[Federal Register Volume 87, Number 121 (Friday, June 24, 2022)]
[Notices]
[Pages 37847-37850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13464]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RD22-3-000]


Before Commissioners: Richard Glick, Chairman; James P. Danly, 
Allison Clements, Mark C. Christie, and Willie L. Phillips; North 
American Electric Reliability Corporation; Order Approving 
Modifications to the Compliance Section of Reliability Standard CIP-014

    1. On February 16, 2022, the North American Electric Reliability 
Corporation (NERC), the Commission-certified Electric Reliability 
Organization (ERO), submitted a petition seeking approval of 
Reliability Standard CIP-014-3, which would modify the compliance 
section of Reliability Standard CIP-014-2 (Physical Security). The 
proposed modification would eliminate a provision requiring that all 
evidence demonstrating compliance with this Reliability Standard should 
be retained at the transmission owner's or transmission operator's 
facility. As discussed in this order, we approve NERC's petition.

I. Background

A. Section 215 and Mandatory Reliability Standards

    2. Section 215 of the Federal Power Act (FPA) requires a 
Commission-certified ERO to develop mandatory and enforceable 
Reliability Standards, subject to Commission review and approval. The 
ERO is obligated to file each Reliability Standard or modification to a 
Reliability Standard that it proposes to be made effective with the 
Commission.\1\ Reliability Standards may be enforced by the ERO, 
subject to Commission oversight, or by the Commission independently.\2\ 
Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO,\3\ and subsequently certified 
NERC.\4\
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    \1\ 16 U.S.C. 824o(d)(1).
    \2\ Id. 824o(e).
    \3\ Rules Concerning Certification of the Elec. Reliability 
Org.; & Procedures for the Establishment, Approval, & Enforcement of 
Elec. Reliability Standards, Order No. 672, 114 FERC ] 61,104, order 
on reh'g, Order No. 672-A, 71 FR 19814 (April 18, 2006),114 FERC ] 
61,328 (2006).
    \4\ N. Am. Elec. Reliability Corp., 116 FERC ] 61,062, order on 
reh'g and compliance, 117 FERC ] 61,126 (2006), aff'd sub nom. 
Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
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B. Currently Effective Reliability Standard CIP-014-2

    3. Reliability Standard CIP-014-2, which applies to transmission 
owners and transmission operators, is designed to ``identify and 
protect Transmission stations and Transmission substations, and their 
associated primary control centers, that if rendered inoperable or 
damaged as a result of a physical attack could result in widespread 
instability, uncontrolled separation, or Cascading within an 
Interconnection.'' \5\ Pursuant to the Reliability Standard, 
transmission owners must perform an initial and subsequent risk 
assessments to identify the transmission stations and substations that, 
if rendered inoperable or damaged could result in instability, 
uncontrolled separation, or cascading within an Interconnection, and is 
subject to a third party verification. Transmission owners that control 
identified facilities must conduct an evaluation of the potential 
threats and vulnerabilities of a physical attack to transmission 
stations and substation, as well as primary control centers, develop 
and implement a documented physical security plan and have a third-
party review of the evaluation.
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    \5\ NERC Reliability Standard CIP-014-2 (Physical Security), 
Purpose.
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C. NERC Petition for Modifications to the Compliance Section of 
Reliability Standard CIP-014

