18 CFR Part 39

Federal Energy Regulatory Commission
agents are prohibited from disclosing,
or using anyone as a conduit for the
disclosure of, non-public, operational
information received from a pipeline
pursuant to § 284.12(b)(4) of this chapter
to a third party or to its marketing
function employees as that term is defined in § 358.3(d) of this chapter.
[78 FR 70187, Nov. 22, 2013]

PART 39—RULES CONCERNING
CERTIFICATION OF THE ELECTRIC
RELIABILITY
ORGANIZATION;
AND PROCEDURES FOR THE ESTABLISHMENT, APPROVAL, AND
ENFORCEMENT OF ELECTRIC RELIABILITY STANDARDS
Sec.
39.1 Definitions.
39.2 Jurisdiction and applicability.
39.3 Electric Reliability Organization certification.
39.4 Funding of the Electric Reliability Organization.
39.5 Reliability Standards.
39.6 Conflict of a Reliability Standard with
a Commission order.
39.7 Enforcement of Reliability Standards.
39.8 Delegation to a Regional Entity.
39.9 Enforcement of Commission rules and
orders.
39.10 Changes to an Electric Reliability Organization Rule or Regional Entity Rule.
39.11 Reliability reports.
39.12 Review of state action.
39.13 Regional Advisory Bodies.
AUTHORITY: 16 U.S.C. 824o.

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SOURCE: Order 672, 71 FR 8736, Feb. 17, 2006,
unless otherwise noted.

§ 39.1 Definitions.
As used in this part:
Bulk-Power System means facilities
and control systems necessary for operating an interconnected electric energy
transmission network (or any portion
thereof), and electric energy from generating facilities needed to maintain
transmission system reliability. The
term does not include facilities used in
the local distribution of electric energy.
Cross-Border Regional Entity means a
Regional Entity that encompasses a
part of the United States and a part of
Canada or Mexico.
Cybersecurity Incident means a malicious act or suspicious event that dis-

§ 39.1
rupts, or was an attempt to disrupt,
the operation of those programmable
electronic devices and communications
networks including hardware, software
and data that are essential to the Reliable Operation of the Bulk-Power System.
Electric Reliability Organization or
‘‘ERO’’ means the organization certified by the Commission under § 39.3
the purpose of which is to establish and
enforce Reliability Standards for the
Bulk-Power System, subject to Commission review.
Electric Reliability Organization Rule
means, for purposes of this part, the
bylaws, a rule of procedure or other organizational rule or protocol of the
Electric Reliability Organization.
Interconnection means a geographic
area in which the operation of BulkPower System components is synchronized such that the failure of one
or more of such components may adversely affect the ability of the operators of other components within the
system to maintain Reliable Operation
of the facilities within their control.
Regional Advisory Body means an entity established upon petition to the
Commission pursuant to section 215(j)
of the Federal Power Act that is organized to advise the Electric Reliability
Organization, a Regional Entity, or the
Commission regarding certain matters
in accordance with § 39.13.
Regional Entity means an entity having enforcement authority pursuant to
§ 39.8.
Regional Entity Rule means, for purposes of this part, the bylaws, a rule of
procedure or other organizational rule
or protocol of a Regional Entity.
Reliability Standard means a requirement approved by the Commission
under section 215 of the Federal Power
Act, to provide for Reliable Operation
of the Bulk-Power System. The term
includes requirements for the operation of existing Bulk-Power System
facilities, including cybersecurity protection, and the design of planned additions or modifications to such facilities
to the extent necessary to provide for
Reliable Operation of the Bulk-Power
System, but the term does not include
any requirement to enlarge such facilities or to construct new transmission
capacity or generation capacity.

