    [Senate Hearing 114-505]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-505

        S. 3018, THE SECURING ENERGY INFRASTRUCTURE ACT, AND TO EXAMINE
                                  PROTECTIONS
                  DESIGNED TO GUARD AGAINST ENERGY DISRUPTIONS

    =======================================================================

                                    HEARING

                                   BEFORE THE

               SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING

                                     OF THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 12, 2016

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           Printed for the use of the
                   Committee on Energy and Natural Resources

               Available via the World Wide Web: http://fdsys.gov

                               _________

                    U.S. GOVERNMENT PUBLISHING OFFICE

     21-995                  WASHINGTON : 2017
    ____________________________________________________________________
     For sale by the Superintendent of Documents, U.S. Government Publishing Office,
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      Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       BERNARD SANDERS, Vermont
    JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
    STEVE DAINES, Montana                AL FRANKEN, Minnesota
    BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
    JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
    SHELLEY MOORE CAPITO, West Virginia

                             Subcommittee on Energy

                            JAMES E. RISCH, Chairman
    JEFF FLAKE                           JOE MANCHIN III
    STEVE DAINES                         BERNARD SANDERS
    BILL CASSIDY                         DEBBIE STABENOW
    CORY GARDNER                         AL FRANKEN
    JOHN HOEVEN                          MARTIN HEINRICH
    LAMAR ALEXANDER                      MAZIE K. HIRONO
    ROB PORTMAN                          ANGUS S. KING, JR.
    SHELLEY MOORE CAPITO                 ELIZABETH WARREN

                          Colin Hayes, Staff Director
                    Patrick J. McCormick III, Chief Counsel
                   Brianne Miller, Professional Staff Member
                Angela Becker-Dippman, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
                    David Gillers, Democratic Senior Counsel

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Risch, Hon. James E., Subcommittee Chairman and a U.S. Senator
      from Idaho.....................................................     1
    Manchin III, Hon. Joe, Subcommittee Ranking Member and a U.S.
      Senator from West Virginia.....................................     2
    King, Jr., Hon. Angus S., a U.S. Senator from Maine..............     4
    Heinrich, Hon. Martin, a U.S. Senator from New Mexico............     5

                                    WITNESS

    Hoffman, Patricia, Assistant Secretary, Office of Electricity
      Delivery and Energy Reliability, U.S. Department of Energy.....     6
    Highley, Duane, President and CEO, Arkansas Electric Cooperative
      Corporation (AECC).............................................    14
    Manning, Robin, Vice President, Transmission, Electric Power
      Research Institute (EPRI)......................................    24
    Stacey, Brent, Associate Laboratory Director, National & Homeland
      Security, Idaho National Laboratory............................    37

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    American Public Power Association:
        Statement for the Record.....................................    85
    Heinrich, Hon. Martin:
        Opening Statement............................................     5
    Highley, Duane:
        Statement for the Record.....................................    14
        Written Statement............................................    17
        Response to Question for the Record..........................    76
    Hoffman, Patricia:
        Statement for the Record.....................................     6
        Written Statement............................................     8
        Responses to Questions for the Record........................    67
    King, Jr., Hon. Angus S.:
        Opening Statement............................................     4
    Manchin III, Hon. Joe:
        Opening Statement............................................     2
    Manning, Robin:
        Opening Statement............................................    24
        Written Testimony............................................    26
    Protect Our Power:
        Statement for the Record.....................................    89
    Risch, Hon. James E.:
        Opening Statement............................................     1
    S. 3018, the ``Securing Energy Infrastructure Act''..............    60
    Stacey, Brent:
        Opening Statement............................................    37
        Written Statement............................................    39
        Responses to Questions for the Record........................    77

        S. 3018, THE SECURING ENERGY INFRASTRUCTURE ACT, AND TO EXAMINE
            PROTECTIONS DESIGNED TO GUARD AGAINST ENERGY DISRUPTIONS

                                  ----------

                             TUESDAY, JULY 12, 2016

                                           U.S. Senate,
                                        Subcommittee on Energy,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:30 p.m. in
    Room SD-366, Dirksen Senate Office Building, Hon. James E.
    Risch, Chairman of the Subcommittee, presiding.

      OPENING STATEMENT OF HON. JAMES E. RISCH, U.S. SENATOR FROM
                                 IDAHO

        Senator Risch. We are going to bring this meeting to order,
    a couple of minutes early, as a matter of fact.
        We do have a vote at 3:30 and, having looked at the agenda,
    the witnesses and the participants, I have every confidence
    that we can get done what we necessarily have to get done in
    order to finish by 3:30.
        With that, the purpose of today's hearing is to receive
    testimony on Senate bill 3018, the Securing Energy
    Infrastructure Act, and to examine protections designed to
    guard against grid disruptions.
        This is a result of, I think, what everybody acknowledges
    and what everybody knows and that is that the electric grid
    that we have in America is really, incredibly, dependable. That
    is true particularly if you have traveled in other parts of the
    world, you know how dependable our grid is.
        Unfortunately, because of the development of the worldwide
    web and those new ways of handling operations of controls, it
    also now has vulnerabilities. These vulnerabilities, obviously,
    are targets by people who wish to do us harm. As a result of
    that, those of us who deal with this every day believe we
    should take a look at doing this better, perhaps even doing
    this differently.
        One of the things that brought this to light, and only one
    of the things, was an event that happened on December 23rd,
    2015 in the Ukraine where an attack shut down their electric
    grid system and caused immeasurable damage and difficulty for
    the people of the Ukraine.
        The attack could have been substantially worse. And it was
    not because they operate differently than we do in that a lot
    of their actions and operation of the grid is done with manual
    procedures as opposed to automated systems.
        We, here in America and other first world countries, have
    really gone to automated systems for a lot of different
    reasons, not the least of which was/is convenience and
    reliability, but also those kinds of things do open us up to
    additional vulnerabilities.
        This bill was originally introduced by Senator King and me,
    and our co-sponsors are Senators Collins and Heinrich. It is
    not by coincidence that all four of us are on the Intelligence
    Committee and we hear stories, not only stories, but expert
    opinions on what can happen not only to our grid but to other
    grids around the world, a good share of which we cannot share
    with you. But suffice it to say that the facts are sufficiently
    concerning that this is a subject that needs the attention of
    the U.S. Congress. So here we are today with this bill.
        As everyone knows this is a two-year pilot project. It
    certainly isn't designed to be an absolute solution, but it is
    designed to explore possibilities of how the United States can
    handle one of these.
        Speaking for myself, not the other co-sponsors but speaking
    for myself, I truly believe that the next significant event,
    and when I talk about a significant event, I mean a really
    significant event, will not be a kinetic event, but will indeed
    be an event that takes place in the cyber world that causes
    considerable grief and harm to Americans. As we all know, we
    face significant challenges in that arena.
        We have asked four people to be with us today to testify.
        We are going to start today with Ms. Pat Hoffman, who is
    Assistant Secretary in the Office of Electricity Delivery and
    Energy Reliability with the Department of Energy. She will
    start us off with an overview of the Department of Energy's
    work protecting our grid from energy disruptions.
        We also have Mr. Duane Highley, President and CEO of the
    Arkansas Electric Cooperative Corporation. He is also co-chair
    of the Electric Subsector of the Coordinating Council.
        We also have Mr. Rob Manning, Vice President of
    Transmission for the Electric Power Research Institute.
        Finally, last but certainly not least from the great State
    of Idaho, we have Mr. Brent Stacey, who is Associate Lab
    Director at the Idaho National Laboratory. Right now, Idaho's
    National Laboratory is the world leader in critical
    infrastructure and control systems research, primarily because
    of the expenditures that we have made developing the systems
    and the facilities to do that research. I am sure Mr. Stacey
    will describe that for us.
        With that, I certainly welcome everyone here today. I think
    this is a good opportunity. This is not a complicated bill. It
    is a bill that is intended to move us forward in a cautious way
    but a way that will help underscore some of the vulnerabilities
    that those of us on the Intelligence Committee have heard about
    over time.
        Senator Manchin.

