Reliability Standard CIP-014-2 Petition

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

North American Electric Reliability
Corporation

)
)

Docket No. _______

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF PROPOSED RELIABILITY STANDARD CIP-014-2
Gerald W. Cauley
President and Chief Executive Officer
North American Electric Reliability
Corporation
3353 Peachtree Road, N.E.
Suite 600, North Tower
Atlanta, GA 30326
404-446-2560

Charles A. Berardesco
Senior Vice President and General Counsel
Holly A. Hawkins
Associate General Counsel
Shamai Elstein
Senior Counsel
North American Electric Reliability
Corporation
Gizelle Wray
Associate Counsel
1325 G Street, N.W., Suite 600
Washington, D.C. 20005
202-400-3000
[email protected]
[email protected]
[email protected]
[email protected]
Counsel for the North American Electric
Reliability Corporation

May 15, 2015

TABLE OF CONTENTS
I.

NOTICES AND COMMUNICATIONS ................................................................................ 2

II.

BACKGROUND .................................................................................................................... 3
A.

Regulatory Framework ..................................................................................................... 3

B.

NERC Reliability Standards Development Procedure ..................................................... 4

C.

Order No. 802 ................................................................................................................... 4

D.

Procedural History of Proposed Reliability Standard CIP-014-2 .................................... 6

III. JUSTIFICATION FOR APPROVAL..................................................................................... 6
IV. EFFECTIVE DATE ................................................................................................................ 8
V.

CONCLUSION ....................................................................................................................... 9

Exhibit A

Proposed Reliability Standard

Exhibit B

Implementation Plan

Exhibit C

Order No. 672 Criteria

Exhibit D

Consideration of Directives

Exhibit E

Analysis of Violation Risk Factors and Violation Severity Levels

Exhibit F

Summary of Development History and Record of Development

Exhibit G

Mapping Document

Exhibit H

Standard Drafting Team Roster

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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

North American Electric Reliability
Corporation

)
)

Docket No. _______

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF PROPOSED RELIABILITY STANDARD CIP-014-2
Pursuant to Section 215(d)(1) of the Federal Power Act (“FPA”), 1 Section 39.5 of the
regulations of the Federal Energy Regulatory Commission (“FERC” or “Commission”), 2 and
Order No. 802, 3 the North American Electric Reliability Corporation (“NERC”) 4 hereby submits
for Commission approval proposed Reliability Standard CIP-014-2. 5 Consistent with Order No.
802, proposed Reliability Standard CIP-014-2 modifies Reliability Standard CIP-014-1 by
removing the term “widespread” from Requirement R1. As discussed below, removing the term
“widespread” will help ensure that: (1) applicable entities identify the appropriate critical facilities
under Requirement R1; and (2) the ERO enforces the Reliability Standard in a consistent manner.
NERC requests that the Commission approve proposed Reliability Standard CIP-014-2 (Exhibit
A) as just, reasonable, not unduly discriminatory, or preferential, and in the public interest.

1

16 U.S.C. § 824o (2006).

2

18 C.F.R. § 39.5 (2014).

3

Physical Security Reliability Standard, Order 802, 149 FERC ¶ 61,140 (2014).

4

The Commission certified NERC as the electric reliability organization (“ERO”) in accordance with
Section 215 of the FPA on July 20, 2006. North American Electric Reliability Corporation, 116 FERC ¶ 61,062
(2006).

5
Unless otherwise designated, all capitalized terms shall have the meaning set forth in the Glossary of Terms
Used in NERC Reliability Standards, available at http://www.nerc.com/files/Glossary_of_Terms.pdf.

1

As required by Section 39.5(a) of the Commission’s regulations, 6 this Petition presents the
technical basis and purpose of the proposed Reliability Standard, a summary of its development
history (Exhibit F), and a demonstration that the proposed Reliability Standard meets the criteria
identified by the Commission in Order No. 672 7 (Exhibit C). The NERC Board of Trustees
adopted proposed Reliability Standard CIP-014-2 and the associated Implementation Plan on May
7, 2015.
I.

