On July 17, 2014, FERC issued a notice of proposed rulemaking (“NOPR”) proposing to approve the North American Electric Reliability Corporation (“NERC”) Reliability Standard CIP-014-1.  The goal of the Reliability Standard is to enhance physical security measures for the most critical Bulk-Power System facilities and thereby lessen the overall vulnerability of the Bulk-Power System facilities against physical attacks.  FERC also proposed to direct NERC to develop two modifications to the standard. 

On March 7, 2014, FERC ordered NERC to develop and submit new Reliability Standards to require entities to reasonably protect against physical attacks that could have an adverse impact on the reliable operation of the grid.  Specifically, FERC directed NERC to submit Reliability Standards that require owners and operators of the Bulk-Power System to (1) perform a risk assessment of their systems to identify critical facilities; (2) evaluate potential threats to, and vulnerabilities of, those facilities; and (3) develop and implement a security plan to protect against attacks on those facilities. 

On May 23, 2014, NERC petitioned the Commission to approve proposed Reliability Standard CIP-014-1.  The proposed standard has six requirements: (1) Requirement R1 requires applicable transmission owners to perform periodic risk assessments to identify their stations or substations, and the controlling primary control center, that could result in widespread instability if deemed inoperable or damaged; (2) Requirement R2 requires applicable transmission owners to have an experienced third party verify the risk assessment performed under Requirement R1; (3) Requirement R3 requires transmission owners to notify the operator of any at-risk stations or substations that they have been identified under Requirement R1 as being at risk; (4) Requirement R4 requires applicable transmission owners or operators to conduct an evaluation of the potential threats and vulnerabilities of a physical attack on each of its respective facilities identified as critical under Requirement R1; (5) Requirement R5 requires transmission owners and operators to develop and implement documented physical security plans that cover each of their respective facilities identified as critical under Requirement R1; and (6) Requirement R6 requires transmission owners and operators subject to Requirements R4 and R5 to have an experienced third party review their Requirement R4 evaluations and Requirement R5 security plans.

In the July 17 NOPR, FERC found that the proposed Reliability Standard largely satisfies the March 7 Order’s directives.  However, FERC proposed to direct NERC to make two modifications to the proposed standards.  First, FERC proposed to direct NERC to develop a modification that would allow governmental authorities to add or subtract facilities from an entity’s list of critical facilities under Requirement R1, although FERC anticipates that governments would exercise that authority rarely.  Second, FERC proposed to direct NERC to use the phrase “instability” in Requirement R1 in place of “widespread instability,” which could create ambiguity since the term “widespread” is not defined.  Additionally, FERC proposed that NERC submit two informational reports to FERC analyzing whether the Reliability Standard should be applicable to additional facilities and analyzing what further steps could be taken to ensure reliable operation of the Bulk-Power System.

Comments on the NOPR are due 45 days after publication in the Federal Register.  A copy of the NOPR is available here.