encompasses an entire interconnection, the Commission 
     may give deference to advice provided by the regional 
     advisory body under paragraph (3).
       ``(o) Applicability of Section.--This section does not 
     apply outside the 48 contiguous States.
       ``(p) Rehearings; Court Review of Orders.--Section 313 
     applies to an order of the Commission issued under this 
     section.''.
       (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 215''.
       (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 215''.
       (c) Savings Clause.--[RESERVED]
                                 ______