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§ 39.2

18 CFR Ch. I (4–1–17 Edition)

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Reliable Operation means operating
the elements of the Bulk-Power System within equipment and electric system thermal, voltage, and stability
limits so that instability, uncontrolled
separation, or cascading failures of
such system will not occur as a result
of a sudden disturbance, including a
Cybersecurity Incident, or unanticipated failure of system elements.
Transmission Organization means a regional transmission organization, independent system operator, independent
transmission provider, or other transmission organization finally approved
by the Commission for the operation of
transmission facilities.
§ 39.2 Jurisdiction and applicability.
(a) Within the United States (other
than Alaska and Hawaii), the Electric
Reliability Organization, any Regional
Entities, and all users, owners and operators of the Bulk-Power System, including but not limited to entities described in section 201(f) of the Federal
Power Act, shall be subject to the jurisdiction of the Commission for the
purposes of approving Reliability
Standards established under section 215
of the Federal Power Act and enforcing
compliance with section 215 of the Federal Power Act.
(b) All entities subject to the Commission’s reliability jurisdiction under
paragraph (a) of this section shall comply with applicable Reliability Standards, the Commission’s regulations,
and applicable Electric Reliability Organization and Regional Entity Rules
made effective under this part.
(c) Each user, owner and operator of
the Bulk-Power System within the
United States (other than Alaska and
Hawaii) shall register with the Electric
Reliability Organization and the Regional Entity for each region within
which it uses, owns or operates BulkPower System facilities, in such manner as prescribed in the Rules of the
Electric Reliability Organization and
each applicable Regional Entity.
(d) Each user, owner or operator of
the Bulk-Power System within the
United States (other than Alaska and
Hawaii) shall provide the Commission,
the Electric Reliability Organization
and the applicable Regional Entity
such information as is necessary to im-

plement section 215 of the Federal
Power Act as determined by the Commission and set out in the Rules of the
Electric Reliability Organization and
each applicable Regional Entity. The
Electric Reliability Organization and
each Regional Entity shall provide the
Commission such information as is
necessary to implement section 215 of
the Federal Power Act.
§ 39.3 Electric Reliability Organization
certification.
(a) Any person may submit an application to the Commission for certification as the Electric Reliability Organization no later than April 4, 2006.
Such application shall comply with the
requirements for filings in proceedings
before the Commission in part 385 of
this chapter.
(b) After notice and an opportunity
for public comment, the Commission
may certify one such applicant as an
Electric Reliability Organization, if
the Commission determines such applicant:
(1) Has the ability to develop and enforce, subject to § 39.7, Reliability
Standards that provide for an adequate
level of reliability of the Bulk-Power
System, and
(2) Has established rules that:
(i) Assure its independence of users,
owners and operators of the BulkPower System while assuring fair
stakeholder representation in the selection of its directors and balanced decisionmaking in any Electric Reliability Organization committee or subordinate organizational structure;
(ii) Allocate equitably reasonable
dues, fees and charges among end users
for all activities under this part;
(iii) Provide fair and impartial procedures for enforcement of Reliability
Standards through the imposition of
penalties in accordance with § 39.7, including limitations on activities, functions, operations, or other appropriate
sanctions or penalties;
(iv) Provide reasonable notice and
opportunity for public comment, due
process, openness, and balance of interests in developing Reliability Standards, and otherwise exercising its duties; and
(v) Provide appropriate steps, after
certification by the Commission as the

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Federal Energy Regulatory Commission
Electric Reliability Organization, to
gain recognition in Canada and Mexico.
(c) The Electric Reliability Organization shall submit an assessment of its
performance three years from the date
of certification by the Commission,
and every five years thereafter. After
receipt of the assessment, the Commission will establish a proceeding with
opportunity for public comment in
which it will review the performance of
the Electric Reliability Organization.
(1) The Electric Reliability Organization’s assessment of its performance
shall include:
(i) An explanation of how the Electric Reliability Organization satisfies
the requirements of § 39.3(b);
(ii) Recommendations by Regional
Entities, users, owners, and operators
of the Bulk-Power System, and other
interested parties for improvement of
the Electric Reliability Organization’s
operations, activities, oversight and
procedures, and the Electric Reliability Organization’s response to such
recommendations; and
(iii) The Electric Reliability Organization’s evaluation of the effectiveness
of each Regional Entity, recommendations by the Electric Reliability Organization, users, owners, and operators
of the Bulk-Power System, and other
interested parties for improvement of
the Regional Entity’s performance of
delegated functions, and the Regional
Entity’s response to such evaluation
and recommendations.
(2) The Commission will issue an
order finding that the Electric Reliability Organization meets the statutory and regulatory criteria or directing the Electric Reliability Organization or a Regional Entity to come into
compliance with or improve its compliance with the requirements of this
part. If the ERO fails to comply adequately with the Commission order,
the Commission may institute a proceeding to enforce its order, including,
if necessary and appropriate, a proceeding to consider decertification of
the ERO consistent with § 39.9. The
Commission will issue an order finding
that each Regional Entity meets the
statutory and regulatory criteria or directing the Regional Entity to come
into compliance with or improve its
compliance with the requirements of

