text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Electric Reliability Improvement Act 
  of 2003''.
  
  SEC. 2. ELECTRIC RELIABILITY STANDARDS.
  
      Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
  by inserting the following new section at the end thereof:
  
  ``SEC. 215. ELECTRIC RELIABILITY.
  
      ``(a) Definitions.--For purposes of this section--
              ``(1) The term `bulk-power system' means--
                      ``(A) facilities and control systems necessary for 
                  operating an interconnected electric energy 
                  transmission network (or any portion thereof); and
                      ``(B) electric energy from generation facilities 
                  needed to maintain transmission system reliability.
          The term does not include facilities used in the local 
          distribution of electric energy.
              ``(2) The terms `Electric Reliability Organization' and 
          `ERO' mean the organization certified by the Commission under 
          subsection (c) the purpose of which is to establish and enforce 
          reliability standards for the bulk-power system, subject to 
          Commission review.
              ``(3) The term `reliability standard' means a requirement, 
          approved by the Commission under this section, to provide for 
          reliable operation of the bulk-power system. The term includes 
          requirements for the operation of existing bulk-power system 
          facilities 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.
              ``(4) The term `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 
          or unanticipated failure of system elements.
              ``(5) The term `Interconnection' means a geographic area in 
          which the operation of bulk-power 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.
              ``(6) The term `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.
              ``(7) The term `regional entity' means an entity having 
          enforcement authority pursuant to subsection (e)(4).
      ``(b) Jurisdiction and Applicability.--(1) The Commission shall 
  have jurisdiction, within the United States, over the ERO certified by 
  the Commission under subsection (c), any regional entities, and all 
  users, owners and operators of the bulk-power system, including but not 
  limited to the entities described in section 201(f), for purposes of 
  approving reliability standards established under this section and 
  enforcing compliance with this section. All users, owners and operators 
  of the bulk-power system shall comply with reliability standards that 
  take effect under this section.
      ``(2) The Commission shall issue a final rule to implement the 
  requirements of this section not later than 180 days after the date of 
  enactment of this section.
      ``(c) Certification.--Following the issuance of a Commission rule 
  under subsection (b)(2), any person may submit an application to the 
  Commission for certification as the Electric Reliability Organization 
  (ERO). The Commission may certify one such ERO if the Commission 
  determines that such ERO--
              ``(1) has the ability to develop and enforce, subject to 
          subsection (e)(2), reliability standards that provide for an 
          adequate level of reliability of the bulk-power system; and
              ``(2) has established rules that--
                      ``(A) assure its independence of the users and 
                  owners and operators of the bulk-power system, while 
                  assuring fair stakeholder representation in the 
                  selection of its directors and balanced decisionmaking 
                  in any ERO committee or subordinate organizational 
                  structure;
                      ``(B) allocate equitably reasonable dues, fees, and 
                  other charges among end users for all activities under 
                  this section;
                      ``(C) provide fair and impartial procedures for 
                  enforcement of reliability standards through the 
                  imposition of penalties in accordance with subsection 
                  (e) (including limitations on activities, functions, or 
                  operations, or other appropriate sanctions);
                      ``(D) provide for reasonable notice and opportunity 
                  for public comment, due process, openness, and balance 
                  of interests in developing reliability standards and 
                  otherwise exercising its duties; and
                      ``(E) provide for taking, after certification, 
                  appropriate steps to gain recognition in Canada and 
                  Mexico.
      ``(d) Reliability Standards.--(1) The Electric Reliability 
  Organization shall file each reliability standard or modification to a 
  reliability standard that it proposes to be made effective under this 
  section with the Commission.
      ``(2) The Commission may approve, by rule or order, a proposed 
  reliability standard or modification to a reliability standard if it 
  determines that the standard is just, reasonable, not unduly 
  discriminatory or preferential, and in the public interest. The 
  Commission shall give due weight to the technical expertise of the 
  Electric Reliability Organization with respect to the content of a 
  proposed standard or modification to a reliability standard and to the 
