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Minutes Board of Trustees Action Without a Meeting July 23, 2009 On July 23, 2009, the members of the Board of Trustees of the North American Electric Reliability Corporation consented in writing to waive notice and take action without a meeting, and approved the revisions to 6.5 and Figure 6.1 of the Compliance Monitoring and Enforcement Program, as described in the General Counsel s memorandum dated July 23, 2009. Attached to these minutes is the memorandum from the General Counsel requesting the action and the written votes of the trustees and the proposed revisions to 6.5 and Figure 6.1 of the Compliance Monitoring and Enforcement Program as Exhibits A, B, and C respectively. Submitted by, Secretary 116-390 Village Blvd. Princeton, NJ 08540 609.452.8060 www.nerc.com

MEMORANDUM TO: FROM: BOARD OF TRUSTEES DAVID COOK GENERAL COUNSEL DATE: July 23, 2009 SUBJECT: REQUEST FOR ACTION WITHOUT A MEETING Revisions to Compliance Monitoring and Enforcement Program for inclusion in the compliance filing in response to the June 1, 2009 FERC Order ACTION DATE: COB, Monday, July 27, 2009 At the request of Chairman Anderson, we are asking the Board of Trustees to take action in writing without a meeting to approve certain minor revisions to the Compliance Monitoring and Enforcement Program that the Federal Energy Regulatory Commission required in its last order on the delegation agreements. We must make the compliance filing by July 31. We request your vote by COB Monday, July 27. Voting instructions are included later in this memorandum. On February 17, 2009, NERC submitted a compliance filing in response to the Commission s December 19, 2008 Order on the delegation agreements. In the compliance filing, NERC proposed additional revisions to its uniform Compliance Monitoring and Enforcement Program and the Attachment 2 Hearing procedures (CMEP). The Commission accepted NERC s compliance filing in an order issued June 1, 2009, subject to further revisions to section 6.5 and figure 6.1. A copy of the changes to section 6.5, redlined to indicate the revisions, is included as Exhibit 1 to this memorandum. Figure 1, also a part of Exhibit 1, is not redlined, because redlining is difficult in the Visio figure. The revisions to the first sentence of the third paragraph of 6.5 are consistent with P 16 of the June 1 Order and make it unambiguous that the Regional Entity is to provide the accepted Mitigation Plan to NERC within five business days after the Regional Entity accepts the Mitigation Plan. The revision to the second sentence of the paragraph responds to the directive in P 17 of the June 1 Order by stating that NERC shall notify the Regional Entity and the Registered Entity, on a contemporaneous basis, of NERC s approval or disapproval of the Mitigation Plan. The revisions to the fourth sentence of the paragraph are consistent with P 18 of the June 1 Order. The revision makes it unambiguous that the findings of violations and 116-390 Village Blvd. Princeton, NJ 08540 609.452.8060 www.nerc.com

imposition of penalties for which the Registered Entity is not subject during the period NERC is reviewing the Mitigation Plan are violations of the specific requirements of Reliability Standards that are the subject of the Mitigation Plan; the grace period does not extend to violations not covered by the Mitigation Plan. The revised Figure 6.1, Mitigation Plan Process, responds to the Commission s directive in the June 1 Order and now shows that (1) when the Compliance Enforcement Authority (CEA) accepts a proposed Mitigation Plan, the CEA will notify both the ERO (NERC) and the Registered Entity of the acceptance, and (2) when the ERO approves the proposed Mitigation Plan, the ERO will notify both the CEA and the Registered Entity. VOTING INSTRUCTIONS: I will need a signed resolution from each trustee voting. You may either (1) paste your signature into the attached Word file [Action Without a Meeting Resolution 20090723 (revised CMEP)], save it, and return the executed resolution to me by attachment to an e-mail (david.cook@nerc.net), or (2) print out, sign, and fax the executed resolution to my attention at (202) 393-3955 [NOTE: This is the fax number for the DC office, not the general NERC New Jersey fax number]. Simply responding to this email is not sufficient. We request that you return the signed resolution by COB Monday, July 27, 2009. We must file at FERC on July 31. Thank you for your prompt consideration of this matter. Please contact me if you have questions or need additional information. -2-

Attachment 1 WRITTEN CONSENT OF THE BOARD OF TRUSTEES OF THE NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION The undersigned, being a majority of the members of the Board of Trustees of the North American Electric Reliability Corporation, a New Jersey nonprofit corporation (the Corporation ), do hereby waive all notice of the time, place and purpose of a meeting and consent and agree to the adoption of the following resolutions pursuant to Section 15A:5-6 of the New Jersey Nonprofit Corporation Act and Section 6 of Article V of the Bylaws, in lieu of holding a meeting: RESOLVED, that the NERC Board of Trustees approves the revisions to 6.5 and Figure 6.1 of the Compliance Monitoring and Enforcement Program, as described in the General Counsel s memorandum dated July 23, 2009, and as set forth in the attached Exhibit 1; and FURTHER RESOLVED, that this consent may be signed in any number of counterparts and by facsimile, photo or other electronic signature copy, each of which shall be deemed to be an original, and all of which taken together shall be deemed to be a single consent. John Q. Anderson Paul F. Barber Thomas W. Berry Janice B. Case James M. Goodrich Frederick W. Gorbet Sharon L. Nelson Kenneth G. Peterson Bruce A. Scherr Jan Schori Richard P. Sergel Dated as of July 23, 2009 Action Without a Meeting Revised uniform Compliance Monitoring and Enforcement Program Circulated July 23, 2009