       STATEMENT OF HON. JOE MANCHIN III, U.S. SENATOR FROM WEST
                                VIRGINIA

        Senator Manchin. Mr. Chairman, thank you, and thank all of
    you for being here today. I want to thank you for scheduling
    this hearing, Mr. Chairman, and for your work on this important
    bill that we are working on. I also want to thank Senators King
    and Heinrich for their leadership on this issue. I appreciate
    our witnesses joining us today for this very special
    discussion.
        The electric grid is essential to our lives and is also the
    lifeblood of the economy. The grid moves power hundreds, if not
    thousands, of miles to our houses, office buildings and
    factories every day. People and business in the Northeast and
    the Mid-Atlantic states are heavily dependent on a well-
    functioning grid to access power generated in my home State of
    West Virginia.
        The Energy Information Administration, EIA, reports that in
    2014 West Virginia produced approximately over 80,000 kilowatt
    hours of electricity. The EIA consistently reports that West
    Virginia typically exports more electricity than it consumes,
    so we are a net exporter of electricity.
        West Virginia's neighbors, Maryland, Virginia, Washington,
    DC and others, depend on us for reliable electric generation,
    not to mention coal and natural gas production. Whether because
    of a cyber or physical attack or some other energy disruption,
    imagine what it would be like if West Virginia stopped
    producing and delivering energy. Incidents like the polar
    vortex quickly become even more dangerous and likely tragic.
        The secure and reliable transportation of energy is vitally
    important to our state's economy and to the safety and health
    of our citizens and those in neighboring states, so I believe
    today's hearing is an important start to a longer conversation
    about the security of our grid.
        As the electric industry has increased its reliance on
    digital technologies to better serve consumers, the grid has
    grown more vulnerable to cyber-attack. Just last December the
    first successful cyber-attack took place against part of
    Ukraine's electric grid demonstrating that shutting down the
    grid is a real possibility.
        Many cyber experts have come to the conclusion that it is
    not a question of ``if'', but a question of ``when'' a massive
    attack on our grid will occur. We must do everything we can to
    protect and prepare, including hardening our networks to
    protect the grid and ensure the continued reliable delivery of
    electricity. But we also need to focus on emergency
    preparedness and incident response to minimize the effects of a
    potential attack. That is why the King/Risch/Collins/Heinrich
    bill is a step in the right direction.
        Senate bill 3018 would establish a two-year pilot program
    within the national labs to research and test technology that
    could be used to isolate and protect the most critical systems
    of the electric grid. It would also establish a working group
    to evaluate the proposals of the pilot program and develop a
    national cyber informed engineering strategy.
        Mr. Chairman, the 2013 attack on the Pacific Gas and
    Electric substation in Metcalf, California reminds us that the
    threats to our grid are not limited to cyberspace. According to
    press reports, the Federal Energy Regulatory Commission has
    identified a smaller number of critical grid-related facilities
    that, if physically attacked, could significantly impair the
    ability of utilities to keep the lights on.
        Keeping America's energy network secure from cyber and
    physical intrusions is critical as new technologies and threats
    continue to emerge from transnational organized crime,
    terrorists' groups and hostile foreign governments. The
    argument goes that the smarter and more connected the power
    grid becomes, the more vulnerable it becomes. I am sure you are
    familiar with the scale we are talking about.
        The Department of Homeland Security reported that 56
    percent of cyber incidents against critical infrastructure in
    2013 were directed at energy infrastructure, mostly in the
    electric grid. While the number has shrunk to 16 percent in
    2015, there is much more to be done. That is why I support the
    Energy Policy Modernization Act of 2016 that Chairman Murkowski
    and Ranking Member Cantwell worked so hard to get passed out of
    Committee and finally out of the Senate by a vote of 85 to 12.
    Believe me, that does not happen here that often.
        The bill includes a cyber energy section that includes the
    research and development program to develop advanced cyber
    security technologies, doubles the Department's current
    investment in cyber-related research and development, supply
    chain security and public/private partnerships.
        It encourages the Department of Energy to work hand in hand
    with the private sector. This recognizes the importance of
    aligning government capabilities with the needs of industry
    actors that are dealing with potential threats to our grid
    every day.
        The ability to deliver energy quickly, securely and without
    interruption is something that West Virginia prides itself on.
    So that is also why I am particularly appreciative of Senator
    King's passion for this issue, and I commend him and all of the
    co-sponsors of this bill.
        Chairman Risch and Senator Heinrich's ongoing efforts for
    this bill is muchly appreciated.
        I want to thank the Chair for holding this hearing, and I
    look forward to the testimony of our witnesses. At this time, I
    would like to turn it over to Senator King.
        Senator Risch. Senator King.

     STATEMENT OF HON. ANGUS S. KING, JR., U.S. SENATOR FROM MAINE

        Senator King. Thank you.
        I first want to commend the Chair. This is first in my
    experience of a hearing that actually started early rather than
    late. That bodes well.
        Senator Risch. If it ends or that could be it.
        Senator King. That is another challenge.
        When I used to appear before the main legislature, the
    first question always asked was, why are you here? I think the
    answer in this case is pretty clear.
        As Senator Risch mentioned he and I serve together on the
    Intelligence Committee. I am also on the Armed Services
    Committee. I would say in virtually every hearing that we have
    had over the past four years that I have been to, somehow the
    cyber vulnerability comes into the conversation.
        In fact we had a classified Armed Services Committee
    hearing just this morning on this very issue, and I
    characterize this as the longest windup for a punch in the
    history of the world.
        We know that it is coming, and we know that there are
    people who are actively working to do us harm right now. And we
    have had warning shots--OPM, SONY, and others.
        As Senator Manchin mentioned, we are asymmetrically wired,
    so we are asymmetrically vulnerable. This is a very
    straightforward bill, and it does grow out, to some extent, of
    the experience in the Ukraine where when they found that they
    had analog and human intervention at certain key points. We are
    not talking about rewriting all the software or dumbing down
    the grid. We are talking about inserting some elements of
    analog and human intervention at certain critical points in
    order to protect us.
        Interestingly enough, just this year, just in the last few
    weeks, there has been an analogous policy recognition in the
    United States Navy. For the first time in 20 years Annapolis is
    now going back to the teaching of celestial navigation, and the
    reason is that you can't hack a sextant.
        This is a recognition that with all of our sophistication
    comes additional vulnerability and that what we are attempting
    to do today is to talk about and work on, on a pilot basis, and
    on a voluntary basis for the utilities, some unconventional
    solutions to this vulnerability challenge. I do not want to go
    home to Maine after a disastrous attack somewhere in the United
    States on our critical infrastructure and explain that we did
    not try some various options.
        That is the reason I brought forth the bill. It grew out of
    conversations with Senator Risch and the work that we have done
    in the Intelligence Committee, and I am delighted that we are
    here today.
        I appreciate the opportunity to present this bill.
        Thank you.
        Senator Risch. Thank you, Senator.
        Do you have an opening statement you want to make, Senator
    Heinrich?

    STATEMENT OF HON. MARTIN HEINRICH, U.S. SENATOR FROM NEW MEXICO

        Senator Heinrich. I do, Mr. Chairman, and I will make it
    very quick.
        I want to thank you for your work and Senator King as well.
    I think this is a very important piece of legislation, and I am
    pleased to be an original co-sponsor.
        I want to reiterate Senator King and I both had a closed-
    door hearing in Armed Services this morning that really drives
    home what a real issue this is and how we need to take it very
    seriously.
        I do think it is important to make the point that this is
    not about dumbing down the grid. I think Senator King, myself,
    and others on this Committee have been very staunch advocates
    of smart grid technology, of microgrids, and of all of the
    developments that are making our grid much more responsive
    today. But it is about having those backups in place and those
    fail safes in place.
        I think it is important to state that our bill is not
    prescriptive in that the working group has the flexibility to
    consider a full range of options.
        So, once again, I want to thank Chairman Risch and I want
    to thank Senator Manchin for holding this hearing today, and I
    very much look forward to the testimony from our witnesses who
    are here.
        Senator Risch. We will now turn to our witnesses. Ms.
    Hoffman, would you care to start us off, please?