  technical expertise of a regional entity organized on an 
  Interconnection-wide basis with respect to a reliability standard to be 
  applicable within that Interconnection, but shall not defer with 
  respect to the effect of a standard on competition. A proposed standard 
  or modification shall take effect upon approval by the Commission.
      ``(3) The Electric Reliability Organization shall rebuttably 
  presume that a proposal from a regional entity organized on an 
  Interconnection-wide basis for a reliability standard or modification 
  to a reliability standard to be applicable on an Interconnection-wide 
  basis is just, reasonable, and not unduly discriminatory or 
  preferential, and in the public interest.
      ``(4) The Commission shall remand to the Electric Reliability 
  Organization for further consideration a proposed reliability standard 
  or a modification to a reliability standard that the Commission 
  disapproves in whole or in part.
      ``(5) The Commission, upon its own motion or upon complaint, may 
  order the Electric Reliability Organization to submit to the Commission 
  a proposed reliability standard or a 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 
  this section.
      ``(6) The final rule adopted under subsection (b)(2) shall include 
  fair processes for the identification and timely resolution of any 
  conflict between a reliability standard and any function, rule, order, 
  tariff, rate schedule, or agreement accepted, approved, or ordered by 
  the Commission applicable to a transmission organization. Such 
  transmission organization shall continue to comply with such function, 
  rule, order, tariff, rate schedule or agreement accepted approved, or 
  ordered by the Commission until--
              ``(A) the Commission finds a conflict exists between a 
          reliability standard and any such provision;
              ``(B) the Commission orders a change to such provision 
          pursuant to section 206 of this part; and
              ``(C) the ordered change becomes effective under this part.
  If the Commission determines that a reliability standard needs to be 
  changed as a result of such a conflict, it shall order the ERO to 
  develop and file with the Commission a modified reliability standard 
  under paragraph (4) or (5) of this subsection.
      ``(e) Enforcement.--(1) The ERO may impose, subject to paragraph 
  (2), a penalty on a user or owner or operator of the bulk-power system 
  for a violation of a reliability standard approved by the Commission 
  under subsection (d) if the ERO, after notice and an opportunity for a 
  hearing--
              ``(A) finds that the user or owner or operator has violated 
          a reliability standard approved by the Commission under 
          subsection (d); and
              ``(B) files notice and the record of the proceeding with 
          the Commission.
      ``(2) A penalty imposed under paragraph (1) may take effect not 
  earlier than the 31st day after the electric reliability organization 
  files with the Commission notice of the penalty and the record of 
  proceedings. Such penalty shall be subject to review by the Commission, 
  on its own motion or upon application by the user, owner or operator 
  that is the subject of the penalty filed within 30 days after the date 
  such notice is filed with the Commission. 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. In any 
  proceeding to review a penalty imposed under paragraph (1), the 
  Commission, after notice and opportunity for hearing (which hearing may 
  consist solely of the record before the electric reliability 
  organization and opportunity for the presentation of supporting reasons 
  to affirm, modify, or set aside the penalty), shall by order affirm, 
  set aside, reinstate, or modify the penalty, and, if appropriate, 
  remand to the electric reliability organization for further 
  proceedings. The Commission shall implement expedited procedures for 
  such hearings.
      ``(3) On its own motion or upon complaint, the Commission may order 
  compliance with a reliability standard and may impose a penalty against 
  a user or owner or operator of the bulk-power system, if the Commission 
  finds, after notice and opportunity for a hearing, that the user or 
  owner or operator of the bulk-power system has engaged or is about to 
  engage in any acts or practices that constitute or will constitute a 
  violation of a reliability standard.
      ``(4) The Commission shall establish regulations authorizing the 
  ERO to enter into an agreement to delegate authority to a regional 
  entity for the purpose of proposing reliability standards to the ERO 
  and enforcing reliability standards under paragraph (1) if--
              ``(A) the regional entity is governed by--
                      ``(i) an independent board;
                      ``(ii) a balanced stakeholder board; or
                      ``(iii) a combination independent and balanced 
                  stakeholder board.
              ``(B) the regional entity otherwise satisfies the 
          provisions of subsection (c)(1) and (2); and
              ``(C) the agreement promotes effective and efficient 
          administration of bulk-power system reliability.
  The Commission may modify such delegation. The ERO and the Commission 
  shall 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. Such regulation may provide that the Commission may 