§ 39.4
this part. If a Regional Entity fails to
comply adequately with the Commission order, the Commission may institute a proceeding to enforce its order,
including, if necessary and appropriate,
a proceeding to consider rescission of
its approval of the Regional Entity’s
delegation agreement.
§ 39.4 Funding of the Electric Reliability Organization.
(a) Any person who submits an application for certification as the Electric
Reliability Organization shall include
in its application a formula or method
for the allocation and assessment of
Electric Reliability Organization dues,
fees and charges. The certified Electric
Reliability Organization may subsequently file with the Commission a request to modify the formula or method.
(b) The Electric Reliability Organization shall file with the Commission its
proposed entire annual budget for statutory and any non-statutory activities,
including the entire annual budget for
statutory and any non-statutory activities of each Regional Entity, with
supporting materials, including the
ERO’s and each Regional Entity’s complete business plan and organization
chart, explaining the proposed collection of all dues, fees and charges and
the proposed expenditure of funds collected in sufficient detail to justify the
requested funding collection and budget expenditures 130 days in advance of
the beginning of each Electric Reliability Organization fiscal year. The
annual Electric Reliability Organization budget shall include line item
budgets for the activities of each Regional Entity that are delegated or assigned to each Regional Entity pursuant to § 39.8.
(c) The Commission, after public notice and opportunity for hearing, will
issue an order either accepting, rejecting, remanding or modifying the proposed Electric Reliability Organization
budget and business plan no later than
sixty (60) days in advance of the beginning of the Electric Reliability Organization’s fiscal year.
(d) On a demonstration of unforeseen
and extraordinary circumstances requiring additional funds prior to the
next Electric Reliability Organization

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§ 39.5

18 CFR Ch. I (4–1–17 Edition)

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fiscal year, the Electric Reliability Organization may file with the Commission for authorization to collect a special assessment. Such filing shall include supporting materials explaining
the proposed collection in sufficient detail to justify the requested funding,
including any departure from the approved funding formula or method.
After notice and an opportunity for
hearing, the Commission will approve,
disapprove, remand or modify such request.
(e) All entities within the Commission’s jurisdiction as set forth in section 215(b) of the Federal Power Act
shall pay any Electric Reliability Organization assessment of dues, fees and
charges as approved by the Commission, in a timely manner reasonably as
designated by the Electric Reliability
Organization.
(f) Any person who submits an application for certification as the Electric
Reliability Organization may include
in the application a plan for a transitional funding mechanism that would
allow such person, if certified as the
Electric Reliability Organization, to
continue existing operations without
interruption as it transitions from one
method of funding to another. Any proposed transitional funding plan should
terminate no later than eighteen (18)
months from the date of Electric Reliability Organization certification.
(g) The Electric Reliability Organization or a Regional Entity may not engage in any activity or receive revenues from any person that, in the judgment of the Commission represents a
significant distraction from, or a conflict of interest with, its responsibilities under this part.
§ 39.5 Reliability Standards.
(a) The Electric Reliability Organization shall file each Reliability Standard or modification to a Reliability
Standard that it proposes to be made
effective under this part with the Commission. The filing shall include a concise statement of the basis and purpose
of the proposed Reliability Standard,
either a summary of the Reliability
Standard
development
proceedings
conducted by the Electric Reliability
Organization or a summary of the Reliability Standard development pro-

