[Federal Register Volume 77, Number 206 (Wednesday, October 24, 2012)]
[Proposed Rules]
[Pages 64920-64935]
[FR Doc No: 2012-26112]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM12-4-000]

Revisions to Reliability Standard for Transmission Vegetation
Management

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the
Commission proposes to approve Reliability Standard FAC-003-2
(Transmission Vegetation Management), submitted by the North American
Electric Reliability Corporation (NERC), the Commission-certified
Electric Reliability Organization. The proposed Reliability Standard
would expand the applicability of the standard to include overhead
transmission lines that are operated below 200 kV, if they are either
an element of an Interconnection Reliability Operating Limit or an
element of a Major WECC Transfer Path. In addition, the proposed
Reliability Standard incorporates a new minimum annual vegetation
inspection requirement, and incorporates new minimum vegetation
clearance distances into the text of the standard.
    The Commission also proposes to approve the three definitions, the
implementation plan and the Violation Severity Levels associated with
the proposed Reliability Standard. Finally, the Commission proposes to
direct that NERC revise the Violation Risk Factor for Requirement R2,
and approve the remainder of the Violation Risk Factors.

DATES: Comments are due December 24, 2012.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
     Electronic Filing through http://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not a scanned format.
     Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
Tom Bradish (Technical Information), Office of Electric Reliability,
Division of Reliability Standards, Federal Energy Regulatory
Commission, 1800 Dual Highway, Suite 201, Hagerstown, MD 21740,
Telephone:<PHONE_NUMBER>.
David O'Connor (Technical Information), Office of Electric Reliability,
Division of Logistics & Security, Federal Energy Regulatory Commission,
888 First Street NE., Washington, DC 20426, Telephone:<PHONE_NUMBER>.
Julie Greenisen (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, Telephone:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Notice of Proposed Rulemaking

Issued October 18, 2012.

    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the
Commission proposes to approve Reliability Standard FAC-003-2
(Transmission Vegetation Management), submitted by the North American
Electric Reliability Corporation (NERC), the Commission-certified
Electric Reliability Organization (ERO). Proposed Reliability Standard
FAC-003-2 modifies the currently effective standard, FAC-003-1 (the
``Version 1'' standard). The proposed modifications, in part, respond
to certain Commission directives in Order No. 693, in which the
Commission approved currently-effective Reliability Standard FAC-003-
1.\2\
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    \1\ 16 U.S.C. 824o (2006).
    \2\ See Mandatory Reliability Standards for the Bulk-Power
System, Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g,
Order No. 693-A, 120 FERC ] 61,053 (2007).
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    2. Proposed Reliability Standard FAC-003-2 has a number of features
that make it an improvement over the Version 1 standard. For example,
like Version 1, the proposed Reliability Standard would apply to all
overhead transmission lines operated at or above 200 kV, but unlike
Version 1, it would explicitly apply to any lower voltage overhead
transmission line that is either an element of an Interconnection
Reliability Operating Limit (IROL) or an element of a Major WECC
Transfer Path.\3\ This is a new class of

transmission lines not previously required to comply with the Standard.
The proposed Reliability Standard would also make explicit a
transmission owner's obligation to prevent an encroachment into the
minimum vegetation clearance distance (MVCD) for a line subject to the
standard, regardless of whether that encroachment results in a
sustained outage or fault.\4\ Also, for the first time, the proposed
Reliability Standard would require transmission owners to annually
inspect all transmission lines subject to the standard and to complete
100 percent of their annual vegetation work plan. The proposed
Reliability Standard also incorporates the MVCDs into the text of the
standard, and does not rely on clearance distances from an outside
reference, as is the case with the currently-effective Version 1
standard. We believe these beneficial provisions, and others discussed
below, support our proposal to approve FAC-003-2.
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    \3\ NERC defines ``IROL'' as ``[a] System Operating Limit that,
if violated, could lead to instability, uncontrolled separation, or
Cascading outages that adversely impact the reliability of the Bulk
Electric System.'' NERC defines ``System Operating Limit'' as
``[t]he value (such as MW, MVar, Amperes, Frequency or Volts) that
satisfies the most limiting of the prescribed operating criteria for
a specified system configuration to ensure operation within
acceptable reliability criteria.'' See NERC Glossary of Terms Used
in Reliability Standards (NERC Glossary) at 26, 48. The Western
Electric Coordinating Council maintains a listing of Major WECC
Transfer Paths, available at http://www.wecc.biz/Standards/Development/WECC-0091/Shared Documents/WECC-0091 Table Major Paths
4-28-08.doc.
    \4\ See Reliability Standard FAC-003-2, Requirements R1 and R2;
see also Petition of the North American Electric Reliability
Corporation for Approval of Proposed Reliability Standard FAC-003-
2--Transmission Vegetation Management at 4, 6 (NERC Petition). NERC
proposes to define MVCD as ``the calculated minimum distance stated
in feet (meters) to prevent flash-over between conductors and
vegetation, for various altitudes and operating voltages.'' Id. at
2.
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    3. A recurring cause in many blackouts has been vegetation-related
outages. In fact one of the initiating causes of the 2003 Northeast
blackout was inadequate vegetation management practices that led to
tree contact.\5\ Further, NERC has identified a focus on preventing
non-random equipment outages such as those caused by vegetation as a
top priority that will most likely have a positive impact on Bulk-Power
System reliability.\6\ We also note that industry has made important
strides in reducing the instances of vegetation contact.\7\ We believe
that the revised FAC-003 standard we propose to approve in this
rulemaking, together with a continued focus by industry on best
practices for vegetation management, will serve to enhance the
reliability of the Bulk-Power System. While we propose to approve
NERC's use of the Gallet equation to determine the minimum vegetation
clearing distances, we believe it is important that NERC develop
empirical evidence that either confirms the MVCD values or gives reason
to revisit the Reliability Standard. Accordingly, consistent with the
activity that NERC has already initiated, the Commission proposes to
direct that NERC conduct or commission testing to obtain empirical data
and submit a report to the Commission providing the results of the
testing.
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    \5\ See U.S.-Canada Power System Outage Task Force, Final Report
on the August 14, 2003 Blackout in the United States and Canada:
Causes and Recommendations at 18, 57-64 (April 2004) (2003 Blackout
Report).
    \6\ See Gerry Cauley written remarks for November 29, 2011
Reliability Technical Conference at 1, 4 and 5 (Docket No. AD12-1-
000).
    \7\ See, e.g., NERC's Second Quarter 2012 Vegetation-Related
Transmission Outage Report at 6-7, available at http://www.nerc.com/fileUploads/File/Compliance/2Q2012_Vegetation%20Report_FINAL%20DRAFT.pdf.
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    4. We also propose to approve the three new or revised definitions
associated with the proposed Reliability Standard for inclusion in
NERC's Glossary. Specifically, we propose to approve the changes in the
definition of ``Right-of-Way (ROW)'' and ``Vegetation Inspection,'' as
well as the addition of the term ``Minimum Vegetation Clearance
Distance (MVCD)'' as defined in NERC's petition. We also propose to
approve NERC's implementation plan for FAC-003-2.
    5. While we believe that the proposed Reliability Standard will
enhance reliability by requiring sub-200 kV transmission lines that are
elements of an IROL or Major WECC Transfer Path to comply with its
requirements, we seek comment on how NERC will ensure that IROLs are
properly designated, as discussed in detail below. In addition, while
we agree that a number of the proposed modifications clarify and make
more explicit the transmission owner's obligations, we seek comment
with regard to the enforceability of certain provisions.
    6. We do not believe, however, that NERC has adequately supported
the assignment of a ``medium'' Violation Risk Factor to Requirement R2,
which pertains to preventing vegetation encroachments into the MVCD of
transmission lines operated at 200 kV and above, but which are not part
of an IROL or a Major WECC Transfer Path. As discussed later, system
events have originated from non-IROL facilities. Accordingly, as
discussed below, we propose to direct that NERC submit a modification,
within 60 days of the effective date of the Final Rule, assigning a
``high'' Violation Risk Factor for violations of Requirement R2.

I. Background

A. Section 215 of the FPA

    7. Section 215 of the FPA requires the Commission-certified ERO to
develop mandatory and enforceable Reliability Standards, subject to
Commission review and approval. Once approved, the Reliability
Standards may be enforced by the ERO subject to Commission oversight,
or by the Commission independently.\8\ Pursuant to the requirements of
FPA section 215, the Commission established a process to select and
certify an ERO \9\ and, subsequently, certified NERC as the ERO.\10\
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    \8\ See 16 U.S.C. 824o(e)(3).
    \9\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC
Stats. & Regs. ] 31,212 (2006).
    \10\ North American Electric Reliability Corp., 116 FERC ]
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006)
(certifying NERC as the ERO responsible for the development and
enforcement of mandatory Reliability Standards), aff'd sub nom.
Alcoa Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).
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B. Reliability Standard FAC-003-1

    8. Currently-effective Reliability Standard FAC-003-1 is applicable
to transmission owners. The requirements of the Version 1 standard
apply to (1) all transmission lines operated at 200 kV or above, and
(2) lower-voltage lines designated as ``critical to the reliability of
the electric system'' by a Regional Entity.
    9. Currently-effective FAC-003-1 contains four requirements.
Requirement R1 requires each transmission owner to prepare, and keep
current, a transmission vegetation management program (TVMP) that
includes, inter alia, a Clearance 1 distance to be achieved at the time
of vegetation management work, and a Clearance 2 distance to be
maintained at all times. The Clearance 2 distance is set by each
transmission owner at a level necessary to prevent flashover, but must
be no less than the clearance distances established in the Institute of
Electric and Electronics Engineers (IEEE) Standard 516-2003 (Guide for
Maintenance Methods on Energized Power Lines). The Clearance 1
distances are established by each transmission owner, and the only
numerical criterion under the current standard is that the ``Clearance
1 distances shall be greater than those defined by Clearance 2.'' \11\
Further, Requirement R1.3 requires that ``[a]ll personnel directly
involved in the design and implementation of the TVMP shall hold
appropriate

qualifications and training, as defined by the Transmission Owner, to
perform their duties.''
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    \11\ FAC-003-1, R1.2.1.
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    10. Requirement R2 of the Version 1 standard requires that each
transmission owner develop and implement an ``annual plan for
vegetation management work,'' allowing flexibility to adjust to
``changing conditions.'' Pursuant to Requirement R3, transmission
owners must report quarterly to the relevant Regional Entity
``sustained transmission line outages * * * caused by vegetation.''
Requirement R4 requires the Regional Entity to report the outage
information to NERC.

