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Daily Rules, Proposed Rules, and Notices of the Federal Government

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.
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: * Electronic Filing throughhttp://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: (301) 665-1391. 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: (202) 502-6695. Julie Greenisen (Legal Information),Office of the General Counsel,Federal Energy Regulatory Commission,888 First Street NE.,Washington, DC 20426,Telephone: (202) 502-6362.

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

116 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).

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 oftransmission 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.

3NERC 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 specifiedsystem configuration to ensure operation within acceptable reliability criteria.”SeeNERC 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 SeeReliability Standard FAC-003-2, Requirements R1 and R2;see alsoPetition 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.

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.

5 SeeU.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 SeeGerry 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 athttp://www.nerc.com/fileUploads/File/Compliance/2Q2012_Vegetation%20Report_FINAL%20DRAFT.pdf.

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 arenotpart 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 ERO9 and, subsequently, certified NERC as the ERO.10

8 See16 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).

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 appropriatequalifications and training, as defined by the Transmission Owner, to perform their duties.”

11FAC-003-1, R1.2.1.

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.

12 SeeOrder No. 693, FERC Stats. & Regs. ¶ 31,242 at P 735.

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.

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.

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

15Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 706.

16 Id.

17 Id.P 708.

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

18 Id.P 721.

19 Id.P 720.

20 Id.P 735.

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

21 Id.P 729.

22 Id.P 732.

23 Id.P 731.

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

24 Id.P 734.

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

25 SeeNERC Petition at 44.

26 Id.at 45.

27 Id.at 46-48;see also id.at 33-40.

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 theseclearances.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

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 alsoEx. I, Appx. 1.

31NERC 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 isalso10−3. 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.

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

32NERC Petition at 6, 19-22.

33 Id.at 6.

34 Id.

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

35 Id.at 7.

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

36 Id.at Ex. B.

37In 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.”

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.

38 Id.at 68.

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

39 SeeReliability 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”).

40NERC Petition at 6.

41 Id.at 22.

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

42 Id.at 22-23.

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

43 Seeproposed Reliability Standard FAC-003-2, n.2.

44NERC Petition at 23.

27.Requirement R3:Requirement R3 requires a transmission owner to have “documented maintenance strategies or procedures or processes orspecifications 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

45 Id.at 20.

46 Id.

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.

47 See id.at 25-26 (referencing Requirement R1.5 of FAC-003-1).

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

48 See id.at 24-25.

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

49 Id.at 17-18.

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 SeeNERC 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 explainsthat “entities will not be able to comply with [Requirement R7] without having a documented plan.”58

56NERC 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

63NERC 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 SeeApril 23, 2012 Notice Inviting Comments on Report.

39. PNNL's finalReport 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.

65PNNL 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.

67PNNL 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

70NERC 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 setsof 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 capability78 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 Systems167 (Marcel Dekker, New York, NY 1999)).

78The 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 kgfor Phase-Ground Insulations Gap configuration Range of kg Typical value 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.

80AEP 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 factorin 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

83KCP&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

85APS 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 operatedbelow200 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.

87NERC 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

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

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

89 SeeNERC 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 th