ceedings conducted by a Regional Entity together with a summary of the Reliability Standard review proceedings
of the Electric Reliability Organization, and a demonstration that the proposed Reliability Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest.
(b) The Electric Reliability Organization shall rebuttably presume that a
proposal for a Reliability Standard or a
modification to a Reliability Standard
to be applicable on an Interconnectionwide basis is just, reasonable, not unduly discriminatory or preferential,
and in the public interest, if such proposal is from a Regional Entity organized on an Interconnection-wide basis.
(c) The Commission may approve by
rule or order a proposed Reliability
Standard or a proposed modification to
a Reliability Standard if, after notice
and opportunity for public hearing, it
determines that the proposed Reliability Standard is just, reasonable,
not unduly discriminatory or preferential, and in the public interest.
(1) The Commission will give due
weight to the technical expertise of the
Electric Reliability Organization with
respect to the content of a proposed
Reliability Standard or a proposed
modification to a Reliability Standard,
(2) The Commission will give due
weight to the technical expertise of a
Regional Entity organized on an Interconnection-wide basis with respect to a
proposed Reliability Standard or a proposed modification to a Reliability
Standard to be applicable within that
Interconnection, and
(3) The Commission will not defer to
the Electric Reliability Organization
or a Regional Entity with respect to
the effect of a proposed Reliability
Standard or a proposed modification to
a Reliability Standard on competition.
(d) An approved Reliability Standard
or modification to a Reliability Standard shall take effect as approved by the
Commission.
(e) The Commission will remand to
the Electric Reliability Organization
for further consideration a proposed
Reliability Standard or modification to
a Reliability Standard that the Commission disapproves in whole or in
part.

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Federal Energy Regulatory Commission

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(f) The Commission may, upon its
own motion or a complaint, order the
Electric Reliability Organization to
submit a proposed Reliability Standard
or modification to a Reliability Standard that addresses a specific matter if
the Commission considers such a new
or modified Reliability Standard appropriate to carry out section 215 of
the Federal Power Act.
(g) The Commission, when remanding
a Reliability Standard to the Electric
Reliability Organization or ordering
the Electric Reliability Organization
to submit to the Commission a proposed Reliability Standard or proposed
modification to a Reliability Standard
that addresses a specific matter may
order a deadline by which the Electric
Reliability Organization must submit a
proposed or modified Reliability Standard.
§ 39.6 Conflict of a Reliability Standard with a Commission Order.
(a) If a user, owner or operator of the
transmission facilities of a Transmission Organization determines that
a Reliability Standard may conflict
with a function, rule, order, tariff, rate
schedule, or agreement accepted, approved, or ordered by the Commission
with respect to such Transmission Organization, the Transmission Organization shall expeditiously notify the
Commission, the Electric Reliability
Organization and the relevant Regional
Entity of the possible conflict.
(b) After notice and opportunity for
hearing, within sixty (60) days of the
date that a notice was filed under paragraph (a) of this section, unless the
Commission orders otherwise, the Commission will issue an order determining
whether a conflict exists and, if so, resolve the conflict by directing:
(1) The Transmission Organization to
file a modification of the conflicting
function, rule, order, tariff, rate schedule, or agreement pursuant to section
206 of the Federal Power Act, as appropriate, or
(2) The Electric Reliability Organization to propose a modification to the
conflicting Reliability Standard pursuant to § 39.5 of the Commission’s regulations.
(c) The Transmission Organization
shall continue to comply with the func-

§ 39.7
tion, rule, order, tariff, rate schedule,
or agreement accepted, approved, or ordered by the Commission until the
Commission finds that a conflict exists, the Commission orders a change
to such provision pursuant to section
206 of the Federal Power Act, and the
ordered change becomes effective.
[Order 672, 71 FR 8736, Feb. 17, 2006, as
amended at 71 FR 11505, Mar. 8, 2006; Order
672–A, 71 FR 19823, Apr. 18, 2006]

§ 39.7 Enforcement
of
Reliability
Standards.
(a) The Electric Reliability Organization and each Regional Entity shall
have an audit program that provides
for rigorous audits of compliance with
Reliability Standards by users, owners
and operators of the Bulk-Power System.
(b) The Electric Reliability Organization and each Regional Entity shall
have procedures to report promptly to
the Commission any self-reported violation or investigation of a violation or
an alleged violation of a Reliability
Standard and its eventual disposition.
(1) Any person that submits an application to the Commission for certification as an Electric Reliability Organization shall include in such application a proposal for the prompt reporting to the Commission of any self-reported violation or investigation of a
violation or an alleged violation of a
Reliability Standard and its eventual
disposition.
(2) Any agreement for the delegation
of enforcement authority to a Regional
Entity shall include a provision for the
prompt reporting through the Electric
Reliability Organization to the Commission of any self-reported violation
or investigation of a violation or an alleged violation of a Reliability Standard and its eventual disposition.
(3) Each report of a violation or alleged violation by a user, owner or operator of the Bulk-Power System shall
include the user’s, owner’s or operator’s name, which Reliability Standard
or Reliability Standards were violated
or allegedly violated, when the violation or alleged violation occurred, and
the name of a person knowledgeable
about the violation or alleged violation
to serve as a point of contact with the
Commission.