NOTICES AND COMMUNICATIONS
Notices and communications with respect to this filing may be addressed to the following: 8

Holly A. Hawkins*
Associate General Counsel
Shamai Elstein*
Counsel
Gizelle Wray*
Associate Counsel
North American Electric Reliability
Corporation
1325 G Street, N.W., Suite 600
Washington, D.C. 20005
202-400-3000
[email protected]
[email protected]
[email protected]

6

Valerie Agnew*
Senior Director of Standards Development
North American Electric Reliability
Corporation
3353 Peachtree Road, N.E.
Suite 600, North Tower
Atlanta, GA 30326
404-446-2560
[email protected]

18 C.F.R. § 39.5(a) (2014).

7

Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the
Establishment, Approval, and Enforcement of Electric Reliability Standards, Order No. 672, FERC Stats. & Regs. ¶
31,204, at P 262, 321-37, order on reh’g, Order No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006).

8

Persons to be included on the Commission’s service list are identified by an asterisk. NERC respectfully
requests a waiver of Rule 203 of the Commission’s regulations, 18 C.F.R. § 385.203 (2014), to allow the inclusion
of more than two persons on the service list in this proceeding.

2

II.

BACKGROUND
A.

Regulatory Framework

By enacting the Energy Policy Act of 2005, 9 Congress entrusted the Commission with the
duties of approving and enforcing rules to ensure the reliability of the Nation’s Bulk-Power
System, and with the duty of certifying an ERO that would be charged with developing and
enforcing mandatory Reliability Standards, subject to Commission approval. Section 215(b)(1)10
of the FPA states that all users, owners, and operators of the Bulk-Power System in the United
States will be subject to Commission-approved Reliability Standards. Section 215(d)(5) 11 of the
FPA authorizes the Commission to order the ERO to submit a new or modified Reliability
Standard.

Section 39.5(a) 12 of the Commission’s regulations requires the ERO to file for

Commission approval each Reliability Standard that the ERO proposes should become mandatory
and enforceable in the United States, and each modification to a Reliability Standard that the ERO
proposes to make effective.
The Commission has the regulatory responsibility to approve Reliability Standards that
protect the reliability of the Bulk-Power System and to ensure that such Reliability Standards are
just, reasonable, not unduly discriminatory or preferential, and in the public interest. Pursuant to
Section 215(d)(2) of the FPA 13 and Section 39.5(c) 14 of the Commission’s regulations, the
Commission will give due weight to the technical expertise of the ERO with respect to the content
of a Reliability Standard.

9

16 U.S.C. § 824o (2006).

10

Id. § 824o(b)(1).

11

Id. § 824o(d)(5).

12

18 C.F.R. § 39.5(a) (2014).

13

16 U.S.C. § 824o(d)(2).

14

18 C.F.R. § 39.5(c)(1).

3

B.

NERC Reliability Standards Development Procedure

The proposed Reliability Standard was developed in an open and fair manner and in
accordance with the Commission-approved Reliability Standard development process. 15 NERC
develops Reliability Standards in accordance with Section 300 (Reliability Standards
Development) of its Rules of Procedure and the NERC Standard Processes Manual. 16 In certifying
NERC as the ERO, the Commission found that NERC’s proposed rules provide for reasonable
notice and opportunity for public comment, due process, openness, and a balance of interests in
developing Reliability Standards and thus satisfies certain of the criteria for approving Reliability
Standards. The development process is open to any person or entity with a legitimate interest in
the reliability of the Bulk-Power System. NERC considers the comments of all stakeholders, and
a vote of stakeholders and the NERC Board of Trustees is required to approve a Reliability
Standard before NERC submits the Reliability Standard to the Commission for approval.
C.

Order No. 802

On November 20, 2014, the Commission issued Order No. 802 approving Reliability
Standard CIP-014-1.