     STATEMENT OF PATRICIA HOFFMAN, ASSISTANT SECRETARY, OFFICE OF
    ELECTRICITY DELIVERY AND ENERGY RELIABILITY, U.S. DEPARTMENT OF
                                 ENERGY

        Ms. Hoffman. Thank you, Chairman Risch, Ranking Member
    Manchin and members of the Subcommittee. Thank you for
    continuing to highlight the importance of a resilient electric
    grid.
        The Department also appreciates the opportunity to provide
    initial views on Senate bill 3018, the Securing Energy
    Infrastructure Act.
        The Department supports the goals of Senate bill 3018 which
    are consistent with the Department's ongoing role to helping
    ensure resilient, reliable and flexible electricity system in
    an increasingly challenging environment.
        The Department would like to work with the sponsor and this
    Committee to offer continued additional input on the bill, and
    I will discuss this later on in my testimony.
        Our economy, national security and even health and safety
    of citizens depend on a reliable delivery of electricity. The
    mission of the Office of Electricity Delivery and Energy
    Reliability is to strengthen, transform and improve the energy
    infrastructure to ensure access to reliable, secure and clean
    sources of energy. We are committed to working with our public
    and private sector partners to protect that the nation's
    critical energy infrastructure, including the electric power
    grid, from disruptions caused by natural and manmade events,
    physical security events and cyber security events.
        A crucial factor in meeting these challenges will be to be
    proactive and cultivate, what I call an ecosystem of
    resilience, a network of owners and operators, regulators,
    vendors, Federal partners and consumers, working together to
    strengthen our ability to prepare, respond and recover.
        Our organization works on in-depth strategies, products and
    tools which inform and educate industry as well as state and
    local officials in their energy emergency preparedness
    activities. As part of the Administration's effort to improve
    the electric sector, cyber security capabilities, the
    Department and industry partners are developing and have
    developed a maturity model. This evaluation tool helps an
    organization prioritize and advance its security posture in the
    areas such as information sharing, supply chain management and
    access control, just to name a few.
        The Department of Energy has provided strategic leadership
    by requesting and facilitating the development of an
    electricity information sharing and analysis center and the
    development of the Electric Sector Coordinating Council. The
    Electric Sector Coordinating Council is a group of leaders from
    the electric sector that meet regularly with government to
    coordinate and share information.
        When the power goes out the local utility is a first
    responder. Should any threat or emergency exceed local or
    private resources or require a full blown response, the
    Electric Sector Coordinating Council will engage with the
    Federal Government for a coordinated response to a crisis
    activity.
        The keys to strengthening resilience are not only from
    better threat insight and response but also through innovation.
    Advanced technology and innovation in cyber security, storage,
    and microgrids will help the industry get ahead of these risks.
    All of the Department's cyber security research initiatives are
    based on industry involvement, joint funding with matching
    funds and the development of an end goal to get industry
    deployment.
        There are several examples of DOE, our organization's,
    activities that support cyber security technologies developed
    for the power grid and use physics and the capabilities of the
    electric grid to its advantage. One example is an industry-led
    research project that helps the protection and control
    equipment check the commands it receives to ensure these
    commands support this ability of grid operations. Another
    example is a national laboratory-led research that is designing
    cyber security awareness and to power system applications
    themselves so that malicious actors should not be able to
    manipulate power system devices.
        Thank you for the opportunity to provide technical
    assistance on Senate bill 3018. We agree with the goals of the
    bill to strengthen the cyber security posture by allowing the
    DOE national laboratories to study the systems most critical to
    national security.
        With respect to assessments, many electric sector entities
    already conduct vulnerability assessments of part of the
    standards set by the North American Electric Reliability
    Corporation. Yet, there still may be a gap where the DOE
    national laboratories should partner with industry.
        But even assessments aren't enough. Research is required to
    conduct cyber engineering to mitigate these risks.
        In conclusion, threats will continue to evolve. The
    Department is working diligently to stay ahead of the curve. To
    accomplish this, we must invest in resilience, encourage
    innovation and use the best practices to raise the energy
    sector's cyber security, physical security maturity level as
    well as strengthen incident response and recovery capabilities.
        Thank you. This concludes my remarks, and I look forward to
    any questions that you may have.
        [The prepared statement of Ms. Hoffman follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Risch. Thank you, Ms. Hoffman.
        You mentioned that, I thought I picked up in there, you had
    some suggestions for the bill. Do you have any specifics at
    this point?
        Ms. Hoffman. With respect to specific suggestions, one
    suggestion that we have is to make sure to coordinate with the
    Electric Sector Coordinating Council, which Duane is a co-chair
    of the Council, as part of the working group.
        We would like to make sure that we have leverage the
    continued capabilities within----
        Senator Risch. I hope you will put some language together
    for us, and we will be happy to have a look at that. As I think
    everybody has picked up here, this is not a partisan issue, by
    any stretch of the imagination. We are all pulling the wagon
    together here, and I think that the Administration's view on
    this, particularly DOE's, will be very helpful for us as we go
    forward.
        If you will get that for us, we would sure appreciate it.
        Thank you.
        Ms. Hoffman. Thank you.
        Senator Risch. Thank you.
        Mr. Highley.

        STATEMENT OF DUANE HIGHLEY, PRESIDENT AND CEO, ARKANSAS
                ELECTRIC COOPERATIVE CORPORATION (AECC)

        Mr. Highley. Yes, sir.
        Chairman Risch, Ranking Member Manchin and all members of
    the Committee, thank you for the invitation to testify today.
    It's an honor to sit on this panel with these colleagues that I
    respect so much.
        I serve as President and CEO of the Arkansas Electric
    Cooperative Corporation. We serve a million Arkansans with
    reliable and affordable, non-profit electricity.
        Electric co-ops in the United States serve--900 coops serve
    42 million people in 47 states covering 75 percent of the
    nation's land mass. That's 2,500 of the 3,100 counties in this
    country. You can imagine the challenge protecting that much
    infrastructure from intentional attack, let alone just normal
    weather events. But the challenge of protecting that is
    actually impossible, but we're working on it all the time.
        I serve as co-chair of the Electric Subsector Coordinating
    Council which is a public/private partnership of critical
    infrastructure operators which coordinate with our government
    counterparts on a regular basis on policy-level security
    issues. So this council is comprised of 30 utility and trade
    association CEOs. We represent all segments of the electric
    industry. We work regularly with the White House, Department of
    Energy, DHS, Federal Energy Regulatory Commission (FERC), the
    FBI, National Security, all those agencies, to make sure that
    electric policy is complementary to reliability for our
    members.
        Now through the ESCC, the Electric Subsector Coordinating
    Council, we have this thing called the Information Sharing and
    Analysis Center that provides real time information on threats
    to utilities.
        It's working well, but it could work even better. We would
    like to see stronger communications and more timely information
    flowing from government. We understand there's confidentiality
    that has to be preserved, and yet when we get that information
    we can send it on to our utility partners, who can take action.
    So in the instance of the Ukraine event, the sooner we know
    about what's going on there, the quicker we can develop a way
    to respond.
        Now as we develop standards for reliability on the grid, we
    don't do that haphazardly. The grid has developed over 100
    plus, and we have to be very deliberate about the way we make
    changes to the grid. The way we do that is through a standard
    setting process through NERC.
        So if FERC passes a regulation, they pass it off to NERC,
    the North American Reliability Corporation. Subject matter
    experts vet that. The NERC Board approves it. FERC then
    approves that, and those standards then become mandatory and
    enforceable on this industry. We can face fines of up to $1
    million a day for violations of cyber security regulations or
    physical security regulations, and NERC has established
    standards for physical security and GMD.
        Now the standards are based on criticalities. So the most
    critical assets get the largest amount of standards. Less
    critical don't have as much. Just for example in our little co-
    op we have 90 million log entries a day that we have to
    preserve of what computer talked to what computer so we can
    ensure that that is not, nothing bad is happening.
        Now our main answer to all threats is defense in depth. We
    didn't design the grid to protect against intentional acts of
    war, but when we designed it with the redundancy to cover
    weather events and equipment failure we end up having high
    reliability. And if you imagine the very worst threats
    possible, a bad event like a tornado or an earthquake, we've
    seen the grid out for, maybe, days. A really terrible event
    like a hurricane or a massive regional ice storm, you might see
    it out for a week or two.
        But the reason those events don't cause greater outages is
    because of the reliability that's already built into the grid,
    and that's also going to protect us from intentional attack.
        And we talk about EMP (electromagnetic pulse), which is a
    doomsday scenario and would constitute an act of war against
    the United States. It would impact more than just the electric
    sector. If we fried all the microprocessors, obviously, it
    would affect gas pumps, ATMs, cash registers, automobile
    engines. We're concerned about the impact of EMP but we want to
    act based on facts, not speculation, which is why we want to
    hear from EPRI about the good work they're doing on a voluntary
    basis to try and figure out the threat, characterize it, so we
    can design appropriate mitigation.
        We have to remember that we could gold plate every
    substation, but there's transmission lines coming in and out so
    we have to balance the amount of effort we put on protecting.
    We can't overprotect one area and leave the rest vulnerable.
        How can Congress help? We thank you for the FAST Act and
    for the Consolidation Appropriation Act which is already
    helping us improve government and industry coordination.
        The insider threat is one of the largest factors we face
    now. We'd like to see you consider legislation giving the FBI
    authority to assist the industry with fingerprint-based,
    criminal and terrorist background checks so the people that
    operate our control systems we know don't have a bad
    background.
        And we find Senate 3018, Securing Energy Infrastructure
    Act, to be very complementary to the industry efforts.
        Please avoid a one-size-fits-all legislation. The grid has
    been custom-designed based on geography and the characteristics
    of the grid. And if we can work that through the NERC standard
    setting process, I think we'll end up with the best result.
        Thank you.
        [The prepared statement of Mr. Highley follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Risch. Thank you very much.
        Mr. Manning.