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§ 39.7

18 CFR Ch. I (4–1–17 Edition)

(4) Each violation or alleged violation shall be treated as nonpublic until
the matter is filed with the Commission as a notice of penalty or resolved
by an admission that the user, owner
or operator of the Bulk-Power System
violated a Reliability Standard or by a
settlement or other negotiated disposition. The disposition of each violation
or alleged violation that relates to a
Cybersecurity Incident or that would
jeopardize the security of the BulkPower System if publicly disclosed
shall be nonpublic unless the Commission directs otherwise.
(5) The Electric Reliability Organization, and each Regional Entity through
the ERO, shall file such periodic summary reports as the Commission shall
from time to time direct on violations
of Reliability Standards and summary
analyses of such violations.
(c) The Electric Reliability Organization, or a Regional Entity, may impose, subject to section 215(e) of the
Federal Power Act, a penalty on a user,
owner or operator of the Bulk-Power
System for a violation of a Reliability
Standard approved by the Commission
if, after notice and opportunity for
hearing:
(1) The Electric Reliability Organization or the Regional Entity finds that
the user, owner or operator has violated a Reliability Standard approved
by the Commission; and
(2) The Electric Reliability Organization files a notice of penalty and the
record of its or a Regional Entity’s proceeding with the Commission. Simultaneously with the filing of a notice of
penalty with the Commission, the Electric Reliability Organization shall
serve a copy of the notice of penalty on
the entity that is the subject of the
penalty.
(d) A notice of penalty by the Electric Reliability Organization shall consist of:
(1) The name of the entity on whom
the penalty is imposed;
(2) Identification of each Reliability
Standard violated;
(3) A statement setting forth findings
of fact with respect to the act or practice resulting in the violation of each
Reliability Standard;
(4) A statement describing any penalty imposed;

(5) The record of the proceeding;
(6) Other matters the Electric Reliability Organization or the Regional
Entity, as appropriate, may find relevant.
(e) A penalty imposed under this section may take effect not earlier than
the thirty-first (31st) day after the
Electric Reliability Organization files
with the Commission the notice of penalty and the record of the proceedings.
(1) Such penalty will be subject to review by the Commission, on its own
motion or upon application by the
user, owner or operator of the BulkPower System that is the subject of
the penalty filed within thirty (30) days
after the date such notice is filed with
Commission. In the absence of the filing of an application for review or motion or other action by the Commission, the penalty shall be affirmed by
operation of law upon the expiration of
the thirty (30)-day period for filing of
an application for review.
(2) An applicant filing an application
for review shall comply with the requirements for filings in proceedings
before the Commission. An application
shall contain a complete and detailed
explanation of why the applicant believes that the Electric Reliability Organization or Regional Entity erred in
determining that the applicant violated a Reliability Standard, or in determining the appropriate form or
amount of the penalty. The applicant
may support its explanation by providing information that is not included
in the record submitted by the Electric
Reliability Organization.
(3) Application to the Commission for
review, or the initiation of review by
the Commission on its own motion,
shall not operate as a stay of such penalty unless the Commission otherwise
orders upon its own motion or upon application by the user, owner or operator that is the subject of such penalty.
(4) Any answer, intervention or comment to an application for review of a
penalty imposed under this part must
be filed within twenty (20) days after
the application is filed, unless otherwise ordered by the Commission.