C. Order No. 693 Discussion Regarding Vegetation Management

    11. On March 16, 2007, in Order No. 693, the Commission approved 83
of 107 proposed Reliability Standards pursuant to FPA section 215(d),
including currently-effective FAC-003-1.\12\ In addition, pursuant to
section 215(d)(5) of the FPA, the Commission directed NERC to develop
modifications to FAC-003-1 to address certain issues identified by the
Commission, discussed below.
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    \12\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 735.
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    12. In the Notice of Proposed Rulemaking (NOPR) that preceded Order
No. 693, the Commission proposed two directives requiring modification
of NERC's proposed standard pursuant to section 215(d)(5) of the
FPA.\13\ The first would have directed NERC to develop a minimum
vegetation inspection cycle, and the second would have required NERC to
remove the standard's general limitation on applicability to
transmission lines operated at 200 kV and above.\14\ In Order No. 693,
the Commission decided not to require either modification at that time,
but continued to express its concern about the standard's limited
applicability and the lack of a minimum vegetation inspection
requirement.
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    \13\ Mandatory Reliability Standards for the Bulk Power System,
Notice of Proposed Rulemaking, 71 FR 64,770 (Nov. 3, 2006), FERC
Stats. & Regs., Proposed Regulations 2004-2007 ] 32,608, at P 387
(2006).
    \14\ Id.
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    13. The Commission instead required NERC to address a modification
to the applicability of the standard through its Standards development
process, directing NERC to ``modify [FAC-003-1] to apply to Bulk-Power
System transmission lines that have an impact on reliability as
determined by the ERO.'' \15\ In doing so, the Commission stated that
it supported the ``suggestions by [certain commenters] to limit
applicability to lower voltage lines associated with IROL'' and noted
that ``these suggestions should be part of the input to the Reliability
Standards development process.'' \16\ Finally, in response to concerns
raised about the cost of compliance with the standard, the Commission
explained that the ERO must ``develop an acceptable definition that
covers facilities that impact reliability but balances extending the
applicability of this standard against unreasonably increasing the
burden on transmission owners.'' \17\
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    \15\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 706.
    \16\ Id.
    \17\ Id. P 708.
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    14. Similarly, while the Commission decided not to require NERC to
submit a modification to FAC-003-1 to incorporate a minimum vegetation
inspection cycle as part of Order No. 693, the Commission noted that it
``continues to be concerned with leaving complete discretion to the
transmission owners in determining inspection cycles.\18\ The
Commission also rejected the notion that incorporating such a minimum
requirement would lead to a ``lowest common denominator'' and thereby
potentially reduce the frequency of inspections for transmission owners
with aggressive inspection cycles.\19\ Although the Commission did not
require a minimum inspection requirement as part of the standard, it
directed NERC ``to develop compliance audit procedures to identify
appropriate inspection cycles based on local factors.'' \20\
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    \18\ Id. P 721.
    \19\ Id. P 720.
    \20\ Id. P 735.
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    15. With respect to minimum vegetation clearances distances, the
Commission approved FAC-003-1's general approach and ``reaffirm[ed] its
interpretation that FAC-003-1 requires sufficient clearances to prevent
outages due to vegetation management practices under all applicable
conditions.'' \21\ However, the Commission directed NERC to ``develop a
Reliability Standard that defines the minimum clearance needed to avoid
sustained vegetation-related outages that would apply to transmission
lines crossing both federal and non-federal land'' \22\ and
``decline[d] to endorse the use of IEEE 516 as the only minimum
clearance.'' \23\
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    \21\ Id. P 729.
    \22\ Id. P 732.
    \23\ Id. P 731.
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    16. Finally, the Commission directed NERC to address certain
commenters' suggestion that, for purposes of the FAC-003 Reliability
Standard, rights-of-way should be defined to encompass the required
clearance area, and not the entire legal right-of-way, particularly
where the legal right-of-way may greatly exceed the area needed for
effective vegetation management.\24\
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    \24\ Id. P 734.
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II. NERC Petition and Proposed Reliability Standard FAC-003-2

A. NERC Petition

    17. In its petition, NERC maintains that proposed Reliability
Standard FAC-003-2 is just and reasonable, as the proposal meets or
exceeds each of the criteria the Commission has identified for
evaluating a proposed Reliability Standard.\25\ NERC asserts that the
proposed Reliability Standard ``achieves the specific reliability goal
of maintaining a reliable electric transmission system by using a
defense-in-depth strategy to manage vegetation located on transmission
ROW and minimize encroachments from vegetation located adjacent to the
ROW, thus preventing the risk of those vegetation-related outages that
could lead to Cascading.'' \26\ Moreover, NERC maintains that the
proposed Reliability Standard contains a technically sound method to
achieve that goal, as it requires transmission owners to prevent
vegetation from encroaching into the flashover distances, requires
consideration of conductor movement and growth rates (among other
things), requires annual inspections, and requires completion of annual
work needed to prevent encroachments. NERC asserts that FAC-003-2 is
clear and unambiguous as to the requirements and penalties, and
contains clear and objective measures for compliance.\27\
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    \25\ See NERC Petition at 44.
    \26\ Id. at 45.
    \27\ Id. at 46-48; see also id. at 33-40.
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    18. Further, NERC maintains that proposed Reliability Standard FAC-
003-2 represents an improvement over the currently-effective standard,
as FAC-003-2 enhances reliability, facilitates enforceability, and
preserves necessary flexibility for transmission owners to address
local vegetation conditions.\28\ NERC asserts that the proposed
Reliability Standard was developed with the shortcomings of the
currently-effective standard, as identified in Order No. 693, in mind,
including the directive to develop a standard that defines the minimum
clearance needed to avoid sustained vegetation-related outages without
relying on IEEE-516 to set these

clearances.\29\ NERC states that the Standard Drafting Team (SDT)
considered four potential methods for deriving flashover distances for
various voltages and altitudes, and of those, selected the ``Gallet
equation'' because the ``information to support the development of the
standard was readily available in an industry recognized reference.''
\30\ NERC asserts that the ``distances derived using the Gallet
Equation result in the probability of flashover in the range of
10-6'' (one in a million).\31\
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    \28\ Id. at 3, 44-52.
    \29\ See id. at 5 (citing Order No. 693, FERC Stats. & Regs. ]
31,242 at PP 731-732).
    \30\ Id., see also Ex. I, Appx. 1.
    \31\ NERC Petition at 6. As NERC explained in its response to
Question 1 of the Commission's Data Requests:
    The probability of a flashover, given a drop in voltage to 85%
of the `Critical Flashover Voltage (CFO),' is roughly .135% (or
approximately 10-3). This value represents the
probability of a flashover, assuming the specified CFO is achieved
or exceeded.
    However, this is not the only event being considered when
attempting to model the probability of a vegetation flashover. The
probability of achieving a maximum switching overvoltage (``Peak
Voltage'') in excess of the CFO must also be considered. This is
shown on page 40 in equation 6 of the Technical Reference Document,
and is specified there as roughly 0.135% (also approximately
10-3).
    In other words, the conditional probability of flashover given
that the 85% CFO has been exceeded is approximately 10-3.
However, the probability of the CFO being exceeded is also
10-3. As these can be treated as two independent events,
the probability is statistically ``joint'' (the probability of
exceeding the CFO and the probability of a flashover given the
exceeding of the CFO are independent events). Accordingly, the two
probabilities are to be multiplied, yielding a probability on the
order of magnitude of approximately 10-6.
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    19. NERC states that proposed FAC-003-2 continues to give
transmission owners the necessary discretion to determine how to
achieve the required clearances,\32\ but is more stringent than the
currently effective standard because it ``explicitly treat[s] any
encroachment into the MVCD (without contact, with a flashover, with a
momentary outage, or with a sustained outage) as a violation of the
standard.'' \33\ According to NERC, the proposed Reliability Standard
incorporates a new requirement to perform an annual inspection of all
applicable lines and is ``much more explicit regarding what actions
must be taken to support vegetation management and reliability.'' \34\
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    \32\ NERC Petition at 6, 19-22.
    \33\ Id. at 6.
    \34\ Id.
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    20. NERC states that proposed FAC-003-2 was designed to address
directives from Order No. 693, including the directives requiring that
NERC address proposed modifications to expand the applicability of FAC-
003-1, evaluate and consider specific proposals made by parties
commenting on FAC-003-1, develop compliance audit procedures to
identify appropriate inspection cycles, define the minimum clearances
needed to avoid sustained vegetation-related outages applicable to
transmission lines crossing both federal and non-federal land, and
address suggestions that rights-of-way should be defined to encompass
required clearance areas only. NERC also explains that proposed FAC-
003-2 is one of the first Reliability Standards developed using NERC's
``results-based'' approach and, therefore, includes some restructuring
of the standard to focus on completing objectives and achieving goals,
as well as to ensure that enforcement is undertaken in a consistent and
non-preferential manner.\35\
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    \35\ Id. at 7.
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    21. NERC proposes an implementation plan for FAC-003-2.\36\ For
individual transmission lines that become subject to the vegetation
management standard for the first time following designation as an
element of an IROL or Major WECC Transfer Path, NERC asks that the
requirements become effective the latter of (1) twelve months after the
date of such designation, or (2) January 1 of the planning year when
the line is forecast to become an element of an IROL or Major WECC
Transfer Path.\37\
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    \36\ Id. at Ex. B.
    \37\ In considering this aspect of the proposed implementation
plan, we assume that NERC asks that the proposed standard become
effective on the ``later'' of alternative (1) or (2), rather than
the ``latter.''
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    22. Accordingly, NERC requests that the Commission approve proposed
FAC-003-2 and the associated Violation Risk Factors and Violation
Severity Levels. NERC requests as an effective date for the Reliability
Standard, ``the first day of the first calendar quarter that is twelve
months following the effective date of a Final Rule in this docket.''
\38\ NERC further requests: (1) retirement of the Version 1 standard
concurrent with the effective date of FAC-003-2; (2) approval of three
definitions for inclusion in the NERC Glossary; and (3) approval of the
implementation plan for proposed FAC-003-2.
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    \38\ Id. at 68.
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B. Proposed Reliability Standard FAC-003-2 and NERC Explanation of
Provisions

    23. The proposed Reliability Standard includes seven requirements.
    24. Requirements R1 and R2: Pursuant to Requirements R1 and R2,
transmission owners must ``manage vegetation to prevent encroachments
into the MVCD of its applicable line(s),'' and any encroachment is
considered a violation of these requirements regardless of whether it
results in a sustained outage.\39\ NERC characterizes this as a ``zero
tolerance'' approach to vegetation management.\40\ Further, NERC
maintains that these requirements represent an improvement over the
currently effective Version 1 Standard because the proposed standard
makes the requirement to prevent encroachments explicit, and because it
incorporates specific clearance distances into the standard itself
based on ``an established method for calculating the flashover distance
for various voltages, altitudes, and atmospheric conditions.'' \41\
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    \39\ See Reliability Standard FAC-003-2, Requirements R1 and R2,
subsection 1 (transmission owners must manage vegetation to prevent,
inter alia, ``an encroachment into the MVCD, as shown in FAC-003-
Table 2, observed in Real-Time, absent a Sustained Outage'').
    \40\ NERC Petition at 6.
    \41\ Id. at 22.
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    25. NERC has bifurcated the basic requirement to prevent
encroachment into the MVCDs. Requirement R1 applies to IROL elements
and Major WECC Transfer Path elements and is assigned a high Violation
Risk Factor. Requirement R2 sets forth the same substantive
requirements but pertains to non-IROL and non-Major WECC Transfer Path
elements and is assigned a medium Violation Risk Factor. NERC explains
that it bifurcated the requirement to ``eliminate commingling of higher
risk reliability objectives and lesser risk reliability objectives.''
\42\
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    \42\ Id. at 22-23.
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    26. In addition, NERC has included a footnote describing certain
conditions or scenarios, outside the transmission owner's control,
where an encroachment would be exempt from Requirements R1 and R2,
including natural disasters and certain human or animal activity.\43\
As NERC explains, the footnote ``does not exempt the Transmission Owner
from responsibility for encroachments caused by activities performed by
their own employees or contractors, but it does exempt them from
responsibility when other human activities, animal activities, or other
environmental conditions outside their control lead to an encroachment
that otherwise would not have occurred.'' \44\
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    \43\ See proposed Reliability Standard FAC-003-2, n.2.
    \44\ NERC Petition at 23.
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    27. Requirement R3: Requirement R3 requires a transmission owner to
have ``documented maintenance strategies or procedures or processes or