    4. NERC proposes to remove section C.1.1.4., Additional Compliance 
Information, from the compliance section of the currently effective 
Reliability Standard CIP-014-2 (Physical Security) that requires all 
evidence demonstrating compliance with this Reliability Standard to be 
retained at the transmission owner's or transmission operator's 
facility in order to protect the entity's confidential information.\6\ 
NERC states that the proposed change applies only to the compliance 
section of Reliability Standard CIP-014-2, and proposes no changes in 
the mandatory and enforceable Requirements of Reliability Standard CIP-
014-2. According to NERC, the provision presents challenges to 
effective and efficient compliance monitoring and is not necessary to 
protect the confidentiality of Reliability Standard CIP-014-2 
compliance evidence.\7\
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    \6\ NERC Petition at 1. Section C.1.1.4., Additional Compliance 
Information states:
    Confidentiality: To protect the confidentiality and sensitive 
nature of the evidence for demonstrating compliance with this 
standard, all evidence will be retained at the Transmission Owner's 
and Transmission Operator's facilities.
    \7\ NERC Petition at 1.
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    5. NERC states that the ``Additional Compliance Information'' 
provision in the compliance section of CIP-014 was added to address 
heightened concerns regarding the protection of CIP-014 evidence. 
However, NERC has determined that it should no longer treat CIP-014 
evidence any differently than other sensitive evidence it collects 
during its Compliance Monitoring and Enforcement Program (CMEP) 
activities.\8\ With the advent of the ERO Secure Evidence Locker (SEL), 
NERC asserts that it has a secure means of collecting and analyzing 
CIP-014 evidence in the same manner as any other sensitive evidence 
collected as part of CMEP activities.\14\
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    \8\ Id. at 5-6.
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    6. NERC explains that if the change is approved, it will no longer 
treat Reliability Standard CIP-014 evidence any differently than other 
sensitive evidence it collects during its compliance activities.\9\ 
NERC plans to use its SEL to support data and information handling, and 
it explains that it has developed the SEL for temporary storage of all 
registered entity compliance evidence.\10\ According to NERC, the SEL 
enables a registered entity to securely submit evidence

[[Page 37848]]

through an encrypted session; the evidence is encrypted immediately 
upon submission, securely isolated per registered entity, never 
extracted, never backed up, and subject to proactive and disciplined 
destruction policies. NERC submits that the SEL provides security 
advantages to ensure proper protection and chain-of-custody management 
of the submitted evidence for CIP-014 compliance.
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    \9\ Id.
    \10\ Id. at 6.
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    7. NERC requests that the modification to the Reliability Standard 
become effective on the date of Commission approval.

II. Notice of Filing and Responsive Pleadings

    8. Notice of NERC's February 16, 2022 Petition was published in the 
Federal Register, 87 FR 11061 (Feb. 28, 2022), with interventions and 
protests due on or before March 15, 2022. The Edison Electric Institute 
(EEI) filed a timely motion to intervene and comments. On March 21, 
2022, NERC submitted a request to submit reply comments and reply 
comments (NERC Answer). On March 30, 2022, EEI filed a motion for leave 
to answer and answer (EEI Answer).
    9. EEI opposes NERC's petition and maintains that Reliability 
Standard CIP-014 requires data collection for industry's most sensitive 
assets and, therefore, the compliance provision should be retained so 
that NERC continues to review compliance evidence for this Reliability 
Standard only on-site at the registered entities for the most sensitive 
data.\11\ EEI explains that the information retained under this 
compliance requirement is of a critical and highly sensitive nature, 
and some information provided for Reliability Standard CIP-014 
compliance is only available to a small set of personnel on a need-to-
know basis within EEI member companies.\12\ According to EEI, its 
members go to great lengths to protect the identity of the assets and 
other sensitive information by using alternative anonymous names both 
in internal and external discussions. Further, EEI expresses security 
concerns related to the use of SEL, arguing that the SEL increases the 
risk of aggregated industry information falling into the hands of a 
nation state or bad actor.\13\ EEI argues that ease of access cannot 
take precedence over the safety, security, and reliability of the 
electric grid.
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    \11\ EEI Comments at 1.
    \12\ Id. at 5.
    \13\ Id.
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    10. NERC asserts in its answer that the proposed modification would 
not decrease the protection of any highly sensitive compliance 
evidence, but it is needed to ensure compliance monitoring with 
Reliability Standard CIP-014.\14\ Among other arguments, NERC explains 
that there will be limited CIP-014 evidence aggregated in the SEL at 
any given time.\15\ Further, NERC elaborates that a registered entity 
may choose to develop its own SEL rather than use NERC's SEL, or use 
NERC's exceptions process, which allows registered entities to 
collaborate with the compliance authority on alternative submittal 
methods.
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    \14\ NERC Answer at 1.
    \15\ Id. at 2-3.
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    11. Finally, NERC states that over the last two years, due to 
pandemic restrictions, in some instances registered entities refused 
on-site access for compliance monitoring.\16\ In addition, certain 
entities also refused to allow a review of evidence using a secure 
videoconferencing platform. NERC believes that ``[t]he end result was 
increased risk, in certain instances, because [NERC and the Regional 
Entities] had no mechanism with which to monitor compliance with CIP-
014 until the entity, at its own discretion, lifted its pandemic-
related restriction.'' \17\
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    \16\ Id. at 3-4.
    \17\ Id. at 4.
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    12. In its answer, EEI argues that more flexibility should be given 
to registered entities to select the most secure methods for providing 
CIP-014 compliance data. In particular, EEI states that, if agreed to 
by a registered entity's Compliance Enforcement Authority, ``secure 
videoconferencing is an attractive and equally effective and efficient 
alternative to using the ERO SEL and one that EEI members would 
welcome.'' \18\ EEI notes, however, that certain entities may prefer to 
use their own videoconferencing tools, as opposed to an ERO-based tool, 
``because in doing so they have an understanding of, and confidence in, 
the security measures that have been implemented.'' \19\ Further, 
because many registered entities' corporate security access management 
programs require training, background checks, and monitoring of third-
party access, EEI believes that some registered entities may be unable 
to use their own SEL to submit compliance information if NERC or 
Regional Entity compliance personnel are unable or unwilling to meet 
their SEL security access requirements.\20\ EEI also expresses concern 
with the length of time NERC will keep compliance information in the 
SEL, as entities have no way of verifying whether it has been deleted.
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    \18\ EEI Answer at 2.
    \19\ Id.
    \20\ Id. at 2-3.
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III. Determination

