Commission Determination Clause Samples

Commission Determination. We accept NERC’s and NPCC’s proposed revisions to the NPCC Delegation Agreement, subject to revisions. With respect to NPCC’s proposed modifications to the NPCC Exhibit D, at section 2.0, regarding the voting requirements applicable to the NPCC hearing body, it remains unclear whether the corollary requirement that no two stakeholder sectors may control, and no single stakeholder sector may veto, a decision by the NPCC board or any of its committees (a requirement set forth under the NPCC Delegation Agreement, at section 2(a)(i)), will apply to the compliance committee’s actions as a hearing body. Accordingly, we direct NPCC to clarify whether this requirement applies to the actions of the compliance committee as a hearing body or justify why it should not. We observe that sections VII.E and VIII of the NPCC bylaws are unclear as to whether the compliance committee, when acting as the hearing body, will render its decisions by a majority of the votes cast by a quorum. To that extent, the NPCC bylaws may be inconsistent with section 2.0 of the NPCC Exhibit D. Accordingly, we require NPCC to amend its bylaws to remove this ambiguity.

Commission Determination. We accept NERC’s and MRO’s proposed changes to the MRO Delegation Agreement, subject to revision. With respect to the proposed revision at Exhibit E, section 5 (i.e., the language stating that the MRO board may establish initiation fees for new members), we clarify that MRO may not charge a membership fee of any kind unless that fee has been submitted for Commission approval as a Regional Entity Rule change and may only take effect upon Commission approval.39 Exhibit E, section 5 states that MRO shall provide a budget for non-statutory activities to NERC at the same time that it submits to NERC its budget for statutory activities. However, the MRO bylaws, at section 5.8, address this requirement only in part, providing that “[t]he board of directors shall propose to NERC a budget for delegated functions exercised by [MRO].” Given the potential inconsistency between these provisions, we clarify that the MRO bylaws, at section 5.8, will be construed consistent with the requirements of Exhibit E, section 5.

Commission Determination. The Commission accepts NERC’s and SERC’s changes to the SERC Delegation Agreement. With respect to SERC’s designation of its board compliance committee, or a subset of it, as SERC’s hearing body, we note that section 7.5 of the SERC bylaws provides that the board compliance committee may appoint ad hoc committees of technical experts to advise it on compliance or technical issues, among other things. Section 7.5 also provides that “[e]ach member (or another entity) that requests that the Compliance Committee review a compliance finding against it may request that an ad hoc committee be formed to assist the Compliance Committee in its review.”

Commission Determination. We accept NERC’s and WECC’s proposed changes to the WECC Delegation Agreement, subject to revision. With respect to the Commission’s requirements regarding the availability of the attorney-client privilege and attorney work-product doctrine, we accept, in part, NERC and WECC’s statement that no amendment of paragraph 1.4.1(b) of WECC hearing procedures is necessary to ensure that WECC compliance staff’s obligation to produce evidence is subject to and limited by any applicable privilege. However, this statement appears to assume that the only privileges that could be asserted by WECC compliance staff are the attorney-client privilege or the attorney work-product doctrine. In contrast, the comparable provision of the pro forma hearing procedures, paragraph 1.5.7(b)(1)(A), is a more general statement that compliance staff may withhold a document from inspection and copying by a respondent if “the document is privileged to staff or constitutes attorney work product of Staff’s counsel.” WECC’s deletion of the former language of paragraph 1.4.1(b)(3), which would have served as a means for WECC enforcement staff to assert any other privilege that might apply, brings into question whether WECC’s current version of paragraph 1.4.1(b) would recognize any other privilege that WECC compliance staff might successfully assert.59 121. In addition, WECC’s revisions to section 1.4.1(b) eliminate completely the concept codified in paragraph 1.5.7(b)(2) of the pro forma hearing procedures that, in the absence of an assertion of privilege, no circumstance that would otherwise protect a document from disclosure authorizes compliance staff to withhold exculpatory evidence contained in the document. Thus, WECC’s revisions appear to be inconsistent with the pro forma hearing procedures on this matter. Our strong preference is for consistency in fundamental matters relating to compliance hearings before all Regional Entities and NERC. To resolve the inconsistencies discussed above with respect to the bases on 59 WECC’s new section 1.4.1(b)(3) could protect from disclosure by WECC compliance staff certain documents containing confidential information. However, it is not clear that the definition of “confidential information” in section 1501(1) of NERC’s Rules of Procedure would cover privileges that WECC compliance staff could assert. That definition does not refer explicitly to information in documents for which an evidentiary privilege is asserted. We also note that, while sect...