specifications it uses to prevent the encroachment of vegetation into
the MVCD of its applicable lines.'' Requirement R3 requires that these
strategies take into account movement of conductors (sag and sway), and
the inter-relationship between vegetation growth rates, vegetation
control methods, and inspection frequency. While NERC acknowledges that
this requirement does not include the currently effective standard's
requirement to establish a Clearance 1 as part of the required TVMP,
NERC notes that Clearance 1 levels are currently left largely to the
discretion of the transmission owner and that the only numerical
criterion for Clearance 1 is that it ``must be some undefined amount
larger than the minimum flashover distance [Clearance 2].'' \45\ NERC
maintains that the proposed standard's requirement to avoid
encroachments after taking into account conductor movement, vegetation
growth rates, etc., ``still retains the same obligations defined by
`Clearance 1.''' \46\
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    \45\ Id. at 20.
    \46\ Id.
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    28. Requirement R4: Requirement R4 requires a transmission owner
that has observed a vegetation condition likely to produce a fault to
notify, ``without any intentional time delay,'' the appropriate control
center with switching authority for that transmission line. NERC states
that the proposed requirement is an improvement over the Version 1
standard, in that it makes explicit the obligation to communicate
imminent threats, rather than merely establish and document a process
for doing so, as is currently required.\47\ In addition, NERC explains
that the currently-effective Reliability Standard's requirement that
the process allow for ``immediate'' notification was ``impractical at
best,'' and was therefore replaced with the phrase ``without any
intentional time delay,'' which still requires timely notification.
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    \47\ See id. at 25-26 (referencing Requirement R1.5 of FAC-003-
1).
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    29. Requirement R5: Requirement R5 requires a transmission owner
constrained from performing vegetation management work needed to
prevent a vegetation encroachment into the MVCD prior to implementation
of the next annual work plan to take corrective action to prevent such
encroachments. NERC contends that this proposed requirement represents
an improvement over the currently-effective provision, Requirement
R1.4, which merely requires the transmission owner to develop
mitigation measures to address such circumstances, but does not
affirmatively require the transmission owner to take corrective action.
The proposed measures for determining compliance associated with
proposed Requirement R5 provide examples of the kinds of corrective
actions expected, including increased monitoring, line de-ratings, and
revised work orders.\48\
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    \48\ See id. at 24-25.
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    30. Requirement R6: Pursuant to Requirement R6, each transmission
owner shall inspect 100 percent of its applicable lines at least once
per year and with no more than 18 months between inspections on the
same Right-of-Way. NERC maintains that the new requirement is ``an
improvement to the standard that reduces risks,'' and notes that the
currently effective standard allows the transmission owner to develop
its own schedule for inspections (with no standard minimum time) and
contains no explicit requirement that the transmission owner meet its
established schedule.\49\
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    \49\ Id. at 17-18.
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    31. Requirement R7: Pursuant to Requirement R7, the transmission
owner must complete 100 percent of its annual vegetation work plan,
allowing for documented changes to the work plan as long as those
modifications do not allow encroachment into the MVCD. NERC argues that
this requirement represents an improvement over the currently effective
standard because the current Requirement (R2) ``does not mandate that
entities plan to prevent encroachments into the MVCD, but simply that
they implement whatever is included in the plan.'' \50\
---------------------------------------------------------------------------

    \50\ Id. at 28.
---------------------------------------------------------------------------

    32. NERC explains in its petition that certain requirements in the
currently-effective Reliability Standard have not been translated into
a requirement in the proposed standard. In particular, NERC notes that
the Version 1 standard's reporting requirements, R3 and R4, have been
moved into the compliance section of proposed standard FAC-003-2.\51\
NERC maintains that the reporting requirement remains enforceable under
NERC's Rules of Procedure, which gives NERC authority, inter alia, to
require entities to provide ``such information as is necessary to
monitor compliance with the reliability standards.'' \52\ NERC further
notes that it can take action against any entity that fails to comply
with such a reporting requirement (which would amount to a failure to
comply with a NERC Rule of Procedure) pursuant to NERC Rule of
Procedure Section 100, and that it is obligated to notify the
applicable governmental authorities of the entity's failure to
comply.\53\
---------------------------------------------------------------------------

    \51\ Id. at 29-31.
    \52\ Id. at 31 (quoting NERC Rule of Procedure Section 400.3).
This provision actually is located at Section 401.3.
    \53\ See id. at 31-32.
---------------------------------------------------------------------------

    33. In addition, NERC acknowledges that the proposed standard no
longer contains a requirement that personnel involved in the design and
implementation of a vegetation management program have appropriate
qualifications and training (currently set out in sub-requirement
R1.3).\54\ According to NERC, this provision of the Version 1 standard
is ``effectively meaningless,'' since ``appropriate'' qualifications
and training are undefined and left entirely to the discretion of the
transmission owner. Thus, NERC maintains that elimination of this sub-
requirement does not impact reliability.
---------------------------------------------------------------------------

    \54\ Id. at 23-24.
---------------------------------------------------------------------------

    34. NERC is also seeking to revise the definitions of Right-of-Way
(ROW) and Vegetation Inspection, and to add a new definition for
MVCD.\55\ NERC proposes that Right-of-Way be defined as the ``corridor
of land under a transmission line(s) needed to operate the line(s),''
which may not exceed the Transmission Owner's legal rights but may be
smaller. NERC proposes to modify ``Vegetation Inspection'' to allow
both maintenance inspections and vegetation inspections to be performed
concurrently. Finally, NERC proposes a new definition, ``MVCD,'' to be
``[t]he calculated minimum distance stated in feet (meters) to prevent
flash-over between conductors and vegetation, for various altitudes and
operating voltages.''
---------------------------------------------------------------------------

    \55\ See NERC Petition, Ex. C.
---------------------------------------------------------------------------

    35. NERC explains in its petition how it will approach enforcement
of each Requirement under FAC-003-2, noting that each Requirement has
an associated compliance measure that identifies what is required and
how the Requirement will be enforced. NERC explains, inter alia, that
the measures for Requirements R1 and R2 require each transmission owner
to have ``evidence that it managed vegetation to prevent encroachment
into the MVCD,'' and to be able to produce records ``indicating the
requirements were not violated.'' \56\ In order to show compliance with
Requirement R3, NERC explains that a transmission owner will be
``obligated to show documentation, and that documentation must be
sufficient to satisfy the auditor that the information contained in
that documentation is sufficient that the Transmission Owner can use it
to prevent encroachment into the MVCD.'' \57\ Similarly, NERC explains

that ``entities will not be able to comply with [Requirement R7]
without having a documented plan.'' \58\
---------------------------------------------------------------------------

    \56\ NERC Petition at 34.
    \57\ Id. at 35.
    \58\ Id. at 39.
---------------------------------------------------------------------------

    36. NERC asserts that it has addressed seven directives in Order
No. 693 regarding NERC's vegetation management standard.\59\ First,
NERC asserts that it has addressed the concerns in applying the
vegetation management standard only to transmission lines that are 200
kV or above.\60\ NERC notes that it has addressed that concern (and
related directives) by extending the applicability of the proposed
standard to overhead transmission lines that are either 200 kV and
above, or less than 200 kV if the line is an element of an IROL or a
Major WECC Transfer Path. In addition, NERC explains that it has
developed an appropriate implementation plan for any new lines covered
by the standard, thereby satisfying the Commission's directive to
consider a delayed implementation date if lower-voltage facilities are
included.\61\ NERC further maintains that it has addressed the
Commission's concern about allowing transmission owners full discretion
to set inspection schedules by requiring inspections at least once per
year, has satisfied the Commission's directive to define minimum
clearances for both federal and non-federal lands by adopting MVCDs
that apply to lines on both federal and non-federal lands, and has
satisfied the Commission's directive to consider whether modifications
to the definition of Right-of-Way were necessary through the proposed
revision to that definition.\62\
---------------------------------------------------------------------------

    \59\ See id. at 40-44.
    \60\ Id. at 40-42.
    \61\ Id. at 42-43.
    \62\ Id. at 43-44.
---------------------------------------------------------------------------

III. PNNL Report and Comments

A. PNNL Report

    37. As NERC explains in its petition, the Standard Drafting Team
applied the ``Gallet equation'' to derive the MVCDs set forth in FAC-
003-2. NERC describes the Gallet equation as a ``well-known method of
computing the required strike distance for proper insulation
coordination.'' \63\
---------------------------------------------------------------------------

    \63\ NERC Petition, Ex. I (Technical Reference Document) at 39.
---------------------------------------------------------------------------

    38. The Commission's Office of Electric Reliability retained the
Pacific Northwest National Laboratory (PNNL) to undertake an ``analysis
of the mathematics and documentation of the technical justification
behind the application of the Gallet equation and the assumptions used
in the technical reference paper [Exh. A of NERC's petition].'' \64\
---------------------------------------------------------------------------

    \64\ See April 23, 2012 Notice Inviting Comments on Report.
---------------------------------------------------------------------------

    39. PNNL's final Report on the Applicability of the ``Gallet
Equation'' to the Vegetation Clearances of NERC Reliability Standard
FAC-003-2 (PNNL Report) was posted as part of the record in this docket
on April 23, 2012, along with a notice inviting comment on the PNNL
Report within 30 days.
    40. While the PNNL Report points out benefits of the use of the
Gallet equation, it raises questions about potential inconsistencies in
NERC's filing.\65\ The PNNL Report raises concerns about NERC's use of
an assumed gap factor of 1.3, asserting that that figure has not been
adequately supported for use with vegetation and that there is no
evidence that statistics relating to tower design are usable with
vegetation.\66\ Instead, the PNNL Report suggests that a ``rod-plane
gap and tree branch might have about the same gap factor (i.e., k=1),''
\67\ but does not provide any other indication of an appropriate gap
factor for use with vegetation.
---------------------------------------------------------------------------

    \65\ PNNL Report at iv-v (``The equation [the Gallet equation]
is a good and simple-to-use way to solve a problem made difficult by
the nonlinear interactions of the variables. However, in spite of
the evident usefulness of the equation, inconsistencies are found in
the NERC filing * * * .'').
    \66\ See id. at 11-13, 19.
    \67\ PNNL Report at 13.
---------------------------------------------------------------------------

    41. The PNNL Report further asserts that without NERC's assumption
``that the gap between a power line and growing vegetation is stronger
(by 30%) than the reference gap used in developing the Gallet
equation,'' the minimum distances calculated would be about 50%
larger.\68\
---------------------------------------------------------------------------

    \68\ Id. at v.
---------------------------------------------------------------------------

    42. The PNNL Report also asserts that ``[t]hough there is no
obvious way to relate tower clearance to vegetation clearance,'' the
proposed MVCDs in FAC-003-2 are small when compared to transmission
tower design clearances:

    The values for tower clearance for a line at 500 kV in the
Transmission Line Reference Book range from 8.3 ft. to over 17 ft.
The NERC filing requires a gap less than 6 ft for the same voltage,
even at high altitude. There is no reason to suppose that a tree
could safely be allowed so much closer to a line (less than 6 ft)
than a tower.\69\
---------------------------------------------------------------------------

    \69\ Id. at 19.
---------------------------------------------------------------------------

B. Comments in Response to PNNL Report

    43. Nine sets of comments were filed in response to the PNNL
Report, with timely submissions made by NERC, the Canadian Electricity
Association, American Electric Power (AEP), Duke Energy Corporation
(Duke), Oncor Electric Delivery Company LLC (Oncor), Kansas City Power
& Light and KCP&L Greater Missouri Operations Company (KCP&L), Arizona
Public Service Company (APS), and Salt River Project Agricultural
Improvement and Power District (Salt River), as well as a joint
submission by the Edison Electric Institute, the American Public Power
Association, the National Rural Electric Cooperative Association and
the Electric Power Supply Association (collectively, the Trade
Associations).
    44. In its comments, NERC asserts that the PNNL Report ``(a)
improperly juxtaposes data included in the FAC-003-2 Reliability
Standard; (b) disregards NERC's justification regarding the selection
of transient overvoltage calculations; (c) fails to consider joint
probability of independent events when analyzing flashover probability;
and (d) disagrees with the choice of gap factor for vegetation without
providing any empirical evidence, scientific reasoning or expert
consensus on what an appropriate gap factor should be.'' \70\
---------------------------------------------------------------------------

    \70\ NERC Comments on PNNL Report at 1-2 (NERC Comments).
---------------------------------------------------------------------------

