[Federal Register Volume 83, Number 147 (Tuesday, July 31, 2018)]
[Rules and Regulations]
[Pages 36727-36741]
[FR Doc No: 2018-16242]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM18-2-000; Order No. 848]

Cyber Security Incident Reporting Reliability Standards

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) directs
the North American Electric Reliability Corporation (NERC) to develop
and submit modifications to the NERC Reliability Standards to augment
the mandatory reporting of Cyber Security Incidents, including
incidents that might facilitate subsequent efforts to harm the reliable
operation of the bulk electric system (BES).

DATES: This rule will become effective October 1, 2018.

FOR FURTHER INFORMATION CONTACT:
    Margaret Steiner (Technical Information), Office of Electric
Reliability, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426,<PHONE_NUMBER>, [email protected].
    Kevin Ryan (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426,<PHONE_NUMBER>, [email protected].

SUPPLEMENTARY INFORMATION:

Order No. 848--Final Rule (Issued July 19, 2018)

    1. Pursuant to section 215(d)(5) of the Federal Power Act (FPA),
the Commission directs the North American Electric Reliability
Corporation (NERC) to develop and submit modifications to

the NERC Reliability Standards to augment the mandatory reporting of
Cyber Security Incidents, including incidents that might facilitate
subsequent efforts to harm the reliable operation of the BES.\1\ The
Commission directs NERC to develop and submit modifications to the
Reliability Standards to require the reporting of Cyber Security
Incidents that compromise, or attempt to compromise, a responsible
entity's Electronic Security Perimeter (ESP) or associated Electronic
Access Control or Monitoring Systems (EACMS).\2\
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    \1\ 16 U.S.C. 824o(d)(5). The NERC Glossary of Terms Used in
NERC Reliability Standards (June 12, 2018) (NERC Glossary) defines a
Cyber Security Incident as ``A malicious act or suspicious event
that: Compromises, or was an attempt to compromise, the Electronic
Security Perimeter or Physical Security Perimeter or, Disrupts, or
was an attempt to disrupt, the operation of a BES Cyber System.''
    \2\ The NERC Glossary defines ``ESP'' as ``[t]he logical border
surrounding a network to which BES Cyber Systems are connected using
a routable protocol.'' The NERC Glossary defines ``EACMS'' as
``Cyber Assets that perform electronic access control or electronic
access monitoring of the Electronic Security Perimeter(s) or BES
Cyber Systems. This includes Intermediate Systems.''
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    2. In the NOPR, the Commission observed that Cyber Security
Incidents are presently reported by responsible entities in accordance
with Reliability Standard CIP-008-5 (Cyber Security--Incident Reporting
and Response Planning).\3\ However, under the definition of Reportable
Cyber Security Incident in Reliability Standard CIP-008-5, responsible
entities must only report Cyber Security Incidents if they have
``compromised or disrupted one or more reliability tasks.'' The
Commission explained that the current reporting threshold may
understate the true scope of cyber-related threats facing the Bulk-
Power System, particularly given the lack of any reportable incidents
in 2015 and 2016. To improve awareness of existing and future cyber
security threats and potential vulnerabilities, the Commission proposed
to direct that NERC develop and submit modifications to the existing
Reliability Standards to augment the reporting of Cyber Security
Incidents, including incidents that might facilitate subsequent efforts
to harm the reliable operation of the BES.
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    \3\ Cyber Security Incident Reporting Reliability Standards,
Notice of Proposed Rulemaking, 82 FR 61499 (Dec. 28, 2017), 161 FERC
] 61,291, P 1 (2017) (NOPR).
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    3. As discussed in detail below, the Commission adopts the NOPR
proposal. The Commission's directive in this Final Rule consists of
four elements intended to augment the current Cyber Security Incident
reporting requirement: (1) Responsible entities must report Cyber
Security Incidents that compromise, or attempt to compromise, a
responsible entity's ESP or associated EACMS; (2) required information
in Cyber Security Incident reports should include certain minimum
information to improve the quality of reporting and allow for ease of
comparison by ensuring that each report includes specified fields of
information; (3) filing deadlines for Cyber Security Incident reports
should be established once a compromise or disruption to reliable BES
operation, or an attempted compromise or disruption, is identified by a
responsible entity; and (4) Cyber Security Incident reports should
continue to be sent to the Electricity Information Sharing and Analysis
Center (E-ISAC), rather than the Commission, but the reports should
also be sent to the Department of Homeland Security (DHS) Industrial
Control Systems Cyber Emergency Response Team (ICS-CERT). Further, NERC
must file an annual, public, and anonymized summary of the reports with
the Commission.
    4. As discussed below, after considering the comments submitted in
response to the NOPR, we conclude that the proposed directive to
augment the current reporting requirement for Cyber Security Incidents
is appropriate to carry out FPA section 215. As NERC recognizes in its
NOPR comments, ``[b]roadening the mandatory reporting of Cyber Security
Incidents would help enhance awareness of cyber security risks facing
entities[,] . . . would create a more extensive baseline understanding
of the nature of cyber security threats and vulnerabilities[,] . . .
[and] is consistent with recommendations in NERC's 2017 State of
Reliability Report.'' \4\ Our directive is intended to result in a
measured broadening of the existing reporting requirement in
Reliability Standard CIP-008-5, consistent with NERC's recommendation,
rather than a wholesale change in cyber incident reporting that
supplants or otherwise chills voluntary reporting, as some commenters
maintain. Indeed, as NERC contends, we believe that the new ``baseline
understanding, coupled with the additional context from voluntary
reports received by the E-ISAC, [will] allow NERC and the E-ISAC to
share that information broadly through the electric industry to better
prepare entities to protect their critical infrastructure.'' \5\
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    \4\ NERC Comments at 4.
    \5\ Id.
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    5. We address in the discussion below concerns raised by commenters
regarding elements of the Commission's directive and the burdens the
directive might impose if NERC develops requirements that are overly
broad. At the outset, we agree with NERC that ``because certain
requirements in the CIP Reliability Standards already require entities
to track data on compromises or attempts to compromise the ESP or
EACMS, the additional burden to report that data appears reasonable.''
\6\ And we do not believe that complying with the augmented reporting
requirements that we direct here would be any more burdensome to
industry than the alternative, responding to a perpetual data or
information request to collect the same information pursuant to Section
1600 of the NERC Rules of Procedure. To ensure that the burden is
reasonable with respect to including EACMS in the augmented reporting
requirement, NERC should develop requirements based on the function of
the EACMS and the nature of the attempted compromise or successful
intrusion. Similarly, as discussed below, NERC should develop reporting
timelines for Cyber Security Incidents that are commensurate with the
adverse or attempted adverse impact to the BES that loss, compromise,
or misuse of those BES Cyber Systems could have on the reliable
operation of the BES.\7\ Prioritizing incident reporting will allow
responsible entities to devote resources to reporting the most
significant Cyber Security Incidents faster than less significant
events. With this guidance, we believe that the standard drafting team,
in the first instance, is in the best position to develop the specific
elements of the directed Reliability Standard requirements.
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    \6\ Id. at 8 (citing Reliability Standard CIP-005-5 (Cyber
Security--Electronic Security Perimeter(s)) and Reliability Standard
CIP-007-6 (Cyber Security--System Security Management)).
    \7\ The NERC Glossary defines BES Cyber System as ``[o]ne or
more BES Cyber Assets logically grouped by a responsible entity to
perform one or more reliability tasks for a functional entity.''
Glossary of Terms Used in NERC Reliability Standards (NERC
Glossary). Reliability Standard CIP-002-5.1a (Cyber Security System
Categorization) provides a ``tiered'' approach to cybersecurity
requirements, based on classifications of high, medium and low
impact BES Cyber Systems.
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    6. We have considered comments submitted by NERC and others
recommending that broadened Cyber Security Incident reporting should be
implemented through a request for information or data pursuant to
Section 1600 of the NERC Rules of Procedure instead of through
Reliability Standard requirements. However, on balance, we

