New Standard Development Alert: FERC’s Response to Physical Threats to the Electricity Industry
On February 11, 2014, a PBS aired an interview with former FERC Commissioner Jon Wellinghoff where he lamented slow government reactions to a year-old sniper attack on a California electricity substation, an event that received almost no media coverage for months. Only days earlier, on February 7, 2014, several U.S. Senators wrote a letter to leaders at both the North American Electric Reliability Corporation (NERC) and the Federal Energy Regulatory Commission (FERC) requesting investigation into this attack on the nation’s critical energy infrastructure and the creation of enforceable standards to protect from future physical threats. [Side note: it is interesting to consider Wellinghoff’s and the Senator’s motives for renewing concern over this event almost ten months after it occurred.]
For more on the backstory: Gaps in Physical Infrastructure Resilience: How a Sniper Attack May Change the Energy Industry
On March 7, 2014, FERC responded by issuing an order directing NERC to create physical standards to protect physical fidelity of energy infrastructure. According to FERC’s directive, engineers and standards developers at NERC should develop one or more standards that will require owners or operators of elements of the Bulk Power System to achieve three goals:
(1) Owners and operators must identify the “critical facilities” that are most vulnerable and that if attacked could have severe consequences on the national supply of electricity,
(2) Owners and operators should evaluate potential threats to the critical facilities, and
(3) Owners and operators should assess those risks and develop a security plan to protect against potential physical threats to those elements.
Along with these primary elements, FERC directed NERC to implement a series of procedures for reevaluation and revision to the list of critical facilities and the steps used to correct the problem areas as well as measures for keeping these security plans confidential. FERC ordered that this series of standards be submitted within 90 days.
This expedited method of requiring the development of a standard is somewhat unique. Upon issuance of the order, NERC will begin developing the standard, but industry participants will not be able to communicate with FERC in regards to the development and concerns because of federal administrative ex parte rules for formal rulemaking found in Section 551 of the federal Administrative Procedures Act (APA). Commissioner John Norris noted this concern in his concurrence to the FERC Order. Still, however, this concern does not foreclose industry from the rulemaking process entirely. NERC rulemaking is governed by the NERC Standards Processes Manual, and these procedures were created to ensure that industry leads all rulemaking. Accordingly, industry participants can and are encouraged to work directly with NERC throughout the rulemaking process to ensure that concerns and challenges to implementation are allayed in the most effective and efficient manner.
The standards that will be proposed over the next several weeks will be a collaboration of industry participants and experts at NERC. Concerns with these standards will almost certainly relate to time periods for implementation, cost of implementation, and designation of “critical facilities,” but how FERC and NERC address these concerns will be an interesting display of administrative dexterity and industry collaboration. After submission to FERC, FERC will open a docket and the (likely very lengthy) administrative process will officially begin.
Stay tuned for more.
Disclaimer: The views, information, and analyses conveyed in this article are those of the author in his personal capacity and do not reflect the official policy, position, or assumptions of the North American Electric Reliability Corporation (NERC), any agency of the U.S. government, or any other corporation, partnership, organization, agency, or entity. Information, assumptions, analyses, or recommendations made in this article should not be construed as legal advice or as an offer to advise and are not reflective of the position of NERC, any governmental agency, or any other entity.