    45. With regard to the assertion in the PNNL Report that there is
no evidence that statistics relating to tower design are usable with
vegetation, NERC explains the rationale for its use of the Gallet
equation in some detail (discussed further in PP 47-48 below), and
notes that the PNNL Report ``disagrees with [NERC's] choice of gap
factor for vegetation without providing any empirical evidence,
scientific reasoning, or expert consensus on what an appropriate gap
factor should be.'' \71\ NERC explains that the Standard Drafting Team
``relied on the scientific body of available knowledge and the opinions
of experts (applied conservatively) currently working in the industry''
to support a gap factor of 1.3.\72\ By contrast, NERC asserts that
``there is no justification for the suggestion that the gap factors for
vegetation could be less than unity,'' and considers the PNNL Report's
suggestion of a gap factor of 1.0 to be based ``purely on
speculation.'' \73\
---------------------------------------------------------------------------

    \71\ Id. at 2.
    \72\ Id., Att. A at 8.
    \73\ Id.
---------------------------------------------------------------------------

    46. With regard to PNNL's assertion that ``inconsistencies are
found in NERC's filing'', NERC states that the ``inconsistencies''
identified by the PNNL Report in NERC's Technical Reference Document
result from PNNL erroneously comparing two separate sets

of data developed for different purposes. According to NERC, one set of
data was developed to demonstrate the consistency between the clearance
values set out in the IEEE-516 standard and the values generated using
the Gallet equation when using similar assumptions as those used in the
IEEE-516 standard. The second set of data was designed to generate
appropriate clearance values using the Gallet equation and ``a set of
assumptions determined by the [SDT] to be consistent with the purposes
of the standard.'' \74\ NERC responds that PNNL's comparison of the two
sets of data is therefore ``misleading.'' \75\
---------------------------------------------------------------------------

    \74\ Id., Att. A at 2.
    \75\ Id.
---------------------------------------------------------------------------

    47. With respect to the gap factor, NERC maintains that it relied
on a widely known and regarded source for determining the appropriate
gap factor, which indicates that an appropriate gap factor for a
conductor-to-lateral structure configuration is in the range of 1.25 to
1.40.\76\ Specifically, NERC explains that the Standard Drafting Team
(SDT) relied on the ``widely regarded'' Insulation Coordination for
Power Systems, by Andrew Hileman, to develop the proposed gap factor of
1.3.\77\ NERC indicated that there is a range of gap factors that could
be used in the Gallet equation, each factor designed to represent the
difference in voltage withstand capability \78\ between a given object,
i.e., the transmission wire or conductor, and a reference case, i.e.,
the object for which the distance from the wire must be established.
The gap factor varies based on the nature of the ``gap configuration''
of the reference case. In its response to the PNNL Report, NERC
provided the following table showing the range of gap factors (shown as
kg in the table below) based on the gap configuration:
---------------------------------------------------------------------------

    \76\ Id., Att. A at 6-7.
    \77\ Id. (citing Andrew Hileman, Insulation Coordination for
Power Systems 167 (Marcel Dekker, New York, NY 1999)).
    \78\ The PNNL Report defines ``withstand'' in this context as
``[t]he capability of an insulation system to function as an
insulator when a high voltage is applied.'' PNNL Report at 1.

      Typical Value of Gap Factors kg for Phase-Ground Insulations
------------------------------------------------------------------------
                                                           Typical value
            Gap configuration               Range of kg        of kg
------------------------------------------------------------------------
Rod-plane...............................            1.00            1.00
Rod-rod (vertical)......................       1.25-1.35            1.30
Rod-rod (horizontal)....................       1.25-1.45            1.35
Conductor-lateral structure.............       1.25-1.40            1.30
Conductor-lower rod.....................       1.40-1.60            1.50
------------------------------------------------------------------------

    48. NERC then states that use of a gap factor of 1.3 is
conservative:

    It is worth noting that the gap factors for many shapes that
could approximate vegetation are even higher than the 1.3 used in
FAC-003-2, with ranges that include values as high as 1.6. Hileman
notes that in regards to the substation environment (which includes
many objects, conducting and non-conducting, with varying shapes and
configurations): ``Practically, the lowest gap factor in the
substations is 1.3, which normally is conservative.''
* * * * *
    [T]he [SDT] did not rely on any specific properties inherent in
trees, rather, the [SDT] conservatively assumed that vegetation had
the same properties as metal. The [SDT] elected to use the
``typical'' value for ``conductor to lateral structure.'' Unlike the
other examples given, which specify a ``typical'' value that is
equivalent to the midpoint of the range, this value (1.3) is within
the conservative third of the range (1.25-1.4).\79\
---------------------------------------------------------------------------

    \79\ Id. at 7.

    49. In response to the assertion in the PNNL Report that ``[t]here
is no reason to suppose that a tree could safely be allowed so much
closer to a line * * * than a tower'' (see P 42, supra), NERC explains
in its comments why NERC's proposed MVCDs may not be directly
---------------------------------------------------------------------------
comparable to distances based on tower design:

    [C]are must be taken when making an interpretation of the
tabular data, as the original survey participants may have answered
the questions in a general context involving multiple structure
designs. The final structure design parameters provided in the Red
Book include the CFO gap plus other factors (such as insulator
geometry, personnel safety and extreme lightning events).
Accordingly, they should not be considered the final word with
regard to Vegetation Management, as those distances were established
to address a number of other issues. FAC-003-2 is not intended to
mandate the parameters for all future line designs; it is focused
solely on the distances necessary to mitigate the risk of vegetation
related outages.

    50. In addition to providing a response to the technical issues
raised by the PNNL Report, NERC argues that the Commission is obligated
under FPA section 215(d)(2) to give due weight to NERC's technical
expertise with respect to the content of proposed standards.
    51. Trade Associations, Duke, Oncor and other commenters support
NERC's technical analysis. AEP and Oncor agree with NERC that the PNNL
report contains inappropriate comparisons of data NERC presented in its
petition and supporting materials, and that if NERC's Gallet-generated
numbers are compared to the distances calculated under IEEE-516, the
``clearances determined by the two calculations are in fact closely
aligned.'' \80\ AEP and Oncor further maintain that the PNNL Report
does not offer a ``better alternative'' to the use of the Gallet
equation, and that it does not dispute the Standard Drafting Team's
rationale for its selection of transmission overvoltages.\81\ AEP and
Oncor note that the PNNL Report acknowledges ``that the Gallet Equation
is `a fair representation of the performance of an air gap of a few
meters, a simple-to-use way to solve a problem made difficult by the
nonlinear interactions of the variables' and that NERC has used the
complete method that includes all the factors that go into the estimate
of peak voltage.'' \82\ AEP and Oncor also assert that proposed FAC-
003-2, taken as a whole, will serve to improve the reliability of the
system. AEP notes that the MVCDs included in Table 2 of the proposed
Reliability Standard are merely the first piece of an overall strategy
the transmission owner must develop to manage vegetation, and that the
transmission owner must have documented strategies to prevent
encroachments within all rated operating conditions, after taking into
account sag, sway, and vegetative growth.
---------------------------------------------------------------------------

    \80\ AEP Comments and Oncor Comments at 2.
    \81\ Id.
    \82\ Id. at 3 (citing PNNL Report at 19).
---------------------------------------------------------------------------

    52. KCP&L comments that the PNNL Report should have ``included
discussion regarding a correction factor

in the clearance calculation using the Gallet Equation due to the
difference in the conductive properties of the metal rod compared to
vegetation.'' \83\ KCP&L supports use of the Gallet equation as an
``improvement over the industry's current means of determining
clearance distances.'' \84\
---------------------------------------------------------------------------

    \83\ KCP&L Comments at 2-3.
    \84\ Id. at 3. KCP&L also points out what it characterizes as a
technical error in the PNNL Report related to the impact of multiple
gaps on flashover probabilities, maintaining that in the example
given by the PNNL Report, the flashover probability with 20 gaps
should be 4% rather than 33%. Id.
---------------------------------------------------------------------------

    53. APS questions whether either the Gallet equation or the IEEE
standard incorporated in currently-effective FAC-003-1 ``provides a
demonstrable indicator of the flash-over distance between conductors
and ground vegetation * * *, '' \85\ and accordingly suggests that the
Commission ask the Department of Energy to experimentally verify the
distances derived from the IEEE and Gallet methodologies. APS takes the
position that, until such data are developed, the Gallet methodology
``seems more reasonable'' than the IEEE standard as a basis for
developing a clearance requirement.\86\
---------------------------------------------------------------------------

    \85\ APS Comments at 2.
    \86\ Id.
---------------------------------------------------------------------------

    54. Salt River supports the PNNL Report's analysis, noting that it
has questioned the applicability of the Gallet equation for vegetation
clearances throughout the development of FAC-003-2. Salt River further
agrees that there is insufficient evidence to suggest that a tree could
safely be allowed much closer to a line than a tower. Finally, Salt
River supports the experimental verification of any proposed guidelines
regarding required vegetation clearances.

C. NERC Response to Data Request

    55. On May 4, 2012, Commission staff issued data requests to NERC.
NERC submitted a timely response to the data requests on May 25, 2012,
addressing matters such as the correct understanding and enforceability
of certain provisions of the proposed Reliability Standard. Relevant
elements of NERC's response to the data requests are discussed further
below.

IV. Discussion

    56. Pursuant to section 215(d) of the FPA, we propose to approve
Reliability Standard FAC-003-2, including the associated new and
revised definitions and implementation plan, as just, reasonable, not
unduly discriminatory or preferential, and in the public interest. As
discussed in Section A below, we believe the proposed Reliability
Standard will enhance reliability and satisfies a number of the
outstanding directives from Order No. 693. In addition, we seek further
comment on certain aspects of the proposed Reliability Standard.
Accordingly, we discuss the following matters below: (A) proposal to
approve FAC-003-2; (B) applicability of the standard to sub-200 kV
transmission lines; (C) clearance distances; (D) appropriate Violation
Risk Factor for Requirement R2; (E) enforcement issues; (F) inclusion
of reporting obligations as a compliance measure; and (G) proposed
definitions.

A. The Commission Proposes to Approve FAC-003-2

    57. We believe that proposed standard FAC-003-2 is an improvement
over the currently-effective Version 1 standard, will support
vegetation management practices that can effectively protect against
vegetation-related transmission outages, and satisfies a number of the
outstanding directives from Order No. 693. As discussed earlier, NERC
has explained how many of the Requirements improve upon the currently-
effective Version 1 standard. In support of our proposal to approve
FAC-003-2, we highlight several of these improvements. For example, in
accordance with our directives in Order No. 693, as discussed further
below, NERC has expanded the applicability of the Reliability Standard
so that it now applies not only to all transmission lines above 200 kV,
but also to transmission lines operated below 200 kV if they are an
element of an IROL or an element of a Major WECC Transfer Path.
    58. In addition, NERC has incorporated minimum clearance distances
into the text of the Reliability Standard, and no longer includes a
required clearance distance based on distances set by IEEE-516 which,
as indicated in Order No. 693, served a different purpose than
vegetation management. Proposed FAC-003-2 requires a transmission owner
to prevent an encroachment into the MVCD, even if the encroachment does
not result in a flashover or fault. As NERC explains, ``FAC-003-2
presents a `zero-tolerance' approach to vegetation management,
explicitly treating any encroachment into the MVCD * * * as a violation
* * *.'' \87\ Finally, encroachments must be prevented under all rated
operating conditions, and must take into account sag and sway of the
line, as well as vegetative growth rates and frequency of inspection
and maintenance.
---------------------------------------------------------------------------

    \87\ NERC Petition at 6.
---------------------------------------------------------------------------

    59. While the Commission did not require NERC to adopt a minimum
inspection cycle as part of Order No. 693, the Commission did express
concern both prior to and as part of Order No. 693 that inspection
cycles should not be left entirely to the discretion of the
transmission owner. Accordingly, in Order No. 693, the Commission
stated that:

    The Commission continues to be concerned with leaving complete
discretion to the transmission owners in determining inspection
cycles, which limits the effectiveness of the Reliability Standard.
Accordingly, the Commission directs the ERO to develop compliance
audit procedures * * * which would identify appropriate inspection
cycles based on local factors. These inspections cycles are to be
used in compliance auditing of FAC-003-1 by the ERO or Regional
Entity to ensure such inspection cycles and vegetation management
requirements are properly met by the responsible entities.\88\
---------------------------------------------------------------------------

    \88\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 721.

