United States: FERC, Congress Take Aim At Cybersecurity Risks In The Electric Utility Sector

Norma M. Krayem is a Sr Policy Advisor and F. Alvin Taylor Jr. is a Senior Counsel both in our Washington DC office.

HIGHLIGHTS:

  • The Federal Energy Regulatory Commission (FERC) recently issued a Notice of Proposed Rulemaking to address cybersecurity concerns involving the electric grid, specifically the risk of malicious software being introduced into industrial control systems, software and network services prior to their delivery to the customer.
  • Congress has also expressed serious concerns over the cybersecurity preparedness of the electric sector.

In light of the potentially devastating economic losses that could result from a cybersecurity attack causing widespread power outages as well as continued concerns about the vulnerability of the nation's electric utility system, the Federal Energy Regulatory Commission (FERC) and both chambers of Congress have recently taken actions to address critical cybersecurity concerns to the industry.

FERC Action

FERC issued a Notice of Proposed Rulemaking (NOPR) on July 16, 2015, to address cybersecurity concerns involving the electric grid, specifically the risk of malicious software being introduced into industrial control systems, software and network services prior to their delivery to the customer. FERC's actions comes in response to two recently identified malware infections, one of which (Havex) was implanted in control systems and affected several European companies, and another (BlackEnergy) that was likely planted in 2011 but only recently activated.

While FERC does not have authority over upstream suppliers, it recently sought comments on how best to ensure the integrity and security of supply chain equipment and software based on those obligations on entities already subject to the North American Electric Reliability Corporation's (NERC) authority. Based on these comments, FERC has indicated it intends to direct NERC to develop a new reliability standard to implement security controls over the supply chain.

This action is a result of serious and systemic concerns over cybersecurity risks in the supply chain and, demonstrating how significant FERC considers this threat, marks only the third time that FERC has exercised its authority to direct NERC to develop a reliability standard.

FERC has also announced that it will hold a Technical Conference on Jan. 28, 2016, to "facilitate a structured dialogue on supply chain risk management." In addition, the NOPR sought to correct two other vulnerabilities it does not believe were adequately addressed by NERC's proposed cybersecurity standards. First, FERC was concerned that NERC had not provided adequate physical protections for non-programmable components, e.g., cables and switches, of the communication systems between cyber assets that could enable "man-in-the-middle" attacks utilizing intercepted data. To correct this shortcoming, FERC directed NERC to modify its proposed standard to require the protection of all communication links and sensitive data between the electric system's control centers, including those carried by third-party networks.

Second, FERC questioned NERC's proposal to only establish security controls for transient devices (such as flash drives) connected to medium- and high-impact cyber systems but imposing no restrictions for devices connected to low-impact systems. Concerned that this approach created a security gap by which malware could still reach critical cyber assets connected to low impact systems, FERC directed NERC to provide more justification for its decision.

Although FERC is respecting its existing jurisdiction and is not seeking to directly impose obligations beyond those entities already subject to electric reliability standards, its proposals will begin to substantially change the working – and ultimately, the contractual – relationship the electric industry has with its suppliers. To close these gaps that could be exploited by sophisticated hackers, purchases of control systems and software will likely be limited to providers that can certify compliance with the final standards developed by NERC, and communications over telecom wires as well as wireless networks will be subject to new security provisions.

Congressional Action

Congress has also expressed serious concerns over the cybersecurity preparedness of the electric sector. In the past few months, the Senate Energy and Natural Resources Committee passed S. 2012, the Energy Policy Modernization Act of 2015 out of committee by a bipartisan vote of 18-4. The bill designates the U.S. Department of Energy (DOE) as the Sector-Specific Agency for the energy sector. Importantly, the bill provides for the President to notify the Secretary of Energy that "immediate action is needed to protect the bulk power system," and upon that notification, the Secretary of Energy has immediate emergency powers to order a bulk power system owner, operator or user to take actions immediately to avert or mitigate a cyber threat.

The House Energy and Commerce Committee has spent a considerable amount of time on cybersecurity concerns with the electric grid. Chairman Fred Upton (R-Mich.), as a means to more quickly move portions of his bill, attached an amendment onto a transportation-related bill, the DRIVE Act, that includes the text of the Energy Policy Modernization Act of 2015. The House and Senate will go to conference on the DRIVE Act with the amendment included, expediting the language and potentially seeing that included in the final bill that the President is expected to sign into law. The bill could be completed as early as the end of this year.

At the same time, both the House and Senate have been working on cybersecurity legislation that will also go to conference shortly. The Senate recently passed S. 754, the Cybersecurity Information Sharing Act, which includes a provision with two requirements for the U.S. Department of Homeland Security (DHS). First, DHS would be required to create a program to mitigate cybersecurity attacks against critical infrastructure, and, second, DHS must assess whether all critical infrastructure should be required to report a cybersecurity attack to both DHS and its respective Sector-Specific Agency. These provisions include all aspects of the energy sector and are on a broader scale than the sector has seen in the past.

As cybersecurity concerns mount and concerns over physical security reinsert themselves in the electric utility sector, expect more oversight from FERC and increased activity at NERC, along with similar efforts from DOE and DHS.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions