Common use of NERC’s Compliance Proposal Clause in Contracts

NERC’s Compliance Proposal. 167. NERC, in its compliance filing, states that when a registered entity does not contest a determination of a violation or an imposition of a penalty, NERC will not be required, per se, to review the penalty imposed by the Regional Entity. Instead, NERC will file a notice of penalty with the Commission, as provided in section 5.6 of the Uniform Compliance Program. However, NERC states that under the pro forma Delegation Agreement, it will be required to participate, with its Regional Entities, in an exchange of information on practices, experiences and lessons learned in the implementation of their compliance enforcement programs.101 NERC states that it intends to utilize this authority and other mechanisms to review all penalties issued pursuant to the NERC Sanction Guidelines for the purpose of determining whether these penalties have been imposed on a consistent basis. Section 5 also provides that NERC will work to achieve consistency in the application of the NERC Sanction Guidelines by Regional Entities by direct oversight and review of penalties and sanctions. 168. With respect to the requirement that NERC provide for appeals of its own determinations, NERC clarifies that its compliance and certification committee will hear all matters brought before it for hearing where NERC (rather than a Regional Entity) is acting as the compliance enforcement authority. NERC further notes that in its second compliance filing, it submitted revisions allowing the opportunity to appeal to the compliance and certification committee any actions that NERC may take when it is acting as the compliance enforcement authority.102 169. NERC states that it has allowed for expeditious appeals of remedial action directives through its hearing procedures, at attachment 2, section 10, which set forth an expedited hearing process for an entity to challenge a remedial action directive.103 With respect to the Commission’s requirement regarding the allowance for appeal rights 101 See pro forma base Delegation Agreement at section 6(j): “NERC shall conduct a review with the Regional Entities that provides for the exchange of information on practices, experiences, and lessons learned in the implementation of compliance enforcement programs.” 102 Second Compliance Filing Order, 118 FERC ¶ 61,030 at P 6 (accepting NERC’s proposed revisions to sections 404.1 and 409 of the NERC Rules of Procedures). 103 NERC’s attachment 2 hearing procedures are discussed supra in section IV(B)(8). relating to a mitigation plan, NERC states that section 6.5 describes the procedures under which a mitigation plan is accepted or rejected by the compliance enforcement authority.104 NERC states that section 6.5 also includes a provision under which the registered entity may seek a hearing on a rejected mitigation plan.