       STATEMENT OF ROBIN MANNING, VICE PRESIDENT, TRANSMISSION,
                ELECTRIC POWER RESEARCH INSTITUTE (EPRI)

        Mr. Manning. Thank you, Mr. Chairman. Thank you, Senators
    and staff.
        I appreciate the opportunity this afternoon to talk about
    the electric grid. It is a passion of mine, and anytime I talk
    about the grid I get excited. So I'm excited to talk about that
    this afternoon.
        I've spent 38 years of my life dedicated to grid operations
    in one way or another. I've taken apart an analog relay and
    reassembled the analog relay. I've taken apart a digital relay.
    Well, I'll stop there. Perhaps I didn't reassemble that one.
        But I will say that it's always exciting to talk about the
    electric grid. And I have watched, over the last 38 years, the
    transformation of our nation's electric grid from what it was
    to a true technological marvel that we see in operations today.
    After all, it's a tremendously integrated system. It's a
    tremendously complex engine, in fact. And in short, we deal
    with a unique commodity.
        Electricity is a unique commodity. We make it, we move it
    at the speed of light, and we use it all at exactly the same
    time. And there's no doubt that there's such a complex system
    out there to manage that. And to operate that grid requires
    huge volumes of information. It requires constant attention. It
    requires constant tremendous diligence by operators like Mr.
    Highley here.
        This is particularly true as we begin to see greater
    concentrations of intermittent resources such as renewable
    energy resources as they enter the equation. These are
    important resources. They are clean resources. They are a part
    of our future, but integrating those resources creates a
    greater reliability on technology.
        The U.S. grid is a collaborative engine. Utilities across
    our country work carefully together, day in, day out, to ensure
    a safe, reliable supply of electricity flows from home to home.
    Even so, from time to time, we face threats that challenge the
    reliability that for which we become known. And many of these
    threats are predictable and become very manageable, like
    evening thunderstorms.
        Yet, we're also seeing an emerging class of threats which
    we have dubbed high impact, low frequency events that are less
    predictable. They're more problematic when it comes to
    preparation and recovery. And certainly much of the discussion
    this afternoon centers around cyber security threat, but
    utilities are evaluating risk and threats from many potential
    hazards and each of these potential hazards have to be
    evaluated and understood so that determination can be made
    regarding strategies to address the entire array of potential
    threats.
        And we can learn from the threat analysis that is taking
    place and from the approach taken with other high impact, low
    frequency events, such as the threat, for example, of
    electromagnetic pulse, or EMP, on the grid. EPRI is
    initializing a broad collaborative effort with the assistance
    of the Department of Energy and the ESCC, as Mr. Highley spoke.
    And in doing so, we are adopting a consistent methodology used
    to develop a deeper understanding of threats and mitigation
    options.
        This mitigation, this methodology, highlights a scientific
    approach to adopting change within the complex U.S. grid. The
    methodology is a tried and true method of threat mitigation. It
    requires systematic research and development, and it provides a
    scientific basis underpinning to any significant change
    initiative.
        Essentially, the methodology requires a clear
    characterization of the threat and identification of potential
    vulnerabilities, evaluation of the impacts and risk and
    identification of mitigation, hardening and recovery practices
    and tools and a well-defined decisionmaking process that
    considers the balance of risk and reward.
        Finally, we need to ensure that there are trials, that
    there are pilots, so that we understand the true implications
    of applying changes to a very complex system. We believe
    following an approach such as this one ensures there are no
    unanticipated impacts any time you introduce change into a
    complex system like the U.S. grid, even a change that is
    designed to simplify.
        The MP initiative provides a solid technical approach that
    it considers all impacts, mitigation, recoveries, even the cost
    to implement, allowing utilities to take these considerations
    and balance them against effective risk making decisions.
        So, we at EPRI, we were created to serve the public good.
    We do that by providing a scientific basis for safe, reliable,
    affordable and environmentally responsible energy. And it is
    this consistent supply of energy that fuels our nation. But it
    is the well-rounded, thoroughly understood science that is the
    underpinning of this energy supply and its carefully
    constructed research and development that is the pathway to
    lighting our future and negotiating all manner of threats, even
    ones so ominous as cyber security.
        I couldn't help but be struck, Mr. Chairman, by your
    comment. It is science that answers the question, can we do it
    better? Should we do it differently?
        Thank you very much. I look forward to your questions.
        [The prepared statement of Mr. Manning follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Risch. Thank you.
        Mr. Stacey.

       STATEMENT OF BRENT STACEY, ASSOCIATE LABORATORY DIRECTOR,
        NATIONAL & HOMELAND SECURITY, IDAHO NATIONAL LABORATORY