NERC developed Reliability Standard CIP-014-1 in response to a

Commission order issued March 7, 2014 in Docket No. RD14-6-000 directing NERC to submit
for approval one or more Reliability Standards to address physical security risks and vulnerabilities
of critical facilities on the Bulk-Power System. 17 The Commission found that Reliability Standard
CIP-014-1 satisfied the directives in the March 7 Order.

15

Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the
Establishment, Approval, and Enforcement of Electric Reliability Standards, Order No. 672 at P 334, FERC Stats. &
Regs. ¶ 31,204, order on reh’g, Order No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006).

16

The NERC Rules of Procedure are available at http://www.nerc.com/AboutNERC/Pages/Rules-ofProcedure.aspx. The NERC Standard Processes Manual is available at
http://www.nerc.com/comm/SC/Documents/Appendix_3A_StandardsProcessesManual.pdf.
17

Reliability Standards for Physical Security Measures, 146 FERC ¶61,166 (2014) (“March 7 Order”).

4

In addition to approving Reliability Standard CIP-014-1, the Commission directed NERC
to remove the term “widespread” from Requirement R1 of CIP-014-1, or alternatively, to propose
modifications to the Reliability Standard that address the Commission’s concerns related to the
term “widespread.” 18 In the March 7 Order, the Commission stated that a critical facility is:
one that, if rendered inoperable or damaged, could have a critical impact on the
operation of the interconnection through instability, uncontrolled separation or
cascading failures on the Bulk- Power System.
Requirement R1 of CIP-014-1, which addresses the directive in the March 7 Order that
owners and operators of the Bulk-Power System perform a risk assessment of their systems to
identify their critical facilities, includes much of the language from the March 7 Order with the
addition of the term “widespread” before the term “instability.”

Specifically, CIP-014-1,

Requirement R1 provides that Transmission Owners must perform risk assessments:
designed to identify the Transmission station(s) or Transmission substation(s) that
if rendered inoperable or damaged could result in widespread instability,
uncontrolled separation, or Cascading within an Interconnection. (Emphasis
added).
In Order No. 802, the Commission determined that inclusion of the undefined term
“widespread” is unclear with respect to the obligation it imposes on applicable entities and
introduces excessive uncertainty in identifying critical facilities under Requirement R1. 19 The
Commission stated that the identification of critical facilities under Requirement R1 “should not
be dependent on how an applicable entity interprets the term ‘widespread’ but instead should be
modified to make clear that a facility that has a critical impact on the operation of an
Interconnection is critical and therefore subject to Requirement R1.” 20

18

Order No. 802 at PP 18-19, 31-35.

19

Id. at PP 19, 35.

20

Id. at P 33.

5

The Commission directed NERC to submit a responsive modification to address the
Commission’s concerns within six months from the effective date of Order No. 802, which is May
20, 2015.
D.

Procedural History of Proposed Reliability Standard CIP-014-2

As further described in Exhibit F hereto, following the issuance of Order No. 802, NERC
posted a revised Standards Authorization Request for a 30-day information comment period to
address the directives issued in Order No. 802. On February 20, 2015, NERC posted the proposed
Reliability Standard for an initial 45-day comment period and 10-day ballot. The initial ballot
received a quorum of 88.33% and an approval of 89.95%. After addressing industry comments on
the initial draft of the proposed Reliability Standard, NERC posted the proposed Reliability
Standard for a final ballot, which received a quorum of 92% and approval of 92.35%. The NERC
Board of Trustees adopted proposed Reliability Standard CIP-014-2 and the associated
Implementation Plan on May 7, 2015.
III.