A. Procedural Matters

    13. Pursuant to Rule 214 of the Commission's Rules of Practice and 
Procedure, 18 CFR 385.214 (2021), EEI's timely, unopposed motion to 
intervene serve to make it a party to this proceeding.
    14. Rule 213(a)(2) of the Commission's Rules of Practice and 
Procedure, 18 CFR 385.213(a)(2) (2021), prohibits an answer to a 
protest or answer unless otherwise ordered by the decisional authority. 
We accept NERC's and EEI's answers because they have provided 
information that assisted us in our decision-making process.

B. Substantive Matters

    15. As discussed below, we find that the proposed removal of the 
evidence retention provision in section C.1.1.4 of the compliance 
section of Reliability Standard CIP-014-2 is just, reasonable, not 
unduly discriminatory or preferential, and in the public interest. The 
modification will allow NERC to monitor compliance more effectively 
without compromising the confidentiality of sensitive information. 
Accordingly, we approve NERC's petition.
    16. Reliability Standard CIP-014-2, compliance section C.1.1.4., 
Additional Compliance Information, currently requires compliance 
personnel and auditors (and enforcement staff if a potential 
noncompliance is identified) to be physically present at an entity's 
facility to review evidence of compliance. As NERC's petition explains, 
this requirement presented challenges during the pandemic, when 
auditors could not access certain entities' facilities in person and in 
some instances were prevented from reviewing the evidence remotely.\21\
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    \21\ NERC Petition at 7; NERC Answer at 3.
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    17. We recognize that Reliability Standard CIP-014-2 requires data 
collection for industry's sensitive assets and that therefore the data 
should be handled in a secure manner. However, while section C.1.1.4 
may have provided necessary protection in the past, we are persuaded by 
NERC's explanation that its SEL now offers a secure and more flexible 
alternative for compliance evidence collection and review for 
Reliability Standard CIP-014-2.
    18. Moreover, we are not persuaded by EEI's comments seeking to 
retain the