        Mr. Stacey. Chairman Risch, Ranking Member Manchin and
    distinguished members of the Subcommittee, I want to thank you
    for holding this hearing and inviting testimony from Idaho
    National Laboratory, also known as INL.
        As a fellow citizen of Chairman Risch's home State of Idaho
    and the Associate Laboratory Director of INL's National and
    Homeland Security directorate, I'm honored to participate and
    request that my written testimony be made a part of the record.
        INL extends its gratitude to Senators King, Risch, Collins,
    Heinrich, Crapo, and Murkowski for the leadership and
    dedication demonstrated in sponsoring Senate bill 3018 with the
    goal of establishing a pilot program to develop a cyber
    informed, engineering strategy that defends our energy
    infrastructure from the most serious security threats.
        INL views this bill as an opportunity to perform the
    research and development and testing that are necessary to
    explore, innovate and validate with science-based data the
    ground truth on credible, high consequence, vulnerabilities and
    their mitigation.
        We understand that the solutions will include advanced
    technologies and engineering alternatives that can be proven
    and practically implemented.
        We believe that our understanding is consistent with the
    intentions and perspectives of many peers in government and in
    industry. My colleague, Mike Assante, the SANS Lead for
    Industrial Control System and Supervisory Control and Data
    Acquisition Securities, said it this way, and I quote, ``Beyond
    enhancing our cyber defenses our goal is to unlock the greatest
    benefits that technology offers but not go so far as to ignore
    the select need to establish responsible limits and
    alternatives.'' This is a role appropriate for national labs.
        INL, as well as other laboratories, partner today on a
    breadth of solutions. This research is sponsored by and
    coordinated with Assistant Secretary Hoffman, leading DOE's
    Office of Electricity Delivery and Energy Reliability, DOE's
    Office of Nuclear Energy, the National Nuclear Security
    Agency's Office of Defense Nuclear Non-Proliferation and DOE's
    Office of Intelligence and Counter Intelligence.
        Our utilities have been efficient and effective in
    positioning the electric sector's infrastructure for
    functionality, reliability and safety and in raising their
    cyber security awareness and posture. Yet, with the advent of
    sophisticated and adaptive cyber adversaries, we are now faced
    with the need to enhance our infrastructure security that it
    can better detect, resist, absorb and respond to the most
    sophisticated cyber attackers.
        INL's vision for control system cyber security research is
    grounded on the following principles and trends. First, the
    speed of technological innovation is outpacing traditional
    approaches. Second, determine sophisticated and patient
    adversaries will be successful in penetrating an
    infrastructure's digital systems. Third, a disciplined
    adversary likely will know the dynamics of digital technology
    better than the asset owner and the asset owner will know their
    engineering and processes better than the adversary. We need to
    leverage our knowledge advantage and strengths. And fourth,
    technology for automation and digital control are inherently
    embedded into our infrastructure. It's simply not feasible to
    go back and implement large scale manual control.
        At INL, we believe that unexplored options exist for taking
    consequences off the table. To this end, INL is piloting a
    transformative approach. We call it consequence driven, cyber
    informed, engineering, or CCE for short.
        CCE reprioritizes the way we look at high consequence risk
    within control system environment. This process starts with
    identifying the highest impact, most severe consequence and
    then discovers the best process design and protection
    approaches for engineering out the cyber risk. Further reducing
    risk will require government research and industry toward a
    common goal complemented by investment in over the horizon
    research and development addressing these holistic solutions.
        An example of a significant step forward in partnering
    within national laboratories to address this national
    challenge, INL, Pacific Northwest National Laboratory and
    Sandia National Laboratories are teaming to lead a research
    initiative that holistically addresses control system, cyber
    security across multiple sectors of the infrastructure and
    government.
        I thank the Committee's members and fellow panelists for
    their dedication to this complex challenge. Protection of the
    energy sector deserves our full commitment to assure economic
    prosperity and energy security, and INL welcomes its role in
    serving the nation.
        Your commitment to this hearing, the high quality of peers
    as my fellow witnesses, your proposed legislative actions and
    appropriations for research demonstrate that the nation is
    actively engaged in addressing this challenge.
        Thank you for inviting me today to testify, and I look
    forward to your questions.
        [The prepared statement of Mr. Stacey follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Risch. Thank you, Mr. Stacey.
        Thank all of you for your well advised thoughts and we
    really appreciate that. Hopefully we will all be able to move
    this forward together.
        We are going to go to a round of five minute questions.
    Since we do have the vote at 3:30, I would urge everybody to be
    as succinct as they can in their questions and answers. I want
    to have everybody have an opportunity, so I will pass. I will
    waive, at least at the outset, and proceed to Senator Manchin.
        Senator Manchin. Thank you. Thank you, Mr. Chairman.
        My one concern is the reliability of the grid and if you
    are concerned about that base load fuel being in jeopardy of
    giving you the necessary reliability. Do any of you have
    concerns about that with so much of our base load being
    diminished?
        Very quickly, anybody? Do you want to start, Mr. Manning?
        Mr. Manning. So it does change. It changes the equation. So
    we have designed----
        Senator Manchin. We are talking base load, mostly, the
    fossils have come offline. Okay, we understand that and we know
    there is a transition going on.
        But are we in jeopardy of the system basically not being
    able to provide reliability?
        Mr. Manning. No, I don't believe we're in jeopardy.
        Senator Manchin. Okay.
        Mr. Manning. But I do think we have to operate the system
    differently tomorrow than we operated the system.
        We spent 80 to 100 years operating it a certain way. And
    the generation of today is very different from the traditional
    generation and is creating new operational protocols, is
    demanding new technologies and we're implementing those as we
    go. But I believe with Pat's help, with the help from FERC and
    from NERC, we're managing that effectively.
        Senator Manchin. My main concern on that was with the polar
    vortex. PJM has about 61 million customers, and that is in all
    of our area. They came within a razor's thin of collapsing.
        Have you all been able to shore that up so that won't
    happen again? Mr. Highley.
        Mr. Highley. When we plan the grid we're always planning 10
    to 15 years out. And so, we're definitely looking at the loss
    of those coal and fossil assets and making the mitigation plans
    now where transmission lines might be needed or gas pipeline
    infrastructure might have to be enhanced.
        Senator Manchin. Were you all aware of how critically close
    that become?
        Mr. Highley. Absolutely. It was also close in Arkansas that
    same winter.
        Senator Manchin. Okay.
        Now I will go to the shrinkage. We call it shrinkage or
    loss. Six percent of electricity is lost when it is transported
    from generation facilities across transmission with the current
    technology that we have and the current products we are using.
    That is enough I understand to power two million homes for one
    month. We are losing that much on the grid system.
        Are there any changes, technology wise, that would give us
    more efficiency so we don't have that much loss?
        Ms. Hoffman, do you know of any?
        Ms. Hoffman. So yes there is technology opportunities to
    improve efficiency on the system.
        With respect to the distribution system and some of the
    Recovery Act activities, we did look at conservation voltage
    reductions, really looked at better optimization and
    utilization of the distribution system.
        But there's also composite conductors, more efficient
    conductors out there that can support capacity on the
    transmission system as well as information technology such as
    the dynamic line rating. But really to be able to maximize the
    use of the transmission system, those are all some of those
    technologies.
        Senator Manchin. Are we changing the quality of products
    that we are using or the composition of the products such as
    ceramics? Are we using ceramics that I understand are much more
    efficient?
        Mr. Highley. I just might add on the transformers we're
    buying power transformers.
        We price in what the lifetime losses would be on that. So
    it's a cost benefit analysis. The losses that we incur are
    losses that are incurred because it's not cost effective to
    make them lower, and when we buy that transformer we price that
    in.
        The ceramic technology comes at a price. There's limited
    applications where that works, but most of the time you can't
    afford it because the energy you're saving isn't worth it.
        Senator Manchin. A final question, very quickly, to either
    Mr. Stacey or Mr. Manning.
        Which country do you think poses the greatest threat for
    cyber security as far as the grid to the United States of
    America? What organization or country?
        Mr. Stacey. I would offer the industrialized countries have
    the capability in many cases.
        Senator Manchin. Which one has the desire and the interest?
        Mr. Stacey. Well, there are probably a couple.
        Senator Manchin. Do you want to name any names or do you
    just want me to name them for you?
        Mr. Stacey. I'd prefer not, but I would say the industrial
    countries.
        Senator Manchin. Mr. Manning?
        Mr. Manning. That was a fantastic answer. I should say----
        Senator Manchin. Are we talking China or Russia or Russia
    and China?
        Mr. Manning. Yes, you are.
        Senator Manchin. Which one first?
        Mr. Manning. So I'm not sure it matters which is first. I
    think we were vulnerable to all. My answer was going to be
    foreign countries.
        Senator Manchin. Foreign. [Laughter.]
        Mr. Manning. But I thought that was a very good answer.
    Industrialized is a greater threat.
        Senator Manchin. I got you. It was very nice.
        Thank you very much. Thank you all.
        Senator Risch. Senator Cassidy.
        Senator Cassidy. Some folks from Bossier City, Louisiana,
    the site of our Innovation Center, had a conversation with a
    colleague of yours, Mr. Bachman. He differentiated between,
