[Congressional Record Volume 147, Number 9 (Wednesday, January 24, 2001)]
[Senate]
[Pages S543-S548]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH of Oregon:
  S. 172. A bill to benefit electricity consumers by promoting the 
reliability of the bulk-power system; to the Committee on Energy and 
Natural Resources.
  Mr. SMITH of Oregon. I stand before you and the Senate today. As I do 
this, our Nation is relearning a fundamental lesson--that electricity 
does not come from hitting a light switch. Our urban areas are getting 
a painful lesson that the quality of life that we and they enjoy in 
this Nation is a direct result of resource production.
  California is scrambling as we speak to keep the lights on from day 
to day and has had 2 days recently of rolling blackouts. The west coast 
energy crisis shows no sign of abating and could actually intensify in 
coming weeks if the region, which is heavily dependent on hydroelectric 
power, continues to face below average precipitation. The reservoir 
behind the Grand Coulee Dam, by far the largest of the Federal dams in 
the Northwest, is at its lowest level in 25 years. The Grand Coulee Dam 
is also upstream of 10 other dams on the mainstem Columbia River. So 
downstream powerhouses cannot generate electricity either.
  Much of the media attention in recent weeks has focused on efforts to 
keep the lights on in California and to keep the State's two largest 
utilities from going bankrupt. The west coast energy market extends to 
11 other Western States, including Oregon, that are all interconnected 
by the high-voltage transmission system.
  I believe there is more that California can and must do immediately 
to address this situation. First and foremost, it must approve further 
electric rate increases. I don't normally advocate increases, but this 
is necessary to send the right signal to Californians that they have to 
conserve energy.
  Further, price increases are necessary to help California's investor-
owned utilities, which have recently been reduced to junk bond status, 
from going bankrupt. Avoiding bankruptcy for these utilities is 
important for Oregon and for other Western States. Since the middle of 
December, Northwest utilities have been forced, by Federal order, to 
sell their surplus power into California, with no guarantee of being 
paid. If the California utilities subsequently seek bankruptcy 
protection, it will be Oregonians who are stuck with the bill for 
California's failed restructuring effort.
  We should not confuse this with deregulation. This is a failed effort 
at restructuring that incredibly took off, went to a free market in the 
wholesale, went to a price cap at retail, and then overregulated at 
production levels.
  I tell you, when you do that with an expanding economy, you have 
created a catastrophe. That is what California has created, and its 
neighbors are now beginning to help shoulder the burden.
  California must also operate its native generation, including its 
fossil fuel plants, at full capacity during this crisis. It can also 
find additional temporary generation.
  I recently came across a news story from last August about one 
California utility that was abandoning its efforts to moor a floating 
power plant in San Francisco Bay as protection against future power 
shortages.
  That 95-megawatt emergency powerplant could have provided enough 
power for 95,000 homes in the area.
  However, according to this news clip, the company abandoned its 
efforts because it was ``under fire from environmentalists and 
skeptical of winning regulatory approval. . . . ''
  The article also quoted the executive director of the San Francisco 
Bay Conservation and Development Commission as saying, ``The commission 
was skeptical as to whether the emergency really existed.''
  What a difference a few months makes. I wonder if anyone in San 
Francisco thinks there isn't an emergency now.
  In response to these tight margins between supply and demand, today I 
am reintroducing legislation that passed the Senate last Congress that 
will enhance the reliability of the wholesale transmission system. It 
is imperative that the transmission grid be operated as efficiently and 
reliably as possible during times when the margin between supply and 
demand is so tight.
  Yesterday, I sent a letter to the President urging him to issue an 
Executive order directing electricity conservation at all federal 
facilities throughout the twelve western states. Between federal office 
buildings, post offices, military bases, prisons, and other facilities, 
the federal government is among the largest consumers of electricity in 
the West.
  The Governors of Oregon and Washington are seeking 10 percent 
reductions in energy use at state facilities, and I believe this would 
be an appropriate goal for federal facilities as well.
  The federal government is also a major producer of electricity in the 
Western United States. Much of that generation is from hydroelectric 
facilities.
  I have expressed concern over the last several weeks that the 
Columbia and Snake River hydropower facilities not be operated in a 
manner that jeopardizes salmon recovery efforts in what is shaping up 
to be a poor water year in the Basin.
  However, there are many other federal generation facilities 
throughout the 12 western states that are interconnected by the high-
voltage transmission system.
  Therefore, I asked that the Energy Department be directed to 
undertake an immediate review of all of these facilities to ensure they 
are providing as much power as possible during this crisis.
  It is not just California that needs additional generation, however. 
According to a recent study by the Northwest Power Planning Council, 
the Pacific Northwest faces a 25 percent chance of power shortages 
during this and coming winters.
  To reduce this probability to a more acceptable level of five 
percent, the Northwest needs nearly 3,000 megawatts of new generating 
resources, conservation, or short-term demand management.
  This report, however, assumed that all the other generation remained 
equal. Yet in recent years there have been calls to close the nuclear 
plant WNP2, with a capacity of 1,250 megawatts.
  Breaching the four lower Snake River dams, which I oppose, would 
reduce capacity by another 1,200 megawatts, enough power for Seattle.
  In addition, almost 12,000 megawatts of non-federal hydroelectric 
power in Oregon, Washington, Idaho, and California, is up for 
relicensing between now and 2010. More stringent operating criteria 
could reduce the total amount of power available.
  New licenses will probably also reduce the operational flexibility of 
these facilities that makes hydropower so valuable in meeting daily 
peaks in energy demand.
  In the face of the numbers I just quoted, I believe it is the height 
of irresponsibility to even be discussing breaching the four lower 
Snake River dams. The Endangered Species Act was never intended to 
force us, as Americans, to dismantle the infrastructure that our 
parents and grandparents worked so hard to build.
  The Bush administration is going to have to clean up a huge mess that 
is not of their making. The assault on domestic energy production and 
the lack of a national energy strategy over the last eight years are 
finally coming