[[Page 37849]]

on-site viewing requirement. First, contrary to EEI's suggestion in its 
comments, the use of the SEL is not novel and untested. In NERC's 
petition requesting funding for the SEL, which was filed in June 2020, 
NERC explained that the use of an evidence locker was a practice 
already in place for at least two Regional Entities to collect evidence 
associated with Critical Infrastructure Protection (CIP) Reliability 
Standards.\22\ Before deciding to implement the SEL, NERC consulted 
with industry and discussed security concerns related to evidence 
collection.\23\ Also, NERC has been using the SEL to access compliance 
evidence for the other CIP Reliability Standards, which indicates that 
it is a well-established and secure method of evidence review. 
Restricting auditor review to on-site only when there is a secure 
alternative impairs the auditor's ability to perform in-depth review of 
the evidence and could result in increased risk due to lack of adequate 
or timely compliance monitoring.
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    \22\ NERC, Request of the North American Electric Reliability 
Corporation to expend funds to develop the ERO Enterprise Secure 
Evidence Locker, Docket No. RR19-8-001, at 4 (filed June 8, 2020) 
(NERC 2020 Filing); N. Am. Elec. Reliability Corp., Docket No. RR19-
8-001 (June 22, 2020) (delegated order).
    \23\ NERC 2020 Filing at 5.
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    19. Further, we are not persuaded by EEI's argument that the SEL 
increases the risk of aggregated industry information falling into the 
hands of a nation-state or bad actor. Once evidence is submitted 
through an SEL encrypted session, it is immediately encrypted and 
cannot be extracted, is not backed up, and is subject to proactive and 
disciplined destruction policies, as well as being separated by 
registered entity.\24\ NERC explained that it will remove the 
information from the SEL when the CMEP engagement concludes.\25\
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    \24\ NERC Answer at 2.
    \25\ Id. at 2-3.
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    20. Finally, as stated by NERC, entities can structure their own 
SELs that adhere to their security measure requirements. EEI argues 
that some registered entities may be unable to use their own SELs to 
submit compliance information if NERC or Regional Entity compliance 
personnel are unable or unwilling to meet the SEL security access 
requirements.\26\ However, EEI provides no specific evidence of such 
situations for other CIP compliance monitoring engagements or whether 
they have led to increased risk of evidence being compromised. We find 
unpersuasive EEI's objections to NERC's offering of a flexible approach 
to accommodate entities.
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    \26\ Id.
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    21. Therefore, we find that the removal of the evidence retention 
provision in section C.1.1.4 of the compliance section of Reliability 
Standard CIP-014-2 will allow NERC to monitor compliance more 
effectively without compromising the confidentiality of sensitive 
information. Accordingly, we approve NERC's petition and accept the 
proposed Reliability Standard CIP-014-3, to become effective on the 
date of issuance of this order.

IV. Information Collection Statement

    22. In compliance with the requirements of the Paperwork Reduction 
Act of 1995, 44 U.S.C. 3506(c)(2)(A), the Commission is soliciting 
public comment on revisions to the information collection FERC-725U, 
Mandatory Reliability Standards for the Bulk Power System; CIP 
Reliability Standards; which will be submitted to the Office of 
Management and Budget (OMB) for a review of the information collection 
requirements. Comments on the collection of information are due within 
60 days of the date this order is published in the Federal Register. 
Respondents subject to the filing requirements of this order will not 
be penalized for failing to respond to these collections of information 
unless the collections of information display a valid OMB control 
number.
    23. The information collection requirements are subject to review 
by the OMB under section 3507(d) of the Paperwork Reduction Act of 
1995.\27\ OMB's regulations require approval of certain information 
collection requirements imposed by agency rules.\28\ The Commission 
solicits comments on the Commission's need for this information, 
whether the information will have practical utility, the accuracy of 
the burden estimates, ways to enhance the quality, utility, and clarity 
of the information to be collected or retained, and any suggested 
methods for minimizing respondents' burden, including the use of 
automated information techniques.
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    \27\ 44 U.S.C. 3507(d).
    \28\ 5 CFR 1320 (2021).
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    24. The number of respondents below is based on an estimate of the 
NERC compliance registry for transmission owners and transmission 
operator. The Commission based its paperwork burden estimates on the 
NERC compliance registry as of May 6, 2022. According to the registry, 
there are 326 transmission owners and 18 transmission operators not 
also registered as transmission owners. The estimate is based on a zero 
change in burden from the current standard to the standard approved in 
this Order. The Commission based the burden estimate on staff 
experience, knowledge, and expertise.
    25. For the new Reliability Standard CIP-014-3, the burden for 
entities remains the same as they will still need to provide the same 
evidence to demonstrate compliance whether it is kept on-site or loaded 
electronically into the SEL. No comments were received that expressed a 
change in the manhour burden associated with the use of SEL.
    26. Burden Estimates: The Commission estimates the changes in the 
annual public reporting burden and cost \29\ as indicated below:
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    \29\ FERC staff estimates that industry costs for salary plus 
benefits are similar to Commission costs. The FERC 2021 average 
salary plus benefits for one FERC full-time equivalent (FTE) is 
$180,703/year (or $87.00/hour) posted by the Bureau of Labor 
Statistics for the Utilities sector (available at https://www.bls.gov/oes/current/naics3_221000.htm).
    \30\ The total number (344) of transmission owners (326) plus 
transmission operators (18) not also registered as owners, this 
represents the unique US entities (taken from data as of May 6, 
2022).