    let's see if I have this correct, traditional IT systems
    security personnel and the industrial control systems,
    supervisory control and data acquisition systems security
    personnel. I am learning that distinction, but is that a fair
    distinction? I see everybody nodding their head yes.
        The reason I bring that up is that he made the point that
    whereas we have the number of ICS security professionals is
    really limited, maybe 500 to 1,000 worldwide and we need tens
    of thousands. Would you all agree with that statement?
        Mr. Manning. Yes.
        Senator Cassidy. Now I guess that begs the question of what
    we are doing to address a shortage which is almost exponential.
        Ms. Hoffman, I hate to put the--but you are the guy, you
    are the gal from the government, if you will. To what extent
    are we planning for that in attempting to address that critical
    shortfall?
        Ms. Hoffman. So what we're trying to do is we're working
    with two universities to look at control system engineering. We
    have the University of Illinois and the University of Arkansas
    where we're trying to develop the next generation engineers
    that have both a cyber security background and a power
    engineering background.
        But likewise not only are we trying to develop through the
    research program engineers in this area, but we are also trying
    to help the industry as their key need is to develop cyber
    mutual assistance capabilities so if an event occurs they're
    able to respond, the industry has the capacity to respond. And
    so that's also a critical need that needs to be addressed.
        Senator Cassidy. Now it seems though as if you are doing
    not that much on man power or woman power training. I say that
    because if you have two universities with an engineering
    program, even if they are big engineering programs, they are
    still relatively small. Again, if I am told we have 500 to
    1,000 but we need tens of thousands, it seems, just if you are,
    I mean, does anyone else see a problem with manpower there, so
    to speak?
        Mr. Highley.
        Mr. Highley. Certainly the demand for technically-skilled
    folks, a lot of times we have to go out of the country to get
    those people. So it's just we don't produce enough in house to
    make it happen.
        Senator Cassidy. To what degree would you characterize the
    shortage? Severe or OMG. [Laughter.]
        Mr. Highley. If severe is the less strident of those
    statements, I'll go with severe. I think it's something we want
    to watch. We don't believe it's insurmountable.
        And again, the Cyber Mutual Assistance that Pat mentioned
    allows us to rely on our neighbors to help us in the event of
    some kind of disaster.
        Senator Cassidy. Gotcha.
        Well, I will put a plug in for our Bossier City Cyber
    Innovation Center which I think is trying to meet this need.
        Let me ask as well. I was speaking to someone recently
    about the attack at San Jose. I had read about that but I don't
    know the whole thing about that. But obviously in one sense
    very low tech. They just shot out a cooling system for a
    transformer and almost brought it down.
        At the time I read that this may have just been people
    hoping to rip off copper but then subsequently I was told that
    no, it was actually more sophisticated and folks had attempted
    to infiltrate a communications system and cut lines. They did
    not succeed. That is the only reason it was detected. Again, I
    see people nodding in agreement with this assessment. So it
    appeared a more coordinated thing. That is low tech.
        I am also told that if you hit key, maybe as few as nine,
    sub centers in the nation you could bring everything crashing
    down. What are we doing to protect ourselves against the low
    tech, if you will, not the EMP, but the guy with the rifle?
        Mr. Highley. The first protection is that redundancy in
    defense and depth so that we have lots of duplicate facilities.
    The grid is planned so that any critical facility can be out of
    the time of the greatest peak demand and yet the grid can
    change to deliver power.
        That's why in the Metcalf incident that you mentioned,
    there was no loss of service to any customers, even though nine
    transformers were destroyed. So that the grid continued to
    deliver and that's our first base line is to design for that
    and cover that.
        So beyond that the most critical facilities have been
    identified. They're not for public knowledge, but those
    critical facilities are being hardened from that kind of
    attack.
        Senator Cassidy. Gotcha.
        I am out of time. I appreciate it.
        Thank you.
        Senator Risch. Thank you.
        Senator King.
        Senator King. One of the genesis, what is the plural of
    genesis, I wonder? Genoese, of this I knew my college Latin
    would come in handy.
        Of this legislation was an important paper written by Andy
    Bachman and others, and the point they made was that the very
    complexity of the grid adds vulnerability. Could you elaborate
    on that, Mr. Stacey, that I think the term was the new layers
    are petri dishes for the growth of new attack surfaces and new
    interdependencies?
        Mr. Stacey. I believe that as we ask the grid to do things
    it wasn't necessarily originally designed to do, integrating
    distributed resources and others, that takes computer
    technology, software and other intelligent devices to be able
    to manage that.
        And when you do, there's an inherent side effect of
    complexity associated with that kind of automation to manage
    the efficiency and effectiveness and reliability of the grid.
    That complexity, or the addition of automation, does include
    some additional complexities and vulnerabilities.
        Senator King. So what we are talking about is, I think,
    there is a term I had never heard, attack surface interruption
    zone, and that is really what we are talking about is a place
    where an attack would be particularly devastating. It is not
    the whole grid. We are not talking about re-engineering the
    whole grid, but we are talking about picking out these
    particular areas of vulnerability. Is that accurate?
        Mr. Stacey. That's accurate.
        These attack surface interruption zones are intended to
    impact the sequence that a cyber attacker goes through to have
    a well-planned and predictable event. And so these disruption
    zones are intended to cause the attacker to have physical
    access and not be able to access remotely.
        Senator King. And that is the key term is physical access.
        The Ukraine hack was done remotely, and the problem is once
    they get through whatever the defenses are, if the whole system
    can be run from the computer, then we are sunk.
        Mr. Stacey. That's correct.
        One of the biggest lessons learned, I believe, from the
    Ukraine incident is being able to protect that remote access
    both from others having access and also so that we can, the
    asset owner, can have secure remote access.
        Senator King. Well as I understand the history of the
    Ukraine hack, one of the first things they did was change all
    the passwords so the operators couldn't get back into their own
    systems, and then they put malware in. I think it showed that
    they had a sense of humor because the last thing they did was
    turn out the lights in the control room. [Laughter.]
        Well, I hope this legislation will be helpful to you in
    focusing on this particular aspect. This is not intended to be
    the be all and end all for cyber security. Clearly, that is a
    massive issue.
        We are trying to focus on this one area that the Ukraine
    hack and the aftermath suggested, like the important one
    possibility is simply air gapping some of these data systems.
    But I understand there are vulnerabilities and limits to that.
    This is another option.
        Mr. Manning, your thoughts?
        Mr. Manning. Well I could not help but think about your
    reference to air gap.
        During my time at TVA our system was air gapped. But you're
    still vulnerable if there's physical access because you may not
    be vulnerable as much to the intrusion from outside cyber, but
    you're vulnerable from an inside actor who may give access to
    someone, to an even an air gap system, via some other means.
        Senator King. I was interested in your comments that we
    need to also be talking about security of operators.
        Mr. Manning. Exactly.
        Senator King. Internal people rather than----
        Mr. Manning. It's physical and cyber. And it strikes me
    that all of these things, we have to understand and balance all
    of these factors together because there are many threats and we
    have to manage and balance all of those.
        The complexity of the grid is by design. We added that
    complexity intentionally because we were lacking in areas that
    required that complexity. So the grid is inherently more
    reliable now because of that complexity.
        It is the technology that overlays it that has increased
    that reliability. So it's becoming more and more reliable, but
    the tradeoff is you have that greater threat factor out there
    associated.
        Senator King. You have more points of attack?
        Mr. Manning. Yes.
        Senator King. Not to depress us, but another whole area
    that we have not discussed is risks in the supply chain.
        I have a nightmare of all the bolts in all the
    transmissions in all the vehicles dropping out on the same day
    given that we are not sure where everything is coming from.
    There may be vulnerabilities built into some of the physical
    gaps or whatever it is that we are using. I presume that is
    another, again, echoing the Senator from Louisiana. You all are
    nodding. The record doesn't show nodding. [Laughter.]
        So if you could say yes that would be helpful.
        Thank you all very much for being here today and for your
    good thinking on this very important issue, I appreciate it.
        Senator Risch. Thank you, Senator King.
        Senator Gardner.
        Senator Gardner. Thank you, Mr. Chairman, and thank you to
    the witnesses. This is an incredibly important topic and
    something that is only going to grow as the latency of the
    Internet evolves around us and becomes more and more prevalent
    in everything we do, touch and work with.
        Ms. Hoffman, I just want to start with you. In 2013 there
    was a hack by Iranians of a New York hydropower facility. When
    that occurred where do you fall? Where does Department of
    Energy fall into the notification of that hack? Were you the
    first to notify, the first to find out? How did that process
    work?
        Ms. Hoffman. So with respect to the Dam Sector, the Dam
    Sector actually falls under the Department of Homeland
    Security. So they would notify the entity would coordinate with
    the local FBI as well as the Department of Homeland Security on
    the notification of that.
        That would go through the National Cyber Integration and
    Communication Center. That information would then go out to all
    the sectors with respect to it and be provided to the electric
    sector information sharing organization which would provide it
    to the entities involved.
        Senator Gardner. Okay. So hydro power is not within the