  assign the ERO's authority to enforce reliability standards under 
  paragraph (1) directly to a regional entity consistent with the 
  requirements of this paragraph.
      ``(5) The Commission may take such action as is necessary or 
  appropriate against the ERO or a regional entity to ensure compliance 
  with a reliability standard or any Commission order affecting the ERO 
  or a regional entity.
      ``(6) Any penalty imposed under this section shall bear a 
  reasonable relation to the seriousness of the violation and shall take 
  into consideration the efforts of such user, owner, or operator to 
  remedy the violation in a timely manner.
      ``(f) Changes in Electricity Reliability Organization Rules.--The 
  Electric Reliability Organization shall file with the Commission for 
  approval any proposed rule or proposed rule change, accompanied by an 
  explanation of its basis and purpose. The Commission, upon its own 
  motion or complaint, may propose a change to the rules of the Electric 
  Reliability Organization. A proposed rule or proposed rule change shall 
  take effect upon a finding by the Commission, after notice and 
  opportunity for comment, that the change is just, reasonable, not 
  unduly discriminatory or preferential, is in the public interest, and 
  satisfies the requirements of subsection (c).
      ``(g) Reliability Reports.--The Electric Reliability Organization 
  shall conduct periodic assessments of the reliability and adequacy of 
  the bulk-power system in North America.
      ``(h) Coordination With Canada and Mexico.--The President is urged 
  to negotiate international agreements with the governments of Canada 
  and Mexico to provide for effective compliance with reliability 
  standards and the effectiveness of the Electric Reliability 
  Organization in the United States and Canada or Mexico.
      ``(i) Savings Provisions.--(1) The Electric Reliability 
  Organization shall have authority to develop and enforce compliance 
  with reliability standards for only the bulk-power system.
      ``(2) This section does not authorize the Electric Reliability 
  Organization or the Commission to order the construction of additional 
  generation or transmission capacity or to set and enforce compliance 
  with standards for adequacy or safety of electric facilities or 
  services.
      ``(3) 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.
      ``(4) Within 90 days of the application of the Electric Reliability 
  Organization or other affected party, and after notice and opportunity 
  for comment, the Commission shall issue a final order determining 
  whether a State action is inconsistent with a reliability standard, 
  taking into consideration any recommendation of the Electric 
  Reliability Organization.
      ``(5) The Commission, after consultation with the Electric 
  Reliability Organization and the State taking action, may stay the 
  effectiveness of any State action, pending the Commission's issuance of 
  a final order.
      ``(j) Regional Advisory Bodies.--The Commission shall 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. A regional advisory body shall be 
  composed or 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. A regional advisory body may provide advice to the Electric 
  Reliability Organization, a regional entity, or the Commission 
  regarding the governance of an existing or proposed regional entity 
  within the same region, whether a standard proposed to apply within the 
  region is just, reasonable, not unduly discriminatory or preferential, 
  and in the public interest, whether fees proposed to be assessed within 
  the region are just, reasonable, not unduly discriminatory or 
  preferential, and in the public interest and any other responsibilities 
  requested by the Commission. The Commission may give deference to the 
  advice of any such regional advisory body if that body is organized on 
  an Interconnection-wide basis.
      ``(k) Application to Alaska and Hawaii.--The provisions of this 
  section do not apply to Alaska or Hawaii.''.
target: Electric Reliability Improvement Act of 2003 - Amends the Federal Power Act to grant the Federal Energy Regulatory Commission (FERC) jurisdiction over a FERC-certified Electric Reliability Organization (ERO), established under this Act to enforce, subject to FERC review, reliability standards for the bulk-power system.
  
  Includes within such jurisdiction regional entities and all users, owners, and operators of the bulk-power system for purposes of approving reliability standards and enforcing compliance with this Act.
  
  Urges the President to negotiate international agreements with the governments of Canada and Mexico to provide effective compliance with reliability standards and the effectiveness of the ERO in the United States, Canada, or Mexico.
  
  Restricts to the bulk-power system only the ERO authority to develop and enforce compliance with reliability standards.
  
  Declares that this Act does not authorize the ERO or FERC to order construction of additional generation or transmission capacity, or to set and enforce compliance with standards for adequacy or safety of electric facilities or services.
  
  Directs FERC to 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. Authorizes such body to advise the ERO, a regional entity, or FERC.
  
  Declares this Act inapplicable to Alaska or Hawaii.
feat_title: To improve the reliability of the Nation's electric transmission system.