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Federal Energy Regulatory Commission
(5) In any proceeding to review a penalty imposed under this part, the Commission, after public notice and opportunity for hearing (which hearing may
consist solely of the record before the
Electric Reliability Organization or
Regional Entity and the opportunity
for the presentation of supporting reasons to affirm, modify, or set aside the
penalty), will by order affirm, set
aside, or modify the penalty or may remand the determination of a violation
or the form or amount of the penalty
to the Electric Reliability Organization for further consideration. The
Commission may establish a hearing
before an administrative law judge or
initiate such further procedures as it
determines to be appropriate, before
issuing such an order. In the case of a
remand to the Electric Reliability Organization, the Electric Reliability Organization may remand the matter to a
Regional Entity for further consideration and resubmittal through the
Electric Reliability Organization to
the Commission.
(6) The Commission will take action
on an application for review of a penalty within sixty (60) days of the date
the application is filed unless the Commission determines on a case-by-case
basis that an alternative expedited procedure is appropriate.
(7) A proceeding for Commission review of a penalty for violation of a Reliability Standard will be public unless
the Commission determines that a nonpublic proceeding is necessary and lawful, including a proceeding involving a
Cybersecurity Incident. For a nonpublic proceeding, the user, owner or
operator of the Bulk-Power System
that is the subject of the penalty will
be given timely notice and an opportunity for hearing and the public will
not be notified and the public will not
be allowed to participate.
(f) On its own motion or upon complaint, the Commission may order
compliance with a Reliability Standard
and may impose a penalty against a
user, owner or operator of the BulkPower System, if the Commission
finds, after public notice and opportunity for hearing, that the user, owner
or operator of the Bulk-Power System
has engaged or is about to engage in
any acts or practices that constitute or

§ 39.8
will constitute a violation of a Reliability Standard.
(g) Any penalty imposed for the violation of a Reliability Standard shall
bear a reasonable relation to the seriousness of the violation and shall take
into consideration efforts of such user,
owner or operator of the Bulk-Power
System to remedy the violation in a
timely manner.
(1) The penalty imposed may be a
monetary or a non-monetary penalty
and may include, but is not limited to,
a limitation on an activity, function,
operation, or other appropriate sanction, including being added to a reliability watch list composed of major
violators that is established by the
Electric Reliability Organization, a Regional Entity or the Commission.
(2) The Electric Reliability Organization shall submit for Commission approval penalty guidelines that set forth
a range of penalties for the violation of
Reliability Standards. A penalty imposed by the Electric Reliability Organization or a Regional Entity must be
within be within the range set forth in
the penalty guidelines.
[Order 672, 71 FR 8736, Feb. 17, 2006, as
amended by Order 737, 75 FR 43404, July 26,
2010]

§ 39.8

Delegation to a Regional Entity.

(a) The Electric Reliability Organization may enter into an agreement to
delegate authority to a Regional Entity for the purpose of proposing Reliability Standards to the Electric Reliability Organization and enforcing Reliability Standards under § 39.7.
(b) After notice and opportunity for
comment, the Commission may approve a delegation agreement. A delegation agreement shall not be effective
until it is approved by the Commission.
(c) The Electric Reliability Organization shall file a delegation agreement.
Such filing shall include a statement
demonstrating that:
(1) The Regional Entity is governed
by an independent board, a balanced
stakeholder board, or a combination
independent and balanced stakeholder
board;
(2) The Regional Entity otherwise
satisfies the provisions of section 215(c)
of the Federal Power Act; and

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§ 39.9

18 CFR Ch. I (4–1–17 Edition)

(3) The agreement promotes effective
and efficient administration of BulkPower System reliability.
(d) The Commission may modify such
delegation.
(e) The Electric Reliability Organization shall and the Commission will
rebuttably presume that a proposal for
delegation to a Regional Entity organized on an Interconnection-wide basis
promotes effective and efficient administration of Bulk-Power System reliability and should be approved.
(f) An entity seeking to enter into a
delegation agreement that is unable to
reach an agreement with the Electric
Reliability Organization within 180
days after proposing a delegation
agreement to the Electric Reliability
Organization may apply to the Commission to assign to it the Electric Reliability Organization’s authority to
enforce Reliability Standards within
its region. The entity must demonstrate in its application that it
meets the requirements of paragraph
(c) of this section and that continued
negotiations with the Electric Reliability Organization would not likely
result in an appropriate delegation
agreement within a reasonable period
of time. After notice and opportunity
for hearing, the Commission may designate the entity as a Regional Entity
and assign enforcement authority to it.
(g) An application pursuant to paragraph (f) of this section must state:
(1) Whether the Commission’s Dispute Resolution Service, or other alternative dispute resolution procedures
were used, or why these procedures
were not used; and
(2) Whether the Regional Entity believes that alternative dispute resolution under the Commission’s supervision could successfully resolve the
disputes regarding the terms of the delegation agreement.

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§ 39.9 Enforcement
of
Rules and Orders.