    Electricity Delivery and Energy Reliability Office?
        Ms. Hoffman. No.
        Senator Gardner. Okay.
        Ms. Hoffman. It is not, sir.
        Senator Gardner. And then so, at which point though--it is
    important though that you know about this.
        Ms. Hoffman. Yes.
        Senator Gardner. When are you notified about it and how
    does that notification occur?
        Ms. Hoffman. So we get notified in a coordination call with
    the Department of Homeland Security. We also participate on the
    floor at the end kick. The Department of Energy is an active
    participant there as well as the industry sector.
        And so that ends up being the coordination point in which
    notification comes out regardless of what sector would have an
    incident or a breach.
        We would also have, as part of the government, a unified
    coordination group, a call across the Federal agencies, to make
    sure everybody is on the same page.
        The one thing that's really important with your question.
    It's a valuable question because we want to make sure that we
    have accurate information and get information out to the
    industry as soon as possible so we may have a very early on
    call, early on with respect to the knowledge and details of the
    event to at least give some situational awareness but recognize
    that more information will be coming out over time.
        Like other events or unlike other events, physical events,
    you can generally know that somebody shot a bullet at a
    transformer. But with cyber security, the details tend to have
    to--there has to be more investigation to get some of those
    details.
        Senator Gardner. Would an agency or a department like the
    Department of State Cyber Bureau, would they reach out and
    contact your agency or Department of Energy over a concern,
    perhaps, that North Korea may be pursuing some kind of an
    attack? How does that ever occur?
        Ms. Hoffman. So with respect to any sort of outside
    influences or interests, usually that comes from the
    intelligence community into the Federal Government and then an
    assessment is performed from that point of view. And so, that
    would be the angle that we would get that information.
        Senator Gardner. One of the things I am trying to
    understand from the Department of Defense, to DHS, to
    Department of State, Department of Energy, is how the
    communication process works. I know you mentioned just one
    that, you know, a dam's hydropower go through one system and
    nuclear goes through another system and coal and nuclear go
    through the same or electricity generation through fossil fuels
    go through the same system, but not hydropower. That all goes
    to grid reliability. Is that the best way to do it?
        Ms. Hoffman. So we do have the existing sector specific
    agencies where DHS is in charge of all the critical
    coordination across all the critical infrastructures. The
    Department of Energy is the sector specific agency for the
    energy sector which includes electricity, oil and gas and those
    are the sectors.
        It's predefined how these sectors were developed under the
    National Infrastructure Protection Plan, but the important
    thing is that there is coordination and communication if there
    is something that is going on in the electric sector.
        For example, DHS co-chairs the Electric Sector Coordinating
    Council meetings with the Department of Energy when we bring
    the CEOs in and have these strategy discussions. So there is
    very close coordination. And that is the only way, regardless
    of the structure, the only way we're going to advance
    information sharing communication and get ahead of the
    discussions.
        Senator Gardner. And if you were to have a cyber issue that
    you wanted to address Congress with when it comes to a cyber
    issue and electricity, who do you think the Committee
    responsible for that jurisdiction is?
        Ms. Hoffman. I would actually reach out to multiple
    committees.
        Senator Gardner. Any guess of how many? [Laughter.]
        Ms. Hoffman. No guess, sorry, but thank you for the
    question.
        Senator Gardner. It is part of our problem and one of the
    things I am very concerned about is what you just stated is you
    would reach out to multiple committees because there seems to
    be a lot of heads of cyber and no one responsible body,
    something I am very concerned about.
        Thanks.
        Senator Risch. There's a lot of concern about that,
    Senator. We appreciate that.
        Let's see, Senator Heinrich.
        Senator Heinrich. Thank you, Mr. Chairman.
        Mr. Stacey, I want to go back to the partnership that INL
    and some of our other labs, Sandia and Pacific Northwest have,
    the work that has been done to look at this so far and ask you
    specifically with regard to these data systems what that work
    has generated in terms of generalized vulnerabilities and what
    you are concerned about there and then what are some of the
    standards or things we should be putting in place to mitigate
    those vulnerabilities?
        Mr. Stacey. Let me take the second part of the question
    first.
        I think a lot of the research and work that's been done,
    not only with the national laboratories, but also with industry
    and within the Department of Energy, has driven the NERC CIP
    standards which has really driven more awareness and more
    systematic discipline to overall protection of that process.
        To answer the second question, I would share with you that
    hygiene is an important element but it's not the only element.
    And as we work at the advanced persistent threat and other
    elements of the high consequence, low frequency event, there's
    additional research. And that's where the national laboratories
    come into play and working on things that others can't, won't
    or shouldn't do. Can't because they don't have access to the
    large infrastructure that Chairman Risch mentioned. They can't
    because they don't have the subject matter experts. Or they
    shouldn't for a variety of other reasons. So, we're focused on
    that research.
        And I would tell you that that research is having a
    significant impact. We can't talk a lot about that here, but
    associated with other elements of the government in DOD, that
    research has significantly helped the U.S.'s national security
    posture.
        Senator Heinrich. Okay.
        Mr. Manning, you talked a little bit about EMPs as one of
    these high consequence but low frequency or low probability
    events. Where would you put insider threats in that continuum
    of risk?
        Mr. Manning. That's a difficult question, I think, to
    answer with a distinctive, specific answer. So I don't know how
    to address it other than to say that I think Mr. Highley
    requested some assistance in that regard regarding ensuring
    that our employees are straightforward with us when we hire
    them.
        Senator Heinrich. Right.
        Mr. Manning. I think we don't know how serious this issue
    is because we haven't experienced a real serious issue yet in
    that regard. So it's difficult to handicap it.
        So I couldn't speak----
        Senator Heinrich. It is one of the reasons why I asked the
    question, actually, is because----
        Mr. Manning. Yes, but I can't tell you what is the answer.
        Senator Heinrich. As you pointed out, we have to divvy up
    our resources and our efforts in this based on what we believe
    the risk to be and there are some areas where it is very hard
    to define what that risk is.
        So, we need to figure out, at least, what low resource
    things we can do to mitigate that risk, even if we don't know
    what the gross risk is.
        Mr. Highley, do you want to add anything to that?
        Mr. Highley. It is important that we have access to this
    Federal database, so right now when we run background checks on
    potential employees we can only access the state level
    database, so we can't get that information.
        Senator Heinrich. Are you referring to, like, the tide
    state or the terrorist screening database?
        Mr. Highley. Correct.
        Senator Heinrich. Those----
        Mr. Highley. That the FBI would have access to, so we would
    like to know before we put someone in our critical control
    center.
        Senator Heinrich. Yes.
        Mr. Highley. If they have that kind of background.
        Senator Heinrich. That is very helpful actually.
        Mr. Highley. Yes.
        Senator Heinrich. I want to ask on another, sort of, broad
    scale issue, and it can be Ms. Hoffman or any of you who want
    to jump in on this one.
        One of the things we are seeing change dramatically from
    when I was a kid and my dad was a lineman at the utility and we
    had a centralized system and all the electronics load one way.
    We are seeing generation and things like storage which, kind
    of, act like a lubricant in the grid, migrate to the grid edge
    and to individual customers, storage generation all moving to
    places on the grid that they did not reside originally.
        What does that mean for our resilience? How do we take
    advantage of that when we can? And are we thinking through that
    in addition to just trying to protect the overall architecture
    of the utility and the transmission pieces of that grid?
        Ms. Hoffman. So I'll start real quick, and then I'll pass
    it to my colleagues.
        Thank you for the question because it's important because
    we are looking forward to opportunities where we can isolate
    parts of the grid, looking at microgrids. We can look at
    graceful degradation. We can look at additional support
    capabilities to the grid via energy storage and distributed
    generation, but also local generation.
        Regardless of the type of generation, I think, having a
    good proportional--proportion of generation in each of the
    regions of the country is very valuable.
        And so, from that perspective, those technologies can be
    quite advantageous. But like anything else, those technologies
    must be protected themselves with respect to cyber security
    measures, control systems, even from the generation point of
    view.
        Mr. Manning. Yeah, I would say the same thing.
        Secure technology enabled is the answer to your question.
    Secure technology enables us to take advantage of that and turn
    it from a challenge to a resiliency plus.
        Senator Heinrich. Great. Thank you.
        Senator Risch. Thank you, Senator.
        Senator Hirono, you would be next but we usually go back
    and forth. Do you object to Senator Capito?
        Senator Capito. Thank you, Mr. Chairman, and thank all of
    you who are here.
        Mr. Stacey, I would like to ask the crux of this bill deals
    with the research done by the National Energy Technology Labs.
    As you know, there are many across the country, one in our
    State of West Virginia in Morgantown. I am curious to know you
    are already pursuing this in the Idaho lab.
        What other kind of interplay do you have now with the other
    national laboratories? Are they all involved? Is it just
    centered around certain of those laboratories? And what would
    you envision through this bill in terms of research capacity at
    these different facilities?
        Mr. Stacey. So all of the national labs are working in one