Attachment 1 WRITTEN CONSENT OF THE BOARD OF TRUSTEES OF THE NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION The undersigned, being a majority of the members of the Board of Trustees of the North American Electric Reliability Corporation, a New Jersey nonprofit corporation (the Corporation ), do hereby waive all notice of the time, place and purpose of a meeting and consent and agree to the adoption of the following resolutions pursuant to Section 15A:5-6 of the New Jersey Nonprofit Corporation Act and Section 6 of Article V of the Bylaws, in lieu of holding a meeting: RESOLVED, that the NERC Board of Trustees approves the revisions to 6.5 and Figure 6.1 of the Compliance Monitoring and Enforcement Program, as described in the General Counsel s memorandum dated July 23, 2009, and as set forth in the attached Exhibit 1; and FURTHER RESOLVED, that this consent may be signed in any number of counterparts and by facsimile, photo or other electronic signature copy, each of which shall be deemed to be an original, and all of which taken together shall be deemed to be a single consent. John Q. Anderson Paul F. Barber Thomas W. Berry Janice B. Case James M. Goodrich Frederick W. Gorbet Sharon L. Nelson Kenneth G. Peterson Bruce A. Scherr Jan Schori Richard P. Sergel Dated as of, 2009 Action Without a Meeting Revised uniform Compliance Monitoring and Enforcement Program Circulated July 23, 2009

WRITTEN CONSENT OF THE BOARD OF TRUSTEES OF THE NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION The undersigned, being a majority of the members of the Board of Trustees of the North American Electric Reliability Corporation, a New Jersey nonprofit corporation (the Corporation ), do hereby waive all notice of the time, place and purpose of a meeting and consent and agree to the adoption of the following resolutions pursuant to Section 15A:5-6 of the New Jersey Nonprofit Corporation Act and Section 6 of Article V of the Bylaws, in lieu of holding a meeting: RESOLVED, that the NERC Board of Trustees approves the revisions to 6.5 and Figure 6.1 of the Compliance Monitoring and Enforcement Program, as described in the General Counsel s memorandum dated July 23, 2009, and as set forth in the attached Exhibit 1; and FURTHER RESOLVED, that this consent may be signed in any number of counterparts and by facsimile, photo or other electronic signature copy, each of which shall be deemed to be an original, and all of which taken together shall be deemed to be a single consent. John Q. Anderson Paul F. Barber Thomas W. Berry Janice B. Case James M. Goodrich Frederick W. Gorbet Sharon L. Nelson Kenneth G. Peterson Bruce A. Scherr Jan Schori Richard P. Sergel Dated as of, 2009

Attachment 1 WRITTEN CONSENT OF THE BOARD OF TRUSTEES OF THE NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION The undersigned, being a majority of the members of the Board of Trustees of the North American Electric Reliability Corporation, a New Jersey nonprofit corporation (the Corporation ), do hereby waive all notice of the time, place and purpose of a meeting and consent and agree to the adoption of the following resolutions pursuant to Section 15A:5-6 of the New Jersey Nonprofit Corporation Act and Section 6 of Article V of the Bylaws, in lieu of holding a meeting: RESOLVED, that the NERC Board of Trustees approves the revisions to 6.5 and Figure 6.1 of the Compliance Monitoring and Enforcement Program, as described in the General Counsel s memorandum dated July 23, 2009, and as set forth in the attached Exhibit 1; and FURTHER RESOLVED, that this consent may be signed in any number of counterparts and by facsimile, photo or other electronic signature copy, each of which shall be deemed to be an original, and all of which taken together shall be deemed to be a single consent. John Q. Anderson Paul F. Barber Thomas W. Berry Janice B. Case James M. Goodrich Frederick W. Gorbet Sharon L. Nelson Kenneth G. Peterson Bruce A. Scherr Jan Schori Richard P. Sergel Dated as of, 2009 Action Without a Meeting Revised uniform Compliance Monitoring and Enforcement Program Circulated July 23, 2009

Exhibit 1 In response to the directive in the June 1 Order concerning 6.5 of the uniform CMEP, NERC is proposing the following revisions to the third paragraph of 6.5: Within five (5) business days after a Regional Entity accepts a Mitigation Plan, the Regional Entities Entity (i) will notify NERC and the Registered Entity within five (5) business days of the acceptance of the a Mitigation Plan and (ii) will provide the accepted Mitigation Plan to NERC. NERC will review the accepted Mitigation Plan and, within thirty (30) days following its receipt of the Mitigation Plan from the Regional Entity, will notify the Regional Entity and the Registered Entity, on a contemporaneous basis, as to whether the Mitigation Plan is approved or disapproved by NERC. If NERC disapproves a Mitigation Plan that was accepted by the Regional Entity, NERC shall state its reasons for the rejection, and may state the changes to the Mitigation Plan that would result in approval by NERC. The Registered Entity shall not be subject to findings of violations of the specific requirements of Reliability Standards that are the subject of the Mitigation Plan or to imposition of penalties or sanctions for such violations with respect to the period of time the Mitigation Plan was under consideration by NERC and for a reasonable period following NERC s disapproval of the Mitigation Plan, so long as the Registered Entity promptly submits a modified Mitigation Plan that addresses the concerns identified by NERC.

Figure 6.1 Mitigation Plan Process