EEI Fall 2008 Legal Conference Boston, Massachusetts Stephen M. Spina November 1,
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1 EEI Fall 2008 Legal Conference Boston, Massachusetts Stephen M. Spina November 1,
2 Overview Reliability Standards Enforcement Framework Critical Infrastructure Protection (CIP) Standards NERC Response to FERC Directives Current Trends in CIP Violations Emerging Issues Federal Legislation 2
3 Reliability Enforcement Framework Section 215 of the Federal Power Act requires NERC to develop mandatory and enforceable Reliability Standards, subject to FERC review and approval. Once approved, the Reliability Standards may be enforced by NERC, subject to FERC oversight. FERC may independently enforce Reliability Standards. 3
4 Reliability Enforcement Framework NERC delegates compliance and enforcement of Reliability Standards to Regional Entities. Reliability Standards became mandatory and enforceable in June, The original Reliability Standards submitted to FERC did not include CIP Reliability Standards (except for CIP-001 Sabotage Reporting). CIP-002 through CIP-009 approved by FERC in Order No. 706 (effective April 7, 2008). 4
5 CIP Reliability Standards CIP Reliability Standards require users, owners and operators of the Bulk Power System to safeguard critical cyber assets. Process: Develop methodology to identify critical assets (e.g. generators, substations, and control centers). Apply the methodology to create list of critical assets. Use the list of critical assets to determine associated critical cyber assets. 5
6 CIP Reliability Standards CIP Reliability Standards: CIP-001 Sabotage Reporting CIP-002 Critical Cyber Asset Identification CIP-003 Security Management Controls CIP-004 Personnel & Training (Background Checks) CIP-005 Electronic Security Perimeters CIP-006 Physical Security of Critical Cyber Assets CIP-007 Systems Security Management CIP-008 Incident Reporting and Response Planning CIP-009 Recovery Plans for Critical Cyber Assets 6
7 CIP Reliability Standards Order No. 706 approved the CIP Reliability Standards but required modifications. FERC directed NERC to remove references to reasonable business judgment and acceptable risk from the standards. NERC also directed to develop specific conditions necessary to invoke technical feasibility exception. 7
8 CIP Reliability Standards Technical Feasibility Exception: Recognizes the difficulty with replacement of legacy equipment before the end of its useful life. FERC states, however, that replacement equipment should meet the CIP Reliability Standard requirements. The technical feasibility exception may include technically safe and operationally reasonable. The exception does not release entity from requirements but rather requires alternative obligation. 8
9 CIP Reliability Standards Technical Feasibility Exception Framework: Develop, document and implement a mitigation plan that achieves comparable level of security. Include a remediation plan and timeline for eliminating the use of the exception. Exception requires the approval of a senior manager. Provide notice to Regional Entity of any technical feasibility exception as part of self-certification with review by Regional Entity during audit process. 9
10 NERC Response FERC, among other things, required NERC to: Submit a work plan for modifications required by FERC and prepare modifications to CIP Reliability Standards. Prepare a technical feasibility exceptions report. Prepare a critical asset methodology guidance document. 10
11 NERC Response NERC s efforts on this are on-going. NERC appointed Mike Assante as Chief Security Officer. NERC held a Cyber Security Summit in September. NERC guidance document on critical asset identification methodology due in December. NERC team formed to revise standards; scheduled to submit revised standards to FERC by the end of March,
12 CIP Standards Violations CIP-001 was mandatory and enforceable in June Only CIP-001 was enforceable at the time the original Notices of Penalty were filed with the Commission. Of the 37 Notices of Penalty filed to date, 17 (46%) contained violations of CIP-001 (Sabotage Reporting). 12
13 CIP Standards Violations Of the 17 violations of CIP-001: 11 were for violations of all 4 Requirements in CIP was for a violation of Requirement R1 (recognition and awareness procedures). 2 were for violations of Requirement R2 (interconnection communication procedures). 3 were for violations of Requirement R4 (FBI communication contacts and procedures). 13
14 CIP Standards Violations Self-Certifications regarding CIP compliance were submitted in July. Entities must continue to self-certify every six months. Regions have begun to identify possible violations in the self-certifications: CIP-004 R2 Training CIP-004 R3 Background Checks CIP-004 R4 Access CIP-008 R1 Cyber Security Incident Response Plan CIP-009 R2 Recovery Plans 14
15 Emerging Issues Development of Critical Asset Identification Methodology no clear guidance at this point. Sabotage Reporting several reported violations of CIP- 001 in the initial notice of penalties filed with FERC by NERC. Why? Vendor Issues: Background checks Requirement to maintain lists of those with access to critical cyber assets Document retention issues. Replacement of legacy equipment. 15
16 Legislation Chairman Kelliher: FERC authority over cybersecurity is insufficient to deal with emerging threats. The timeline for developing Reliability Standards through the NERC process takes too long. House held hearings, but legislation did not emerge. Congress may address issue early in 111 th Congress. 16
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