    way or another on cyber security issues. The labs that I
    pointed out earlier, Pacific Northwest National Laboratory and
    Sandia National Laboratory, as well as Idaho National
    Laboratory, we believe, have unique capabilities and skills to
    bring to the industrial control system challenge that we're
    facing.
        But in fact, we shouldn't be restricted. We should have
    access to any of the national laboratories or resources we need
    to address this challenge, this complex challenge that the
    nation----
        Senator Capito. Do you have that now with the other
    laboratories, that kind of collaborative approach?
        Mr. Stacey. You know, I believe we do.
        Senator Capito. You do.
        Mr. Stacey. The national laboratories, early on, were more
    and more competitive. As we get challenges and the budgets are
    reduced you're seeing a renewed interest across all the
    laboratories, more cooperation and collaboration and frankly,
    the national challenge mandates that we take advantage of that.
        So I'm pretty optimistic about the approach and the teaming
    that we have right now across the national laboratory system.
        Senator Capito. Well, good. Thank you.
        Ms. Hoffman, well actually this is for Mr. Highley. My
    question is she did a good recitation as to what would happen
    and who she would, what other government agencies and
    committees would be involved if a breach were to occur and how
    quickly could be acted in a coordinated capacity. In your
    sector, as the electricity provider, do you feel that you are
    in the loop enough or as quick enough as you would want to be?
    Is that something that you are working on? What is that
    collaborative relationship like?
        Mr. Highley. So under the Electric Subsector Coordinating
    Council there's something called the Information Sharing and
    Analysis Center (ISAC), and that's where we would go.
        So we are a hydropower operator. We operate hydropower
    plants on the Arkansas River. And frankly if we had a cyber
    incident occur there we would immediately notify the ISAC. And
    then they disseminate that to the other utilities across the
    country, so that we know about that threat.
        Senator Capito. And they then disseminate to the Department
    of Energy and Homeland Security or is that how that works?
        Mr. Highley. And coordinates with NCCIC and the other
    counterparts.
        Senator Capito. And all that, okay.
        In the description of the bill I thought, well let me find
    the description of the bill that I found interesting.
    ``Establishes a two-year pilot program with the national labs
    to examine ways to replace automated systems with manual
    procedures controlled by human operators to remove
    vulnerabilities that allow cyber criminals to access the grid
    through holes in digital software systems.''
        I am thinking to myself, I think today I might have seen a
    driverless car. I am thinking at the end of the day you can't
    replace the eyes on, hands on, mental acuity of a person
    actually driving a car which I immediately got on the sidewalk
    on, or in terms of this.
        So it is interesting to me just looking at it as we evolve
    with all this technology where we, kind of, come back to in the
    end, particularly in the terms of security.
        So I imagine that with that comes a lot of technological
    expertise, maybe some forensic ability to be able to pick this
    up. Are there any institutions in the country that are
    particularly looking at this as a job path, job creation? And
    if they are, maybe you could highlight a few of those for us,
    if anybody knows?
        Mr. Highley. I just would echo the comments of Pat about
    the University of Arkansas and that partnership. I'm very
    familiar with that one to develop that capability.
        Senator Capito. Anybody else, Ms. Hoffman, that you know
    that is working in this direction?
        Ms. Hoffman. Beyond the two universities I mentioned,
    University of Illinois has a strong partnership with power
    system engineers. I think what we're trying to do is really go
    after what capabilities do we need to enable in industry?
        Senator Capito. Right.
        Ms. Hoffman. And build in the educational institution as
    well as the emergency responders so that we actually can have
    an effective restoration process, but get the right information
    out in a timely manner.
        Senator Capito. Right. It would have to come from a whole
    spectrum of educational aspects to be able to really hit that.
        Thank you all very much.
        Senator Risch. Thank you, Senator Capito.
        The vote has been called and Senator Hirono, you can wrap
    it up for us.
        Senator Hirono. I will be quick.
        Ms. Hoffman, the covered entities as defined in S. 3018
    comes from Executive Order 13636 which requires the Department
    of Homeland Security Secretary to consult with sector specific
    agencies which includes DOE in identifying critical
    infrastructure, ``where a cyber security incident could
    reasonably result in catastrophic regional or national effects
    on public health or safety, economic security or national
    security.'' The list of entities is then updated annually.
        Are you confident in the process that the DOE uses to
    identify critical infrastructure under this Executive Order?
    And can you describe how the DOE engages with DHS in this
    annual process? And I might add that the list of critical
    infrastructure through this process is classified, isn't it?
        Ms. Hoffman. The list, I think, as a complete set is
    classified. Individuals, there can be conversations with
    individuals on that list.
        But first of all, thank you for the question.
        Identification, prioritization of critical entities and
    critical infrastructure gets to the crux of what we need to do
    in making sure that we're focusing on the right points on the
    system to advance technology but advance cyber security
    measures.
        With respect to the evaluation, we did a very transparent
    collaborative process with industry and the Federal Government
    looking at the criteria which was significant economic impact
    as well as potential impact to health and safety, were some of
    the criteria that was looked at in that evaluation. So with
    respect to the electric sector it was companies that would have
    a high economic impact in the United States and as well as
    associated critical infrastructures with those companies.
        Senator Hirono. So when you apply that kind of criteria
    there would be states, possibly such as Alaska or Hawaii, where
    we may not have what may be termed a national impact and
    therefore, how can we be assured that the proper analysis is
    done with regard to our grid to identify very specific,
    specifically, where the areas of vulnerability are either to
    physical attack or cyber-attack? Can we get help to--in this
    kind of analysis of our grid?
        Ms. Hoffman. Absolutely, Senator. I would love to sit down
    and talk to you and understand more the critical assets and the
    things that you're concerned about. And we can make sure that
    we incorporate that in our discussions and our activities
    moving forward.
        Senator Hirono. That is always a concern of mine whenever
    we have national legislation that kicks off with some kind of a
    program or assistance and then there is a criteria that you
    have to show a national impact. Obviously for noncontiguous
    states that is a little hard to show, and I think it really
    disadvantages Alaska and Hawaii. I just wanted to make that
    point, Mr. Chairman.
        Mr. Manning, the Department of Defense's recent Smart Power
    Infrastructure Demonstration for Energy Reliability and
    Security, better known as SPIDERS program, included projects to
    boost energy security at Joint Base Pearl Harbor Hickam and
    Camp Smith in Hawaii. I have worked to promote energy
    resiliency at military installations in the DOD Energy Security
    Act which I had introduced along with Senator Wyden.
        Clearly this is a rhetorical question that if it is a good
    thing that if our installations could get off the grid so that
    they can be pretty much self-sufficient. My question is could
    you talk a little bit about how a functioning military
    installation could help recovery of the larger grid if
    something happens to the larger grid?
        Mr. Manning. So I think it's not just specific to military
    installations but to a trend of microgrids in general. And the
    ability of a microgrid to integrate in and out of the existing
    grid, I think, is a function of technology in the ability to
    synchronize those grids together and to operate them either
    independently or dependently and to be free to move in and out
    of that continuum.
        I think with a number of the military bases we were very
    focused on the ability to operate either separately isolated or
    operate in conjunction with the grid. And ultimately I think
    that provides you the best scenario going forward because you
    may always decide I want to operate in this mode or the other
    or you may change depending on current conditions.
        Senator Hirono. Well that makes a lot of sense. So as more
    and more, for example, military installations become energy
    self-sufficient that that thought that the synchronization is
    as something that gets built into the design of the----
        Mr. Manning. Absolutely. And it's another example of where
    technology is enabling greater resiliency and greater poise
    going forward.
        Senator Hirono. Thank you, Mr. Chairman.
        Senator Risch. Thank you.
        Those interesting sounds you have heard indicate that we
    have got to get down to vote. So I never have figured out
    exactly how that works, but I know you have got to run to the
    floor when you hear the sound. So that is where we are.
        With that, I am going to conclude the hearing.
        I am going to leave the record open. Senator King and I, as
    sponsors of this bill, and for that matter, everyone on the
    Committee, sincerely appreciate all of you coming today to give
    us your input. But we want to get this right. Obviously it is
    not an area that is particularly controversial, but it is
    highly technical and it is important that we do get it right.
        If we have overlooked something, if there is something that
    you want to get your two cents worth in on this, I would really
    urge you to do that. I am going to keep the record open until
    this week, Friday at five o'clock, so you can get anything in
    that you want to.
        Senator Risch. Senator King, anything else for the good of
    the order?
        Senator King. No, I think I was just going to tell Mr.
    Stacey if we get this bill through I will personally deliver a
    sextant to the Office of the Idaho National Lab. [Laughter.]
        Senator Risch. Senator King, you have been threatening to
    come the INL and have not made it yet.
        Senator King. This is going to be the occasion.
        Senator Risch. We are going to get you there someday.
        Anyway, thank you so much, all of you. We will end the
    hearing, declare the hearing closed.
        [Whereupon, at 3:42 p.m. the hearing was adjourned.]

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