NERC has addressed this concern by incorporating a minimum inspection
cycle requirement in the proposed Reliability Standard (at least once
per calendar year and no more than 18 months between inspections).\89\
---------------------------------------------------------------------------

    \89\ See NERC Petition at 43.
---------------------------------------------------------------------------

    60. Thus, based on the overall benefits of proposed FAC-003-2, we
propose to approve Reliability Standard FAC-003-2 and propose to direct
a change in the VRF level assigned to Requirement R2, as discussed
further below.
    61. In considering whether to approve Reliability Standard FAC-003-
2, we give due weight to NERC's technical expertise. In light of our
proposal to approve the proposed Reliability Standard, commenters'
suggestions that we have failed to give due weight to NERC's technical
expertise are moot. Below, however, we will discuss our substantive
consideration of the proposed minimum clearance distances derived based
on application of the Gallet equation and certain technical points
raised by the PNNL Report and commenters.

B. Applicability

    62. The currently-effective Reliability Standard, FAC-003-1, is
applicable to any transmission line operated at 200 kV and above, and
to any line of lesser voltage designated by a Regional Entity \90\ as
``critical to the reliability of

the electric system in the region.'' \91\ As discussed above, the
Commission accepted this approach in Order No. 693, but directed NERC
to address a modification to the applicability of the standard through
its Reliability Standards development process:
---------------------------------------------------------------------------

    \90\ Reliability Standard FAC-003-1 refers to Regional
Reliability Organizations (RROs), the precursors to Regional
Entities.
    \91\ To date, no Regional Entity has designated any lower
voltage lines as critical to regional reliability and therefore
subject to FAC-003-1.

    We will not direct NERC to submit a modification to the general
limitation on applicability as proposed in the NOPR. However we will
require the ERO to address the proposed modification through its
Reliability Standards development process. As explained in the NOPR,
the Commission is concerned that the bright-line applicability
threshold of 200 kV will exclude a significant number of
transmission lines that could impact Bulk-Power System reliability *
* *. We support the suggestions by Progress Energy, SERC and MISO to
limit applicability to lower voltage lines associated with IROL and
these suggestions should be part of the input to the Reliability
Standards development process.
* * * * *
    [Other commenters] raise concerns about the cost of implementing
this Reliability Standard if the applicability is expanded to lower-
voltage facilities. We recognize these concerns * * *and we direct
the ERO to develop an acceptable definition that covers facilities
that impact reliability but balances extending the applicability of
this standard against unreasonably increasing the burden on
transmission owners.\92\
---------------------------------------------------------------------------

    \92\ Order No. 693, FERC Stats. & Regs. ] 31,242 at PP 706, 708.

    63. We believe that NERC has satisfied this directive by
considering the various concerns raised by the commenters as noted in
Order No. 693, and ultimately by revising the Reliability Standard so
that it applies to not only to lines that are 200 kV and above, but
also to any sub-200 kV transmission line that is an element of an IROL
or a Major WECC Transfer Path. We believe that NERC has supported its
approach to the expansion in applicability, noting that proposed FAC-
003-2 provides specific criteria to determine applicability for sub-200
kV transmission lines. In addition, NERC has used an impact-based
approach for determining applicability rather than a bright-line
threshold as a means of balancing the potential increased burden on
transmission owners under a standard with expanded applicability.\93\
---------------------------------------------------------------------------

    \93\ NERC Petition at 41-42.
---------------------------------------------------------------------------

    64. While we view the modified applicability as a significant
improvement, there are two aspects on which we seek comment. First,
section 4.2.2 of proposed FAC-003-2 provides that the standard applies
to overhead transmission lines operated below 200 kV identified as an
IROL under NERC Standard FAC-014 by the planning coordinator. However,
FAC-014-2 does not explicitly require the planning coordinator to
provide information about IROL status to transmission owners. Further,
IROLs may change with changing system conditions. Given these factors,
we seek a better understanding of how FAC-003-2 will be applied to
facilities designated as IROLs. For example, we seek comment on how
information regarding IROL status will be transmitted to transmission
owners that must comply with FAC-003-2 and how transmission owners can
effectively implement vegetation management per FAC-003-2 given that
such programs are generally implemented annually and a change in IROL
status can take place at any time given changing system conditions.\94\
---------------------------------------------------------------------------

    \94\ For example, if a line is designated to be an IROL element
by the planning coordinator, how will the transmission owner know to
thereafter apply FAC-003-2 to that line? If the designation of an
IROL changes with changes in system conditions, how will a
transmission owner document management of vegetation over time?
---------------------------------------------------------------------------

    65. Second, in Order No. 693, the Commission directed that the
proposed Reliability Standard apply to ``Bulk-Power System transmission
lines that have an impact on reliability as determined by the ERO.''
\95\ The Commission noted evidence that some lines below 200 kV can
have significant impacts on the Bulk-Power System, including IROLs and
System Operating Limits (SOLs).\96\ The Commission directed the ERO,
however, to balance extending the applicability of the standard against
unreasonably increasing the burden on transmission owners.\97\ Thus, we
seek comment on how the applicability of the proposed Reliability
Standard complies with the directive that the standard cover ``lines
that have an impact on reliability.'' In addition, since the issuance
of Order No. 693, we note that Commission staff and NERC stated in
their joint report on the 2011 Southwest outage that failure to
properly designate IROLs was a major cause of the outage.\98\
Therefore, as part of the broader inquiry into whether the standard
covers ``lines that have an impact on reliability,'' we seek comment on
how NERC will assure that IROLs are properly designated.
---------------------------------------------------------------------------

    \95\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 706.
    \96\ Id. P 710.
    \97\ Id. P 708.
    \98\ See FERC and NERC Staff Report, Arizona- Southern
California Outages on Sept. 8, 2011: Causes and Recommendations at
6, 97-100 (April 2012).
---------------------------------------------------------------------------

C. Requirements R1 and R2

1. Minimum Clearance Values
    66. We find that NERC has relied on a reasonable method for setting
the MVCD, and has supported the inputs and assumptions it used to
develop those minimum clearance distances, at least until such time
that empirical data is developed and is available for use in setting
MVCDs. We note that the MVCDs are roughly equivalent to, or slightly
larger than, the minimum Clearance 2 distances in the current standard.
    67. NERC explains that the MVCD is the result of a conservative gap
factor. Further, the MVCD clearances represent only one aspect of
proposed FAC-003-2. The MVCD establishes a ``minimum[] required to
prevent Flash-over.'' \99\ The proposed standard requires transmission
operators to manage vegetation to ensure that vegetation does not
encroach into that minimum clearance distance, which requires
transmission owners to manage vegetation to a distance further than the
MVCD. For example, transmission owners are required to have documented
compliance strategies, procedures, processes, or specifications under
Requirement R3 to prevent encroachments into the MVCDs after taking
into account sag and sway of the lines, as well as vegetative growth
rates, planned control methods and frequency of inspections. Similarly,
under Requirement R7, a transmission owner is required to ``complete
100% of its annual vegetation work plan of applicable lines to ensure
no vegetation encroachments occur within the MVCD.'' \100\ Indeed, as
NERC has explained, the ``Transmission Owner is obligated to show
detailed documentation that clearly explains their system with regard
to the geography and how the Transmission Owner will execute the plan
to prevent encroachment.'' \101\ Further, NERC has indicated that a
transmission owner's documentation approach will generally contain the
following elements:

    \99\ NERC Petition, Ex. A (Proposed Reliability Standard FAC-
003-2) at 26 (Table 2--Minimum Vegetation Clearance Distances (MVCD)
For Alternating Current Voltages), n. 7 (emphasis added).
    \100\ Proposed Reliability Standard FAC-003-2 R7.
    \101\ See NERC Response to Data Request Q2.

    1. The maintenance strategy used (such as minimum vegetation-to-
conductor distance or maximum vegetation height) to ensure that MVCD
clearances are never violated.
    2. The work methods that the Transmission Owner uses to control
vegetation;
    3. A stated Vegetation Inspection frequency;

    4. An annual work plan.\102\
---------------------------------------------------------------------------

    \102\ NERC Response to Data Request Q4 (emphasis added) (citing
NERC Petition, Ex. A at 19-20).

NERC also has indicated in its filing that ``prudent vegetation
maintenance practices dictate that substantially greater distances
[than the applicable MVCD] will be achieved at time of vegetation
maintenance.''\103\
---------------------------------------------------------------------------

    \103\ NERC Petition, Ex. A (Proposed Reliability Standard FAC-
003-2) at 26 (Table 2--Minimum Vegetation Clearance Distances (MVCD)
For Alternating Current Voltages), n. 7.
---------------------------------------------------------------------------

    68. NERC also explains that a conductor's position in space at any
point in time continuously changes in reaction to a variety of factors,
such as the amount of thermal and physical loading, air temperature,
wind velocity and direction, and precipitation. The following diagram
is a cross-section view of a single conductor at a given point along
the span that illustrates six possible conductor positions due to
movement resulting from thermal and mechanical loading: \104\
---------------------------------------------------------------------------

    \104\ NERC Petition, Ex. A at 20-21.
    [GRAPHIC] [TIFF OMITTED] TP24OC12.000

NERC indicates that conductor movements must be taken into account
under FAC-003-2, and that the transmission owner is required to show
that its approach to vegetation management under Requirement R3 will
prevent encroachments under all expected line positions.\105\ Thus, a
transmission owner must manage vegetation to ensure it does not
encroach into the MVCD under multiple conditions.
---------------------------------------------------------------------------

    \105\ See id. and Requirement R3 of FAC-003-2; see also NERC
Petition, Ex. I (Technical Reference Document) at 20-29.
---------------------------------------------------------------------------

    69. Finally, as NERC explains in its Technical Reference Document,
transmission owners will have to clear vegetation to levels ``well away
from'' the minimum spark-over zone:

    As the conductor moves through various positions [due to thermal
loading and physical loading], a spark-over zone surrounding the
conductor moves with it. * * * At the time of making a field
observation, however, it is very difficult to precisely know where
the conductor is in relation to its wide range of all possible
positions. Therefore, Transmission Owners must adopt maintenance
approaches that account for this dynamic situation.
* * * * *
    In order to maintain adequate separation between vegetation and
transmission line conductors, the Transmission Owner must craft a
maintenance strategy that keeps vegetation well away from the spark-
over zone mentioned above.\106\
---------------------------------------------------------------------------

    \106\ NERC Petition, Ex. I (Technical Reference Document) at 21-
24.