Commission

(a) The Commission may take such
action as is necessary and appropriate
against the Electric Reliability Organization or a Regional Entity to ensure
compliance with a Reliability Standard
or any Commission order affecting the
Electric Reliability Organization or a

Regional Entity, including, but not
limited to:
(1) After notice and opportunity for
hearing, imposition of civil penalties
under the Federal Power Act.
(2) After notice and opportunity for
hearing, suspension or decertification
of the Commission’s certification to be
the Electric Reliability Organization.
(3) After notice and opportunity for
hearing, suspension or rescission of the
Commission’s approval of an agreement to delegate certain Electric Reliability Organization authorities to a
Regional Entity.
(b) The Commission may periodically
audit the Electric Reliability Organization’s performance under this part.
§ 39.10 Changes to an Electric Reliability Organization Rule or Regional Entity Rule.
(a) The Electric Reliability Organization shall file with the Commission for
approval any proposed Electric Reliability Organization Rule or Rule
change. A Regional Entity shall submit
a Regional Entity Rule or Rule change
to the Electric Reliability Organization and, if approved by the Electric
Reliability Organization, the Electric
Reliability Organization shall file the
proposed Regional Entity Rule or Rule
change with the Commission for approval. Any filing by the Electric Reliability Organization shall be accompanied by an explanation of the basis
and purpose for the Rule or Rule
change, together with a description of
the proceedings conducted by the Electric Reliability Organization or Regional Entity to develop the proposal.
(b) The Commission, upon its own
motion or upon complaint, may propose a change to an Electric Reliability Organization Rule or Regional
Entity Rule.
(c) A proposed Electric Reliability
Organization Rule or Rule change or
Regional Entity Rule or Rule change
shall take effect upon a finding by the
Commission, after notice and opportunity for public comment, that the
change is just, reasonable, not unduly
discriminatory or preferential, is in the
public interest, and satisfies the requirements of § 39.3.

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Federal Energy Regulatory Commission
§ 39.11

Reliability reports.

(a) The Electric Reliability Organization shall conduct assessments as determined by the Commission of the reliability of the Bulk-Power System in
North America and provide a report to
the Commission and provide subsequent reports of the same to the Commission.
(b) The Electric Reliability Organization shall conduct assessments of the
adequacy of the Bulk-Power System in
North America and report its findings
to the Commission, the Secretary of
Energy, each Regional Entity, and
each Regional Advisory Body annually
or more frequently if so ordered by the
Commission.
(c) The Electric Reliability Organization shall make available to the Commission, on a non-public and ongoing
basis, access to the Transmission
Availability Data System, Generator
Availability Data System, and protection system misoperations databases,
or any successor databases thereto.
Such access will be limited to:
(1) Data regarding U.S. facilities; and
(2) Data that is required to be provided to the ERO.
[Order 672, 71 FR 8736, Feb. 17, 2006, as
amended by Order 824, 81 FR 45008, July 12,
2016]

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§ 39.12

Review of state action.

(a) Nothing in this section shall be
construed to preempt any authority of
any state to take action to ensure the
safety, adequacy, and reliability of
electric service within that state, as
long as such action is not inconsistent
with any Reliability Standard, except
that the State of New York may establish rules that result in greater reliability within that state, as long as
such action does not result in lesser reliability outside the state than that
provided by the Reliability Standards.
(b) Where a state takes action to ensure the safety, adequacy, or reliability
of electric service, the Electric Reliability Organization, a Regional Entity
or other affected person may apply to
the Commission for a determination of
consistency of the state action with a
Reliability Standard.
(1) The application shall:
(i) Identify the state action;

§ 39.13
(ii) Identify the Reliability Standard
with which the state action is alleged
to be inconsistent;
(iii) State the basis for the allegation
that the state action is inconsistent
with the Reliability Standard; and
(iv) Be served on the relevant state
agency and the Electric Reliability Organization, concurrent with its filing
with the Commission.
(2) Within ninety (90) days of the application of the Electric Reliability Organization, the Regional Entity, or
other affected person, and after notice
and opportunity for public comment,
the Commission will issue a final order
determining whether the state action
is inconsistent with a Reliability
Standard, taking into consideration
any recommendation of the Electric
Reliability Organization and the state.
(c) The Commission, after consultation with the Electric Reliability Organization and the state taking action,
may stay the effectiveness of the state
action, pending the Commission’s
issuance of a final order.
§ 39.13 Regional Advisory Bodies.
(a) The Commission will establish a
Regional Advisory Body on the petition of at least two-thirds of the states
within a region that have more than
one-half of their electric load served
within the region.
(b) A petition to establish a Regional
Advisory Body shall include a statement that the Regional Advisory Body
is composed of one member from each
participating state in the region, appointed by the governor of each state,
and may include representatives of
agencies, states and provinces outside
the United States.
(c) A Regional Advisory Body established by the Commission may provide
advice to the Electric Reliability Organization or a Regional Entity or the
Commission regarding:
(1) The governance of an existing or
proposed Regional Entity within the
same region;
(2) Whether a Reliability Standard
proposed to apply within the region is
just, reasonable, not unduly discriminatory or preferential, and in the public interest;
(3) Whether fees for all activities
under this part proposed to be assessed