JUSTIFICATION FOR APPROVAL
As discussed below and in Exhibit C, proposed Reliability Standard CIP-014-2 satisfies

the Commission’s criteria in Order No. 672 and is just, reasonable, not unduly discriminatory or
preferential, and in the public interest. Consistent with Order No. 802, proposed Reliability
Standard CIP-014-2 modifies Reliability Standard CIP-014-1 by removing the term “widespread”
from Requirement R1. As revised, Requirement R1 reads, in relevant part, as follows:
Each Transmission Owner shall perform an initial risk assessment and subsequent
risk assessments of its Transmission stations and Transmission substations
(existing and planned to be in service within 24 months) that meet the criteria
specified in Applicability Section 4.1.1. The initial and subsequent risk assessments
shall consist of a transmission analysis or transmission analyses designed to
identify the Transmission station(s) and Transmission substation(s) that if rendered
inoperable or damaged could result in widespread instability, uncontrolled
separation, or Cascading within an Interconnection.
6

Removing the term “widespread” will help provide for more consistent implementation and
enforcement of Requirement R1. As the Commission recognized, the term “widespread” is
susceptible to varying interpretations and may introduce uncertainty in identifying critical facilities
under Requirement R1. 21 Under the proposed Reliability Standard, the identification of critical
assets will not depend on the manner in which a particular entity understands the term
“widespread”; instead, entities will focus on the critical impact of the facility on the operation of
the Interconnection, consistent with the March 7 Order.
The Commission clarified in Order No. 802 that only an instability that has a critical impact
on the operation of the interconnection warrants finding that the facility causing the instability is
critical under Requirement R1.22 To provide additional guidance to stakeholders on identifying
critical facilities according to Requirement R1, the standard drafting team included the following
in the Rationale for Requirement R1 appended to the proposed Reliability Standard:
The requirement is not intended to bring within the scope of the standard a
Transmission station or Transmission substation unless the applicable
Transmission Owner determines through technical studies and analyses based on
objective analysis, technical expertise, operating experience and experienced
judgment that the loss of such facility would have a critical impact on the operation
of the Interconnection in the event the asset is rendered inoperable or damaged. In
the November 20, 2014 Order, FERC reiterated that “only an instability that has a
“critical impact on the operation of the interconnection” warrants finding that the
facility causing the instability is critical under Requirement R1.” The Transmission
Owner may determine the criteria for critical impact by considering, among other
criteria, any of the following:
•

Criteria or methodology used by Transmission Planners or Planning
Coordinators in TPL-001-4, Requirement R6;

•

NERC EOP-004-2 reporting criteria

•

Area or magnitude of potential impact

21

Order No. 802 at P 31-33.

22

Id. at P 33.

7

Aside from removing the term “widespread,” NERC did not change any other aspect of
Requirement R1.
IV.

EFFECTIVE DATE
In the March 7 Order, the Commission stated that “NERC should develop an

implementation plan that requires owners or operators of the Bulk-Power System to implement
the Reliability Standards in a timely fashion, balancing the importance of protecting the BulkPower System from harm while giving the owners or operators adequate time to meaningfully
implement the requirements.” 23 Consistent with the Commission’s directive and as provided in
the proposed Implementation Plan, attached hereto as Exhibit B, NERC respectfully requests that
the Commission approve proposed Reliability Standard CIP-014-2 to become effective on the later
of the first day following the effective date of CIP-014-1 or the first day after the effective date of
the Commission’s order approving CIP-014-2. The proposed effective date is designed to provide
responsible entities regulatory certainty by limiting the time, if any, that CIP-014-1 would be
effective.

23

March 7 Order at P 12.

8

V.

CONCLUSION
For the reasons set forth above, NERC respectfully requests that the Commission approve:
•

proposed Reliability Standard CIP-014-2 and associated elements included in Exhibit A,
effective as proposed herein;

•

the proposed implementation plan included in Exhibit B; and

•

the retirement of Reliability Standard CIP-014-1.
Respectfully submitted,
/s/ Gizelle Wray
Holly A. Hawkins
Associate General Counsel
Shamai Elstein
Counsel
Gizelle Wray
Associate Counsel
North American Electric Reliability Corporation
1325 G Street, N.W., Suite 600
Washington, D.C. 20005
202-400-3000
[email protected]
[email protected]
[email protected]
[email protected]
Counsel for the North American Electric Reliability
Corporation

Date: May 15, 2015

9