[[Page S544]]

home to roost. This nation is more dependent on foreign oil than at any 
time in its history, and crude oil prices are rising as foreign nations 
are reducing production. Natural gas prices have doubled in recent 
months. Electricity prices on the West Coast have skyrocketed, and they 
remain high in the Northeast.
  The previous administration started out wanting to tax energy 
production through a BTU tax, as a way to force Americans to conserve. 
When that wasn't enacted, the past administration went about a 
systematic assault on energy production. They went after coal-fired 
plants, nuclear plants, and hydroelectric plants.
  They opposed the siting of new natural gas pipelines and the 
expansion of oil refining capacity. They put millions of acres of land 
off-limits to oil, gas, and coal exploration. The economy, particularly 
on the west coast, is just beginning to feel the cumulative effects of 
these actions.
  The U.S. economy needs energy. It needs abundant, reasonably priced 
oil, gas and electricity if our economic prosperity is to continue.
  I want to thank the leadership of the Senate for efforts to craft an 
energy bill. I know that the Bush administration will work with the 
Congress to achieve more energy production and more conservation.
  But I say to my fellow Oregonians and Americans everywhere who care 
about this issue that we must reconnect the reality dots between the 
lives we live and the natural resources we demand.
  At the end of the day, power is not created by hitting a light 
switch. Food does not come from Safeway. Gasoline does not come from a 
filling station. These are all things we need, and we must be good 
stewards of the environment but also remember that using the land does 
not have to equal abusing the land. But those who advocate that all 
must be shut down are simply the ones who would visit this trauma that 
we are now seeing in California on the rest of us as well.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 172

       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 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 electric power 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 electric power transmission grid; and
       ``(ii) the output of generating units necessary to maintain 
     the reliability of the interconnected electric power 
     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;
       ``(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.--
       ``(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 subsection (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

[[Page S545]]

     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, 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

[[Page S546]]

       ``(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 specified 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 in 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;
       ``(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

[[Page S547]]

     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.
       ``(iii) 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:
       ``(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 an 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.
       ``(q) Preservation of State Authority.--
       ``(1) Extent of authority of the electric reliability 
     organization.--The electric reliability organization shall 
     have authority to develop, implement, and enforce compliance 
     with standards for the reliable operation of only the bulk-
     power system.
       ``(2) No authority with respect to adequacy or safety.--
     This section does not provide the electric reliability 
     organization or the Commission with the authority to 
     establish or enforce compliance with standards for adequacy 
     or safety of electric facilities or services.
       ``(3) No preemption.--
       ``(A) In general.--Nothing in this section preempts the 
     authority of any State to take action to ensure the safety, 
     adequacy, and reliability of electric service within the 
     State, so long as the action is not inconsistent with any 
     organization standard.
       ``(B) Consistency determination.--Not later than 90 days 
     after the electric reliability organization or any other 
     affected party submits to the Commission a petition for a 
     determination that a State action is inconsistent with an 
     organization standard,

[[Page S548]]

     the Commission shall issue a final order determining whether 
     a State action is inconsistent with an organization standard, 
     after notice and opportunity for comment, taking into 
     consideration any recommendations of the electric reliability 
     organization.
       ``(C) Stay.--The Commission, after consultation with the 
     electric reliability organization, may stay the effectiveness 
     of any State action, pending the Commission's issuance of a 
     final order.''.
       (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''.
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