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Pt. 40

18 CFR Ch. I (4–1–17 Edition)

within the region are just, reasonable,
not unduly discriminatory or preferential, and in the public interest; and
(4) Any other responsibilities requested by the Commission.
(d) The Commission may give deference to the advice of a Regional Advisory Body established by the Commission that is organized on an Interconnection-wide basis.

ability Standards must be included in
the posting.

PART 40—MANDATORY RELIABILITY
STANDARDS FOR THE BULKPOWER SYSTEM

Sec.
41.1
41.2
41.3
41.4
41.5
41.6
41.7
41.8

Sec.
40.1 Applicability.
40.2 Mandatory Reliability Standards.
40.3 Availability of Reliability Standards.

PART 41—ACCOUNTS, RECORDS,
MEMORANDA AND DISPOSITION
OF CONTESTED AUDIT FINDINGS
AND PROPOSED REMEDIES
DISPOSITION OF CONTESTED AUDIT FINDINGS
AND PROPOSED REMEDIES

CERTIFICATION OF COMPLIANCE WITH
ACCOUNTING REGULATIONS

AUTHORITY: 16 U.S.C. 824o.
SOURCE: Order 693, 72 FR 16598, Apr. 4, 2007,
unless otherwise noted.

§ 40.1

Applicability.

(a) This part applies to all users,
owners and operators of the BulkPower System within the United
States (other than Alaska or Hawaii),
including, but not limited to, entities
described in section 201(f) of the Federal Power Act.
(b) Each Reliability Standard made
effective by § 40.2 must identify the
subset of users, owners and operators
of the Bulk-Power System to which a
particular Reliability Standard applies.
§ 40.2 Mandatory
ards.

Reliability

Stand-

(a) Each applicable user, owner or operator of the Bulk-Power System must
comply with Commission-approved Reliability Standards developed by the
Electric Reliability Organization.
(b) A proposed modification to a Reliability Standard proposed to become
effective pursuant to § 39.5 of this Chapter will not be effective until approved
by the Commission.

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§ 40.3 Availability of Reliability Standards.
The Electric Reliability Organization
must post on its Web site the currently
effective Reliability Standards as approved and enforceable by the Commission. The effective date of the Reli-

Notice to audited person.
Response to notification.
Shortened procedure.
Form and style.
Verification.
Determination.
Assignment for oral hearing.
Burden of proof.

41.10
41.11
41.12

Examination of accounts.
Report of certification.
Qualifications of accountants.

AUTHORITY: 16 U.S.C. 791a–825r, 2601–2645; 42
U.S.C. 7101–7352.
SOURCE: Order 141, 12 FR 8500, Dec. 19, 1947,
unless otherwise noted.
CROSS REFERENCE: For rules of practice
and procedure, see part 385 of this chapter.

DISPOSITION OF CONTESTED AUDIT
FINDINGS AND PROPOSED REMEDIES
§ 41.1 Notice to audited person.
(a) Applicability. This part applies to
all audits conducted by the Commission or its staff under authority of the
Federal Power Act except for Electric
Reliability Organization audits conducted pursuant to the authority of
part 39 of the Commission’s regulations.
(b) Notice. An audit conducted by the
Commission’s staff under authority of
the Federal Power Act may result in a
notice of deficiency or audit report or
similar document containing a finding
or findings that the audited person has
not complied with a requirement of the
Commission with respect to, but not
limited to, the following: A filed tariff
or tariffs, contracts, data, records, accounts, books, communications or papers relevant to the audit of the audited person; matters under the Standards of Conduct or the Code of Conduct;
and the activities or operations of the

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