Commission Determination. 28. We accept NERC’s proposed amendments to CMEP section 3.4, with conditions. With respect to ▇▇▇▇’s proposed changes to section 3.4, we repeat our commitment in the March 21 Order to work together with Canadian and Mexican reliability authorities to develop procedures under which the Commission receives notice that an Applicable Governmental Authority outside the United States wishes to obtain information from or about a U.S.-based Registered Entity for purposes of conducting an investigation and, conversely, that appropriate Canadian or Mexican authorities receive notice that the Docket No. RR06-1-016, et al. -12- Commission seeks information about an entity registered in Canada or Mexico for the same purpose. 29. NERC’s revisions to CMEP section 3.4 include appropriate notification procedures with respect to the proposed disclosure by NERC of compliance-related information it receives. As we directed in the March 21 Order, these notice procedures require NERC to address how it would protect from public disclosure non-public, compliance-related information for entities subject to Reliability Standards, whether registered in Canada, Mexico or the United States. 30. NERC properly includes in the description of its proposed notices the nature of the U.S.–related compliance information NERC would disclose to a Canadian or Mexican reliability authority and the procedures NERC would use to ensure that its disclosure complies with section 39.7(b)(4) of our regulations. In this regard, we require that NERC identify in these notices each particular Applicable Governmental Authority to which it proposes to disclose this information and the specific procedures for protecting from public disclosure any non-public compliance information that would be transferred. Moreover, our acceptance of NERC’s amendments to section 3.4 does not constitute our prior permission for NERC to transfer information obtained in investigations about U.S. entities to Canadian or Mexican reliability authorities. We note, in this regard, that NERC has not yet explained how it would protect from public disclosure non-public U.S. compliance information subject to section 39.7(b)(4). We require NERC to submit this explanation in its compliance filing. 31. We also agree that the reciprocal procedure NERC proposes to notify a Canadian or Mexican Applicable Governmental Authority that the Commission or its staff requests NERC to provide compliance-related information for an entity within that aut...

Commission Determination. The Commission accepts ▇▇▇▇’s and FRCC’s proposed changes to the FRCC Delegation Agreement, subject to revision. With respect to FRCC’s compliance committee review process, we expect each Regional Entity’s compliance staff to be independent and technically competent. Thus, we are not persuaded that the compliance committee review process, as revised in Exhibit D, section 1.2, should be permanent. Further, if the process is to be limited to a review of how to comply with requirements of the Reliability Standards, as proposed, reviews should not relate to the development of proposals for a penalty or sanction for violations, as could be permitted under NERC’s and FRCC’s proposal. In addition, only FRCC compliance staff should initiate the review process, when it believes that a review is appropriate. We require NERC and Docket No. RR06-1-016, et al. -43- FRCC to amend section 1.2 to state that the review process is to be initiated only by compliance staff and that the process may not be used to determine proposals for penalties or sanctions for violations.