                                                   FERC-725U--(Mandatory Reliability Standards: Reliability Standard CIP-014) Change in Burden
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                                              Number of       Number of
                                             respondents    responses per   Total number       Average burden hours & cost per            Total burden hours & total cost          Average cost
                                                \30\         respondent     of responses                  response                                                                per respondent
                                                      (1)             (2)     (1) * (2) =  (4)...................................  (3) * (4) = (5)..............................       (5) / (1)
                                                                                      (3)
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Change Annual Reporting and Recordkeeping             344               1             344  32.71 hrs.; $2,845.77.................  11,252.24 hrs.; $978,944.88..................       $2,845.77
Total FERC-725U..........................             344               1             344  32.71 hrs.; $2,845.77.................  11,254.24 hrs.; $978,944.88..................        2,845.77
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[[Page 37850]]

    Titles: FERC-725U, Mandatory Reliability Standards for the Bulk 
Power System; CIP Reliability Standards.
    Action: Compliance update with no changes to Existing Collections 
of Information, FERC-725U.
    OMB Control Nos.: 1902-0274(FERC-725U).
    Respondents: Business or other for profit, and not for profit 
institutions.
    Frequency of Responses: On occasion.
    Necessity of the Information: Reliability Standard CIP-014-3 
(Physical Security) is part of the implementation of the Congressional 
mandate of the Energy Policy Act of 2005 to develop mandatory and 
enforceable Reliability Standards to better ensure the reliability of 
the nation's Bulk Power system. Specifically, the revised standard only 
changes the how the evidence is stored.
    Internal Review: The Commission has reviewed NERC's proposal and 
determined that its action is necessary to implement section 215 of the 
FPA.
    27. Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
Office of the Executive Director, 888 First Street NE, Washington, DC 
20426 [Attention: Ellen Brown, email: [email protected], phone: 
(202) 502-8663].
    28. All submissions must be formatted and filed in accordance with 
submission guidelines at: http://www.ferc.gov. For user assistance, 
contact FERC Online Support by email at [email protected], or 
by phone at (866) 208-3676 (toll-free).
    29. Comments concerning the information collections and 
requirements approved and associated burden estimates, should be sent 
to the Commission in this docket and may also be sent to the Office of 
Management and Budget, Office of Information and Regulatory Affairs 
[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 
OMB submissions must be formatted and filed in accordance with 
submission guidelines at www.reginfo.gov/public/do/PRAMain. Using the 
search function under the ``Currently Under Review'' field, select 
Federal Energy Regulatory Commission; click ``submit,'' and select 
``comment'' to the right of the subject collection.
    30. Please refer to the appropriate OMB Control Number(s) 1902-
0274(FERC-725U) in your submission.

V. Document Availability

    31. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE, Room 2A, 
Washington, DC 20426.
    32. From the Commission's Home Page on the internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    33. User assistance is available for eLibrary and the Commission's 
website during normal business hours from the Commission's Online 
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].
    The Commission orders:
    Reliability Standard CIP-014-3 is hereby approved, as discussed in 
the body of this order.

    Issued: June 16, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2022-13464 Filed 6-23-22; 8:45 am]
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