    70. Thus, while clearances required at the time of maintenance may
vary from one region or area to another, our proposed approval of FAC-
003-2 is based on our understanding, which is drawn directly from
NERC's statements in its petition, that transmission operators will
manage vegetation to distances beyond the MVCD to ensure no
encroachment into the MVCD.
    71. As discussed above, the PNNL Report identifies specific
potential concerns regarding NERC's approach to calculating minimum
clearance values, such as the appropriate ``gap factor'' to apply. In
its response to the PNNL Report, NERC explains the Standard Drafting
Team's approach to reach a 1.3 gap factor and how it considered the
matters raised in the PNNL Report. For example, with regard to the gap
factor, NERC indicates that the drafting team relied on an
authoritative source and chose a conservative gap factor value.\107\
Based on the record in this proceeding, the application of the Gallet
equation appears to be one reasonable method to calculate MVCD values.
Further, while questions have been raised regarding certain inputs into
the mathematical formula, we believe that NERC has supported use of the
MVCD values set forth in FAC-003-2.
---------------------------------------------------------------------------

    \107\ NERC Comments on PNNL Report at 6-7.
---------------------------------------------------------------------------

    72. Notwithstanding our approval of the proposed MVCD, we remain
concerned, as indicated in Order No. 693, over the lack of empirical
data with regard to actual flashover distances observed through testing
or analysis of flashover events.\108\ NERC states in its petition that
the Electric Power Research Institute (EPRI) is planning to undertake
``the first known field tests of energized high voltage conductor
flash-over to vegetation'' at its Lenox facility, and that EPRI could
be ready to commence such testing by the summer of 2013.\109\ We seek
comment on the status of this project and any other similar testing
that is planned or ongoing of which NERC or other commenters are aware.
---------------------------------------------------------------------------

    \108\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 735.
    \109\ NERC Petition at 5, n. 10.
---------------------------------------------------------------------------

    73. NERC further states that ``the results of those [EPRI] tests
may be useful to the industry for future reviews of this NERC
standard.'' \110\ We agree

with NERC. While we accept NERC's approach to determine the MVCDs
between conductors and vegetation needed to prevent flashovers, we
believe it is important that NERC develop empirical evidence that
either confirms the MVCD values or gives reason to revisit the
Reliability Standard. Accordingly, consistent with the activity that
NERC has already initiated, the Commission proposes to direct that NERC
conduct or commission testing to obtain empirical data and submit a
report to the Commission providing the results of the testing. We seek
comment on this proposal, as well as the appropriate time frame for
completion of the required testing and the submission of a report.
---------------------------------------------------------------------------

    \110\ Id.
---------------------------------------------------------------------------

2. Designation of Medium VRF for Requirement R2
    74. Requirement R1 of currently-effective Reliability Standard FAC-
003-1 requires a transmission owner to maintain a ``transmission
vegetation management program'' pursuant to which a transmission owner
must maintain certain clearance distances between applicable
transmission lines and vegetation. Requirement R1 of the Version 1
standard is assigned a ``high'' Violation Risk Factor.
NERC Petition
    75. Under FAC-003-2, NERC proposes to bifurcate the assigned
Violation Risk Factor levels, depending on the type of transmission
line involved. NERC proposes to assign a high Violation Risk Factor to
Requirement R1, which requires transmission owners to ``manage
vegetation to prevent encroachments into the MVCD of its applicable
line(s) which are either an element of an IROL, or an element of a
Major WECC Transfer Path.'' Requirement R2 of the proposed Reliability
Standard, which is assigned a medium Violation Risk Factor, provides
that ``[e]ach Transmission Owner shall manage vegetation to prevent
encroachments into the MVCD of its applicable line(s) which are not
either an element of an IROL, or an element of a Major WECC Transfer
Path.'' [Emphasis in original.] Thus, the substantive obligation set
forth in Requirements R1 and R2 are identical, but the Violation Risk
Factors differ based on whether a transmission line is an element of an
IROL or Major WECC Transfer Path.
    76. NERC maintains that the assignment of a medium Violation Risk
Factor for Requirement R2 is appropriate pursuant to existing Violation
Risk Factor definitions and guidelines. NERC maintains that ``[l]ines
that are not IROLs and are not Major WECC Transfer Paths by definition
have less potential for leading to cascading, separation or
instability.'' \111\ Thus, NERC asserts that the separation into high
risk and medium risk categories ``ensure entities properly understand
the risk to reliability associated with specific actions.'' \112\
---------------------------------------------------------------------------

    \111\ NERC Petition at 53.
    \112\ Id. at 54.
---------------------------------------------------------------------------

Commission Proposal
    77. Based on the information provided in NERC's Petition, it is not
clear that NERC has adequately supported a medium Violation Risk Factor
designation for Requirement R2. The Commission-approved definition of a
``medium'' risk requirement is:

    A requirement that, if violated, could directly affect the
electrical state or the capability of the bulk electric system, or
the ability to effectively monitor and control the bulk electric
system. However, violation of a medium risk requirement is unlikely
to lead to bulk electric system instability, separation, or
cascading failures * * *.\113\
---------------------------------------------------------------------------

    \113\ See North American Electric Reliability Corp., 119 FERC ]
61,145 at P 9, order on compliance, 121 FERC ] 61,179, at n.2, Appx.
A (2007) (emphasis added).

---------------------------------------------------------------------------
    The definition of a high Violation Risk Factor is:

    A requirement that, if violated, could directly cause or
contribute to bulk electric system instability, separation, or a
cascading sequence of failures, or could place the bulk electric
system at an unacceptable risk of instability, separation, or
cascading failures * * *.\114\
---------------------------------------------------------------------------

    \114\ Id. (emphasis added).

NERC's support for the medium designation is that transmission lines
that are not IROLs and are not Major WECC Transfer Paths ``have less
potential for leading to cascading, separation, or instability'' than
lines that are IROLs or Major WECC Transfer Paths.\115\ But NERC does
not explain why outages on these relatively high voltage lines (200 kV
or higher) would not likely lead to cascading, separation, or
instability, or provide any indication of the number of transmission
lines and transmission line-miles that would now be subject to a
reduced (i.e., medium) Violation Risk Factor designation if FAC-003-2
were in effect.
---------------------------------------------------------------------------

    \115\ NERC Petition at 53.
---------------------------------------------------------------------------

    78. Moreover, transmission lines not designated as an IROL element
(or the equivalent) have been instrumental in causing major blackouts,
including the August 2003 Northeast blackout. In that case, at least
three of the four 345 kV lines (Star-S Canton, Harding-Chamberlin, and
Hanna-Juniper) that tripped due to tree contact were not monitored as a
flowgate, which could be viewed as the technical equivalent of an IROL
at that time.\116\ These three lines were the second, third and fourth
lines to trip.\117\
---------------------------------------------------------------------------

    \116\ 2003 Blackout Report at 55, 57, 60. The NERC Glossary
defines a flowgate as: ``1.) A portion of the Transmission system
through which the Interchange Distribution Calculator calculates the
power flow from Interchange Transactions. 2.) A mathematical
construct, comprised of one or more monitored transmission
Facilities and optionally one or more contingency Facilities, used
to analyze the impact of power flows upon the Bulk Electric
System.'' NERC Glossary at 20.
    \117\ 2003 Blackout Report at 46 (Fig. 5.1).
---------------------------------------------------------------------------

    79. Likewise, an August 10, 1996 blackout in WECC began with the
trip of a 500 kV line (due to a tree contact) that was not identified
as part of WECC's relevant path catalog at the time, i.e., the line was
not identified as one of the critical paths subject to WECC monitoring
and oversight similar to that required for a Major WECC Transfer Path
today.\118\
---------------------------------------------------------------------------

    \118\ The blackout originated with the trip of the Keeler-
Allston 500 kV line, see NERC 1996 System Disturbances: Review of
Selected Electric System Disturbances in North America (August 2002)
at 40, 47, and affected 7.5 million people and 28,000 MW of load
across fourteen states. 2003 Blackout Report at 106.
---------------------------------------------------------------------------

    80. Pursuant to proposed Requirements R1 and R2, transmission
owners must ``manage vegetation to prevent encroachments into the MVCD
of its applicable lines,'' and any encroachment is considered a
violation of these requirements regardless of whether it results in a
sustained outage. NERC explains that it bifurcated the requirement to
eliminate commingling of higher risk reliability objectives and lesser
risk reliability objectives. However, analysis of the two
aforementioned system disturbances suggests that lines that are not
designated as an IROL or a Major WECC Transfer Path at a given point in
time (i.e., proposed Requirement R2 lines), may still be associated
with higher-risk consequences, including outages that can lead to
Cascading.
    81. Accordingly, pursuant to our Violation Risk Factor guidelines,
which require, among other things, consistency within a Reliability
Standard (guideline 2) and consistency between requirements that have
similar reliability objectives (guideline 3), we propose to modify the
Violation Risk Factor assigned to Requirement R2 from medium to high.
However, in its comments on this NOPR, NERC is free to provide
additional explanation than provided thus far to demonstrate the lines
identified in Requirement R2 are properly assigned a medium Violation
Risk Factor.

D. Enforceability

NERC Petition
    82. In its petition, NERC describes its approach to enforcement
with respect to each of the Reliability Standard's requirements, noting
that each requirement is associated with a specific measure for
evaluating compliance and Violation Severity Level guidance. With
respect to Requirements R1 and R2, NERC explains that the associated
measure sets out the types of evidence or documentation that will be
required to show that vegetation was managed to prevent encroachments.
    83. NERC acknowledges that proposed Requirements R1 and R2 include
a general footnote (Footnote 1) describing multiple conditions
exempting a transmission owner from these requirements so as not to be
held accountable for an encroachment (e.g., a natural disaster or a
``major storm'' as defined either by the transmission owner or an
applicable regulatory body). However, NERC explains that this exception
would only apply to situations that are beyond the control of the
transmission owner or its duly appointed delegate.\119\ Further, any
determination by the Commission or any other ``applicable regulatory
body'' as to whether a given event does or does not qualify as a
``major storm'' would override any such determination by the
transmission owner.\120\
---------------------------------------------------------------------------

    \119\ NERC Petition at 34.
    \120\ NERC Petition at 34.
---------------------------------------------------------------------------

    84. With respect to the Requirement R3 obligation that a
transmission owner document its approach to vegetation management, NERC
explains that the transmission owner must not only demonstrate that its
program takes into account ``the movement of the conductor, as well as
growth rate, control method, and inspection frequency,'' it must also
provide ``documentation that is sufficient to satisfy the auditor that
the information contained in that documentation is sufficient that the
Transmission Owner can use it to prevent encroachment into the MVCD.''
\121\ NERC further explains that ``[a]uditors will have to use judgment
to evaluate the appropriateness of the documentation provided given the
particular circumstances of the entity being audited.'' \122\
---------------------------------------------------------------------------

    \121\ Id. at 35.
    \122\ Id.
---------------------------------------------------------------------------

    85. With respect to the obligation in Requirement R4 to provide
notice to the applicable control center of a confirmed vegetation
condition likely to cause a fault, NERC again explains that auditors
may have to use judgment based on the specific circumstances, ``but it
is expected that an entity that does not make this reporting a top
priority would be in violation of the standard.'' \123\ In addition,
NERC explains that the obligation to notify without intentional delay
generally ``can be understood to include an immediate (within 1 hour of
the observation) communication notwithstanding a safety issue to the
personnel, other immediate priority maintenance functions to ensure
reliability or system stability, or communications equipment failure
that precludes immediate communication.'' \124\
---------------------------------------------------------------------------

    \123\ Id.
    \124\ Id. at 37.
---------------------------------------------------------------------------

    86. With respect to Requirement R5, NERC explains that in the case
where a transmission owner is prevented from taking actions needed to
prevent an encroachment into the MVCD, the transmission owner must de-
energize or de-rate the line to reduce the MVCD as needed to avoid a
violation, and must show proof that it has taken that action if
needed.\125\
---------------------------------------------------------------------------

    \125\ Id.
---------------------------------------------------------------------------

    87. With respect to Requirement R7 covering vegetation work plans,
NERC notes that the requirement does not explicitly require the
creation of such a plan, but states that ``entities will not be able to
comply with the requirement without having a documented plan.'' \126\
While NERC acknowledges that R7 allows transmission owners to have a
``dynamic work plan,'' it points out that any modifications to the plan
must be executed to avoid encroachment of vegetation into the MVCD.
Moreover, NERC notes that ``[a]ny such encroachment would be a
violation of R1 or R2, and any changes to the plan that resulted in
such an encroachment would be a violation of R7.'' \127\ Finally, NERC
notes that auditors will be able to request and review initial work
plans for comparison with completed work plans in order to assess
compliance with these requirements.\128\
---------------------------------------------------------------------------

    \126\ Id. at 39.
    \127\ Id.
    \128\ Id. at 40.
---------------------------------------------------------------------------