Commission Determination. 108. We accept NERC’s and SPP’s proposed changes to the SPP Delegation Agreement, subject to revision. While we accept NERC’s and SPP Regional Entity’s proposed changes to the SPP Regional Entity bylaws, it remains unclear to the Commission whether this new bylaw provision fully resolves the concerns set forth in the March 21 Order. NERC and SPP Regional Entity explain that the SPP Regional Entity allows open participation in its activities and SPP Regional Entity does not have membership. Thus, all interested entities may participate in matters such as the Docket No. RR06-1-016, et al. -36- development of a regional Reliability Standard, or voting on a regional standard as part of the SPP Regional Ballot Body. However, other SPP Regional Entity functions and activities are conducted through the existing committees and structure of SPP Inc., i.e., the regional transmission organization. 109. For example, the SPP Inc. Market and Operations Committee appoints a standing SPP Inc. subcommittee or work group to serve as the Reliability Standards development team for developing a new or revised regional Reliability Standard. While it appears that other interested entities may join and participate in the Reliability Standards development team, the team is initially selected by a SPP Inc. committee. Likewise, once a draft regional Reliability Standard receives an affirmative vote by the SPP Regional Entity Ballot Body, the draft standard is then submitted to the SPP Inc. Market and Operations Committee and subsequently the SPP Inc. Board of Directors/Members Committee for advisory votes before reaching the SPP Regional Entity independent trustees for a final vote. While these votes are “advisory,” the Markets and Operation Committee and SPP Inc. Board of Directors/Members Committee also have the ability to “remand” a draft regional Reliability Standard back to the Reliability Standards development team for further consideration or even “terminate” the draft standard, albeit subject to notice to the SPP Regional Entity trustees with an opportunity to override such actions.52 110. Thus, the SPP Markets and Operation Committee and SPP Board of Directors/Members Committee have the opportunity to significantly delay, if not terminate, a draft regional Reliability Standard after the SPP Regional Entity Ballot Body has affirmatively voted on the standard. Pursuant to the SPP Inc. bylaws, it appears that participation in the Market and Operations Committee and the SPP Inc...

Commission Determination. 48. The Commission accepts ▇▇▇▇’s proposed revisions to section 6.5, subject to the following conditions. First, we note that the first paragraph of section 6.5 contemplates that a Registered Entity may submit a mitigation plan initially either to a Regional Entity or to NERC. This is so because, by definition, a Regional Entity or NERC may be a “compliance enforcement authority.” We understand that Registered Entities generally submit mitigation plans initially to Regional Entities. However, there are instances in Docket No. RR06-1-016, et al. -18- which it is appropriate that NERC initially review a mitigation plan. For example, NERC may initially receive a mitigation plan from a Registered Entity because NERC is conducting a compliance violation investigation of the Registered Entity. NERC may also receive a mitigation plan from a Regional Entity for a violation of a Reliability Standard applicable to the Regional Entity.24 Accordingly, we construe the first paragraph of section 6.5 to apply to the initial review of a mitigation plan, either by a Regional Entity or by NERC. 25 49. The Commission rejects TANC’s request that section 6.5 be revised to provide for a 30-day de facto approval when a compliance enforcement authority refers a mitigation plan to NERC. The second paragraph of section 6.5 would state, as proposed by ▇▇▇▇, that within 30 days of receipt of a mitigation plan from a Regional Entity, NERC will either approve or disapprove the plan. The 65-day de facto approval period that TANC seeks for NERC’s referral of a mitigation plan to a Regional Entity is not necessary because section 6.5 does not contemplate such a referral. Nor do we agree that the term “compliance enforcement authority” should be deleted from the first paragraph of section 6.5, given our interpretation of this provision. Finally, we reject TANC’s proposal to amend that paragraph to require that a Regional Entity notify NERC and the relevant Registered Entity within 30 days of receipt of a mitigation plan that the Regional Entity either accepts or rejects the plan. This proposal would remove the Regional Entity’s appropriate discretion, already established in the first paragraph of section 6.5, to extend the period for review of a mitigation plan beyond 30 days after its receipt. 50. However, we agree with TANC that a Registered Entity that submits a mitigation plan should receive some certainty about the time period for the plan’s initial consideration. Accordingly, we dire...

Commission Determination. We accept ▇▇▇▇’s proposed revision to paragraph 1.