On October 15, 2009, the Commission issued an order confirming its jurisdiction to enforce reliability standards over federal agencies that use, own or operate the bulk power system. The order settles an ongoing disagreement between FERC and several other agencies, including the Department of Energy (“DOE”).
The dispute initially arose on February 20, 2008, when the Texas Regional Entity, an independent division of the Electric Reliability Council of Texas, Inc., issued a Notice of Confirmed Violation and Proposed Penalty or Sanction against the United States Army Corps of Engineers’ (“Army Corps”) Tulsa District for failing to comply with reliability standards. On June 24, 2009, the North American Electric Reliability Corporation (“NERC”) issued a Notice of Penalty to the Army Corps’ Tulsa District for failing to comply with the reliability standards under section 215 of the Federal Power Act (“FPA”). Under section 215 of the FPA and related FERC orders, NERC has been granted the authority to develop and enforce reliability standards, subject to FERC review.
The Army Corps originally asserted that NERC, and therefore by extension, FERC, lacked any jurisdiction over the Army Corps or any other federal agency. Since that time, FERC has asked for public comment on NERC’s jurisdiction to enforce the reliability standards under section 215 of the FPA. On October 7, 2009, the DOE asked FERC to stay approximately fifty enforcement actions against DOE entities (“department entities”) where NERC is attempting to levy civil fines until FERC’s authority under section 215 of the FPA is clarified.
The DOE also questioned NERC’s ability to enforce mandatory reliability standards through monetary fines or criminal penalties for non-compliance. While the DOE agrees that the department entities must comply with the mandatory standards, it claims FERC is not authorized under the FPA to levy fines or assess criminal penalties. The DOE claimed sections 316 and 316A of the FPA limited FERC’s ability to assess fines and criminal penalties to a “person,” not a federal agency.
However, FERC affirmed that “all users, owners, and operators of the Bulk-Power System, including federal entities, comply with Commission-approved Reliability Standards.” In its order, FERC noted that the legislative history demonstrates that the reliability provisions of the FPA were added to prevent cascading blackouts. If federal agencies were exempted from these reliability provisions, it would create significant gaps in an otherwise comprehensive program. Because this conclusion runs counter to the FPA’s legislative purpose, section 215 of the FPA gives FERC, and therefore NERC, jurisdiction over federal agencies.
FERC’s order is available at www.ferc.gov under docket NP09-26.