    88. In addition, NERC has identified what it expects a transmission
owner's vegetation management program to contain. See P 67, supra.
    89. The proposed Reliability Standard, as filed, includes a
``Guideline and Technical Basis'' document that further explains NERC's
expectations on how the requirements will be enforced and how
compliance can be demonstrated. For example, with respect to
Requirement R3, NERC explains in greater detail that the documentation
showing the transmission owner's approach to vegetation management must
provide ``the basis for evaluating the intent, allocation of
appropriate resources, and the competency of the Transmission Owner in
managing vegetation.'' \129\ While NERC notes that there are many
acceptable approaches to vegetation management, the transmission owner
must be able to show how it conducts work to maintain the required
clearances.\130\ In addition, as discussed in paragraphs 67-71 above,
transmission owners cannot show compliance with the standard without
adopting a vegetation management program that keeps vegetation away
from the MVCDs under changing conditions.
---------------------------------------------------------------------------

    \129\ Id., Ex. A at 19.
    \130\ Id. at 20.
---------------------------------------------------------------------------

Commission Proposal
    90. We support NERC's overall efforts to develop explicit,
verifiable measures for each requirement in order to allow for
consistent, non-preferential enforcement.
    91. As noted above, NERC has provided information we believe is
useful to an overall understanding of the intent of the standard and
how it will be interpreted and enforced, including the information that
NERC has provided in its petition, in the Guideline and Technical Basis
document that is attached as part of Exhibit A to the petition, and in
its May 25, 2012 responses to the Commission staff's data requests. We
believe these additional resources, while not setting forth
requirements or themselves determining whether compliance has occurred,
provide guidance with respect to uniform compliance with the proposed
Reliability Standard.\131\ We expect that NERC will approach its
compliance, auditing and enforcement obligations as described in each
of these submitted materials. We seek comment as to whether this
material should be consolidated as reference material to complement the
proposed compliance measures in order that entities that must comply
can find these materials in one place and assure implementation of the
proposed standard as NERC has supported in its filings.
---------------------------------------------------------------------------

    \131\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 253.
---------------------------------------------------------------------------

    92. In addition, Requirement R4 requires transmission owners to
notify ``without intentional time delay'' the control center with
switching authority for the applicable line when the transmission owner
has confirmed the

existence of a vegetation condition that is likely to cause an imminent
fault. We seek comment on how NERC would or should treat a delay in
communication caused by the negligence of the transmission owner or one
of its employees, where the delay may be significant and
``unintentional.''

E. Reporting Requirements

    93. Reliability Standard FAC-003-1, Requirements R3 and R4, require
quarterly reporting to the Regional Entities of sustained transmission
outages caused by vegetation. While the proposed Reliability Standard
moves these reporting requirements to the ``Additional Compliance
Information'' section as a Periodic Data Submittal, NERC maintains that
the reporting requirements remain enforceable under NERC's Rules of
Procedure. Among other things, NERC states that it and Regional
Entities can require entities to provide ``such information as is
necessary to monitor compliance with the reliability standards'' under
Section 401.3 of NERC's Rules of Procedure.\132\ In addition, NERC
asserts that it ``has certain courses of action it may undertake as
necessary to ensure the entity complies with the Rules,'' pursuant to
NERC Rule of Procedure Section 100, including notifying the Commission
of the entity's failure to comply.\133\
---------------------------------------------------------------------------

    \132\ NERC Rules of Procedure Section 401.3.
    \133\ See NERC Petition at 31-32. See NERC Rule of Procedure,
Section 100 (``[e]ach Bulk Power System owner, operator, and user
shall comply with all Rules of Procedure of NERC that are made
applicable to such entities * * *. If NERC determines that a Rule of
Procedure has been violated, or cannot practically be complied with,
NERC shall notify [the Commission] and take such other actions as
NERC deems appropriate to address the situation'').
---------------------------------------------------------------------------

    94. We agree that pursuant to section 401.3 of NERC's Rules of
Procedure, NERC and the Regional Entities can require transmission
owners to make quarterly reports of sustained transmission outages
because these reports provide information relating to compliance with
the requirements of proposed FAC-003-2. This rule states: ``All Bulk
Power System owners, operators and users shall provide to NERC and the
applicable Regional Entity such information as is necessary to monitor
compliance with the Reliability Standards.'' Further, a periodic data
submittal is a requirement to provide compliance information pursuant
to section 3.6 of NERC's Compliance Monitoring and Enforcement
Program.\134\ However, we seek comment on NERC's statement regarding
the ``courses of action'' that are available to it in order to ensure
compliance, other than notifying the Commission of the entity's failure
to comply.
---------------------------------------------------------------------------

    \134\ NERC Rules of Procedure, Appx. 4C Sec.  3.6.
---------------------------------------------------------------------------

F. Definitions

    95. We propose to accept the new definition of Minimum Vegetation
Clearance Distance and the revised definitions of Vegetation Inspection
and Right-of-Way for inclusion in the NERC Glossary of Terms. However,
we seek further comment regarding the proposed revision to the
definition of Right-of-Way, as discussed below.
Revised Definition of Right-of-Way
    96. As noted above, we directed NERC in Order No. 693 to consider
FirstEnergy's suggestion that ``rights-of-way be defined to encompass
the required clearance areas instead of the corresponding legal rights,
and that the standards should not require clearing the entire right-of-
way when the required clearance for an existing line does not take up
the entire right-of-way.'' \135\ In response to this directive, NERC
now proposes the following new definition of Right-of-Way (ROW):
---------------------------------------------------------------------------

    \135\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 734.

    The corridor of land under a transmission line(s) needed to
operate the line(s). The width of the corridor is established by
engineering or construction standards as documented in either
construction documents, pre-2007 vegetation maintenance records, or
by the blowout standard in effect when the line was built. The ROW
width in no case exceeds the Transmission Owner's legal rights but
---------------------------------------------------------------------------
may be less based on the aforementioned criteria.

    97. Under Requirements R1.1 and R2.1 of the proposed Reliability
Standard, encroachments into the MVCD observed in real time would be
violations of R1 or R2 regardless of whether they cause a sustained
outage and regardless of whether the vegetation is within the Right-of-
Way as defined under FAC-003-2. However, under proposed Requirements
R1.2, R1.3 and R1.4 and the corresponding sub-requirements of R2, fall-
ins, blow-ins and grow-ins that cause a sustained outage are violations
of the proposed standard only if they occur from inside this newly-
defined Right-of-Way, which could give transmission owners the perverse
incentive to ``define'' a particular Right-of-Way as narrowly as
possible in order to limit the likelihood of an R1 or R2 violation.
    98. In response to the Commission staff data requests, NERC has
provided information suggesting that encroachments from within the
legal right-of-way (i.e., the area within the transmission owner's
control) would, in most cases, still be violations of FAC-003-2, even
if the Right-of-Way is more narrowly defined. In response to Commission
staff's question about a transmission owner's obligation to respond
when it identifies a vegetation condition that might encroach into the
MVCD if the vegetation is located outside of the Right-of-Way (as
proposed under the new definition), but within the transmission owner's
legal right-of-way, NERC provided the following explanation:

    1. A grow-in from a tree or the tree wall into the ROW. The
definition of ROW provides for ``The corridor of land under a
transmission line(s) needed to operate the line(s).'' Therefore, in
order to operate the line consistent with its rating, the ROW
includes space for ``blowout'' of the lines within the context of
the MVCD. With respect to the grow in of a tree from outside the ROW
as defined but within the legal ROW, the TO will use vegetations
[sic] inspections to identify ``those vegetation conditions under
the Transmission Owner's control that are likely to pose a hazard to
the line(s) prior to the next planned maintenance or inspection.''
In the event, an inspection shows that a tree has already grown
inside the MVCD, the TO would be in violation of R1 item 1 or R2
item 1. Another way to consider this issue is that tree growing into
the MVCD from the side is no different from a tree growing into the
MVCD from below the line.
    2. A fall-in of danger timber (dead, diseased or dying) from
outside of the ROW but within the TO's control. The definition of
inspection covers vegetation ``* * * vegetation conditions on a
Right-of-Way and those vegetation conditions under the Transmission
Owner's control that are likely to pose a hazard to the line(s)
prior to the next planned maintenance or inspection.'' Under this
requirement, if the TO is regularly identifying its danger trees and
has a program for managing the risk of fall-in there would be no
violation. Conversely, if an outage occurs and it is confirmed that
the TO was not attempting to identify its danger timber risk, the TO
would be in violation of R6* * *. Also, if the TO identifies the
danger tree but puts no plan into effect to manage the risk of fall-
in, the TO would be in violation of R7 * * *.\136\
---------------------------------------------------------------------------

    \136\ NERC Data Responses, Responses to Q9 (May 25, 2012).

    99. NERC distinguishes these cases from a case where a fall-in
occurs from a green or healthy tree outside the corridor-based Right-
of-Way, but within the right-of-way controlled by the transmission
owner. In that case, NERC acknowledges that there would be no violation
under the proposed standard, and maintains that the ``fact that the
Transmission Owner owns additional ROW over and above * * * that needed

by the MVCD is insufficient reason to cut healthy green trees. To
require the cutting of green, healthy trees that pose no known threat
would likely not be environmentally, socially, or politically
acceptable.'' \137\
---------------------------------------------------------------------------

    \137\ Id., Response to Q9 at P 3.
---------------------------------------------------------------------------

    100. We agree with NERC that in the situation in which a fall-in
occurs from a green or healthy tree outside the corridor based Right-
of-Way, but within the ROW controlled by the transmission owner, there
would be no violation under the revised Reliability Standard. Moreover,
we note that the proposed Reliability Standard does not require clear-
cutting along the right-of-way, but instead gives the transmission
owner the flexibility to adopt an appropriate vegetation management
strategy to comply with FAC-003-2 based on the particular circumstances
for a given line. As NERC notes in its Technical Reference Document,
different vegetation management strategies may be appropriate for
different areas, and FAC-003-2 gives transmission owners the option to
adopt strategies to comply with FAC-003-2 that encourage active
vegetation management and Integrated Vegetation Management rather than
clear-cutting.\138\ NERC's Technical Reference Document describes ANSI
A-300--Best Management Practices for Tree Care Operations and
identifies Integrated Vegetation Management as a best management
practice, including incorporation of wire-border zone management
techniques and the establishment and maintenance of compatible
vegetation.
---------------------------------------------------------------------------

    \138\ See NERC Petition, Ex. I (Technical Reference Document) at
24-29.
---------------------------------------------------------------------------

    101. However, we seek further comment on NERC's enforcement
approach with respect to a fall-in by ``danger timber'' (dead, diseased
or dying trees or limbs) from within the transmission owner's legally-
owned and controlled right-of-way. Specifically, NERC indicates in its
data responses (restated in P 98, supra) that ``if the TO is regularly
identifying its danger trees and has a program for managing the risk of
fall-in there would be no violation.'' The Commission's concern is that
this statement could be read to mean that, as long as the transmission
owner identifies danger trees and has a program to manage the risk of
those trees, an encroachment into the MVCD from a location within the
transmission owner's control would not be a violation. The Commission
would not agree with such a reading. The mere existence of a program to
identify danger trees and a program to manage risk should not shield a
transmission owner from enforcement if, notwithstanding the existence
of the program, an encroachment into the MVCD occurred. The Commission
seeks comment on this reading and, based on the comments, will consider
whether changes are needed.
    102. We also note that the proposed definition of Right-of-Way
includes guidance as to how the transmission owner may define its
Right-of-Way, requiring that it be based on construction documents,
pre-2007 vegetation maintenance records, or as-built blowout standards.
We seek comment on how the identified guidance in the new definition
will be used: (1) by the transmission owner to establish criteria to
determine an appropriate Right-of-Way; and (2) by auditors to establish
criteria to determine compliance with the proposed standard.

G. Implementation Plan

    103. We propose to approve the Implementation Plan as submitted in
Ex. B of NERC's petition.

V. Information Collection Statement

    104. The following collection of information contained in the
Proposed Rule is subject to review by the Office of Management and
Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of
1995 (PRA).\139\ OMB's regulations require that OMB approve certain
reporting and recordkeeping requirements (collections of information)
imposed by an agency.\140\ Upon approval of a collection of
information, OMB will assign an OMB control number and expiration date.
Respondents subject to the filing requirements of this rule will not be
penalized for failing to respond to these collections of information
unless the collections of information display a valid OMB control
number.
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    \139\ 44 U.S.C. 3507(d) (2006).
    \140\ 5 CFR Sec.  1320.11 (2012).
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    105. The Commission is proposing to submit these reporting and
recordkeeping requirements to OMB for its review and approval under
section 3507(d) of the PRA. Comments are solicited on the Commission's
need for this information, whether the information will have practical
utility, the accuracy of the provided burden estimate, ways to enhance
the quality, utility, and clarity of the information to be collected,
and any suggested methods for minimizing the respondent's burden,
including the use of automated information techniques.
    106. This Notice of Proposed Rulemaking proposes to approve
Reliability Standard FAC-003-2, which includes certain requirements to
create and maintain records related to a transmission owner's
vegetation management work plan and its performance of inspections.
Because transmission owners have vegetation management plans they
follow per the existing transmission vegetation management standard
(FAC-003-1), and must compile and maintain similar records and provide
similar reports under the existing standard, the proposed revisions are
expected to have a minor impact on the burden of record-keeping and
reporting. In addition, by allowing greater flexibility compared to the
currently-effective Version 1 standard with regard to the materials
that must be maintained for a vegetation management plan or strategy,
the NERC proposal may prove to reduce the reporting burden for some
entities.
    107. Public Reporting Burden: Our estimate below regarding the
number of respondents is based on the NERC compliance registry as of
July 24, 2012. According to the compliance registry, NERC has
registered 330 transmission owners within the United States.
Transmission owners must report and retain certain data pursuant to the
currently effective Version 1 Standard. Thus, the burden estimate below
is based on the potential change in the reporting burden imposed by
proposed FAC-003-2. As discussed earlier, Requirement R3 of NERC's
proposal provides more flexibility for transmission owners in preparing
and maintaining a vegetation management program, and the incremental
change in the burden may be negligible or even decrease for some
portion of transmission owners. The individual burden estimates are
based on each transmission owner having to perform a one-time review of
the revised Reliability Standard's information collection requirements
and to make any required modifications to its existing vegetation
management plans and documentation procedures. In addition, the burden
estimate takes into account an on-going, albeit very minor increase in
the quarterly reporting burden, based on the increased burden to
confirm whether or not reportable outages have occurred on lines not
previously subject to FAC-003-1's requirements. Further, the burden
estimate takes into account the increased recordkeeping burden
associated with the proposed standard's annual vegetation inspection
requirements, which is estimated to increase the inspection cycles (and
the associated documentation to

demonstrate compliance) for about one third of transmission owners (110
transmission owners).

----------------------------------------------------------------------------------------------------------------
                                                     Number of
                                                   transmission      Number of        Average      Total annual
 FAC-003-2 (transmission vegetation management)        owner       responses per   burden hours    burden hours
                                                    respondents     respondent     per response
                                                             (1)             (2)             (3)     (1)x(2)x(3)
----------------------------------------------------------------------------------------------------------------
One-time review and modifications to existing                330               1              16         * 5,280
 documentation, plans and procedures............
Quarterly Reporting.............................             115               4             0.5       \141\ 330
Annual Vegetation Inspections Documentation.....             110               1               2             220
                                                 ---------------------------------------------------------------
    Total.......................................  ..............  ..............  ..............           5,830
----------------------------------------------------------------------------------------------------------------
* (One-time).

    Total Annual Hours for Collection: (Compliance/Documentation) =
5,830 hours.
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    \141\ While approval of FAC-003-2 is not expected to increase
the number of reports made or the number of reportable outages
experienced, some utilities may experience a very slight increase in
the amount of time required to confirm whether or not any reportable
outages occurred due to the increased applicability of the standard
to certain sub-200 kV transmission lines.
---------------------------------------------------------------------------

    Quarterly Reporting Cost for Transmission Owners: = 330 hours @
$70/hour\142\ = $23,100.
---------------------------------------------------------------------------

    \142\ This figure is the average of the salary plus benefits for
a manager and an engineer. The figures are taken from the Bureau of
Labor and Statistics at http://bls.gov/oes/current/naics3_221000.htm.
---------------------------------------------------------------------------

    Annual Vegetation Inspections Documentation: = 220 hours @ $28/
hour\143\ = $6,160.
---------------------------------------------------------------------------

    \143\ Wage figure is based on a Commission staff study of record
retention burden.
---------------------------------------------------------------------------

    Total Annual Cost (Reporting + Record Retention): = $23,100 +
$6,160 = $29,260.
    One-Time Review and Modification of Plans and Documentation: 5,280
hours @ $52/hour\144\ = $274,560.
---------------------------------------------------------------------------

    \144\ This figure is the average of the salary plus benefits for
an engineer and a forester. The figures are taken from Bureau of
Labor and Statistics at http://bls.gov/oes/current/naics3_221000.htm.
---------------------------------------------------------------------------

    Title: Mandatory Reliability Standards for the Bulk-Power System.
    Action: Proposed revisions to collection FERC-725A.
    OMB Control No.: 1902-0244.
    Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
    Frequency of Responses: Annual, quarterly, and one-time.
    Necessity of the Information: The proposed revision of NERC
standard FAC-003-2 Transmission Vegetation Management is part of the
implementation of the Congressional mandate of the Energy Policy Act of
2005 to develop mandatory and enforceable Reliability Standards to
better ensure the reliability of the nation's Bulk Power System.
Specifically, the proposal would ensure that transmission owners are
protecting transmission lines from encroachment of vegetation.
    Internal Review: The Commission has reviewed the proposed revision
to the current Reliability Standard and made a determination that its
action is necessary to implement section 215 of the FPA. The Commission
has assured itself, by means of its internal review, that there is
specific, objective support for the burden estimate associated with the
information requirements.
    108. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426 [Attention:
Ellen Brown, Office of the Executive Director, email:
<EMAIL_ADDRESS>phone:<PHONE_NUMBER>, fax:<PHONE_NUMBER>].
    109. For submitting comments concerning the collection of
information and the associated burden estimate, please send your
comments to the Commission and to the Office of Management and Budget,
Office of Information and Regulatory Affairs, Washington, DC 20503
[Attention: Desk Officer for the Federal Energy Regulatory Commission,
phone:<PHONE_NUMBER>, fax:<PHONE_NUMBER>]. For security reasons,
comments to OMB should be submitted by email to<EMAIL_ADDRESS>Comments submitted to OMB should include Docket
Number RM12-04 and OMB Control Number 1902-0244.

VI. Regulatory Flexibility Act Certification

    110. The Regulatory Flexibility Act of 1980 (RFA) \145\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a proposed rule and that minimize
any significant economic impact on a substantial number of small
entities. The Small Business Administration's (SBA's) Office of Size
Standards develops the numerical definition of a small business.\146\
The SBA has established a size standard for electric utilities, stating
that a firm is small if, including its affiliates, it is primarily
engaged in the transmission, generation and/or distribution of electric
energy for sale and its total electric output for the preceding twelve
months did not exceed four million megawatt hours.\147\
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    \145\ 5 U.S.C. 601-612 (2006).
    \146\ 13 CFR 121.101 (2012).
    \147\ 13 CFR 121.201, Sector 22, Utilities & n.1.
---------------------------------------------------------------------------

    111. Proposed Reliability Standard FAC-003-2 will be applicable to
overhead transmission lines operated at 200 kV or higher, and, for the
first time, to transmission lines operated at less than 200 kV if they
are elements of an IROL as defined by FAC-014 or elements of a Major
WECC Transfer Path. In addition, Proposed Reliability Standard FAC-003-
2 will require annual vegetation inspections for all applicable lines,
which could result in an increase in annual inspections performed for a
subset of transmission owners.
    112. Comparison of the NERC Compliance Registry with data submitted
to the Energy Information Administration on Form EIA-861 indicates
that, of the 330 transmission owners in the United States registered by
NERC, 127 of these entities qualify as small businesses. The Commission
estimates that the 127 transmission owners that qualify as small
businesses will incur increased costs associated solely with a one-time
review of the proposed standard and modification to existing plans and
procedures. As described in the information collection section of this
NOPR, the estimated cost

for the increased data collection and retention is approximately $1,000
per entity.
    113. Further, some transmission owners that qualify as small
entities will incur costs associated with an increase in frequency of
inspections. As indicated above, currently-effective FAC-003-1 requires
periodic vegetation management inspections of transmission line rights-
of-way at an interval determined by each transmission owner.
Requirement R6 of the proposed standard would require each transmission
owners to inspect 100 percent of the transmission lines at least once
per year. Based on a review of available information, including data
provided in response to a 2004 vegetation management study performed by
Commission staff,\148\ we estimate that approximately one third, i.e.,
42, of the transmission owners that qualify as small entities would
incur costs associated with more frequent inspection cycles. Assuming
that (1) such small entities own approximately 50-200 miles of
transmission lines, (2) approximately 15-20 miles of transmission line
can be inspected per day and (3) cost of labor is approximately $47 per
hour,\149\ the estimated increase in inspection cost for these 42 small
entities is in the range of approximately $5,000 to 10,000 per entity.
As discussed above, NERC's proposal would modify the applicability of
the Reliability Standard to include overhead transmission lines that
are operated below 200 kV if they are either an element of an IROL or
an element of a Major WECC Transfer Path. Based on a review of the
Major WECC Transfer Paths and a sample of sub-200 kV IROLs in the
Eastern Interconnect, the Commission believes that most, if not all, of
the transmission lines subject to the expanded applicability of
proposed FAC-003-2 are owned by large entities. Thus, the increased
cost of the new rule to small entities appears to be negligible with
respect to the expanded applicability of the Reliability Standard.
---------------------------------------------------------------------------

    \148\ See Utility Vegetation Management and Bulk Electric
Reliability Report from the Federal Energy Regulatory Commission, p.
8-10 (Sept. 7, 2004). Available at: http://www.ferc.gov/industries/electric/indus-act/reliability/veg-mgmt-rpt-final.pdf.
    \149\ The wage figure is taken from the Bureau of Labor and
Statistics at http://bls.gov/oes/current/naics3_221000.htm.
---------------------------------------------------------------------------

    114. Based on the above, the Commission does not consider the cost
of the NERC proposal to be a significant economic impact for small
entities because it should not represent a significant percentage of an
affected small entity's operating budget.
    115. Based on the above, the Commission certifies that the new or
revised requirements set forth in proposed Reliability Standard FAC-
003-2 will not have a significant economic impact on a substantial
number of small entities. Accordingly, no regulatory flexibility
analysis is required.

VII. Environmental Analysis

    116. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\150\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. The actions proposed here fall within the categorical
exclusion in the Commission's regulations for rules that are
clarifying, corrective or procedural or that do not substantially
change the effect of the regulations being amended.\151\ The actions
proposed herein fall within this categorical exclusion in the
Commission's regulations.
---------------------------------------------------------------------------

    \150\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
& Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \151\ 18 CFR 380.4(a)(2)(ii) (2012).
---------------------------------------------------------------------------

VIII. Comment Procedures

    117. The Commission invites interested persons to submit comments
on the matters and issues proposed in this notice to be adopted,
including any related matters or alternative proposals that commenters
may wish to discuss. Comments are due December 24, 2012. Comments must
refer to Docket No. RM12-4-000, and must include the commenter's name,
the organization they represent, if applicable, and their address in
their comments.
    118. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
    119. Commenters that are not able to file comments electronically
must send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    120. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

IX. Document Availability

    121. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A,
Washington, DC 20426.
    122. From the Commission's Home Page on the Internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
    123. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at<PHONE_NUMBER> (toll free at 1-866-208-3676) or email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 40

    Electric power; Electric utilities; Reporting and recordkeeping
requirements.

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-26112 Filed 10-23-12; 8:45 am]
BILLING CODE 6717-01-P