believe that broadened mandatory reporting pursuant to Reliability
Standard requirements as opposed to a standing data request is more
aligned with the seriousness and magnitude of the current threat
environment, and more likely to improve awareness of existing and
future cyber security threats and potential vulnerabilities. Four main
reasons inform our decision. First, a new or modified Reliability
Standard will ensure that the desired goals of our directive are met
because the Commission will have the ability to review and ultimately
approve the standard, as opposed to the opportunity for informal review
that the Commission would have of a data request under ROP Section
1600. Second, the Commission has well-defined authority and processes
under section 215(e) of the FPA to audit and enforce compliance with a
Reliability Standard. Third, we do not anticipate that there will be a
need to change the parameters of the Cyber Security Incident report for
EACMS because the parameters that we direct below are based on five
static functions of EACMS and are not technology specific, so the
potential flexibility provided by a Section 1600 data request may not
be significantly beneficial. Finally, collecting data through a
Reliability Standard is consistent with existing practices; responsible
entities are currently required to maintain the types of information
that would lead to a reportable Cyber Security Incident pursuant to
Reliability Standard CIP-007-6, Requirement R4.1. Nonetheless, should
future events require an expedited change in data collection or should
NERC desire to collect data outside the scope of the proposed
Reliability Standard, NERC could then use the Section 1600 process to
supplement information reported under a mandatory Reliability Standard.
    7. Accordingly, pursuant to section 215(d)(5) of the FPA, we adopt
the NOPR proposal and direct NERC to develop modifications to the
Reliability Standards to include the mandatory reporting of Cyber
Security Incidents that compromise, or attempt to compromise, a
responsible entity's ESP or associated EACMS, as well as modifications
to specify the required information in Cyber Security Incident reports,
their dissemination, and deadlines for filing reports. We direct NERC
to submit the directed modifications within six-months of the effective
date of this Final Rule.

I. Background

A. Section 215 and Mandatory Reliability Standards

    8. Section 215 of the FPA requires a Commission-certified Electric
Reliability Organization (ERO) to develop mandatory and enforceable
Reliability Standards, subject to Commission review and approval.
Reliability Standards may be enforced by the ERO, subject to Commission
oversight, or by the Commission independently.\8\ Pursuant to section
215 of the FPA, the Commission established a process to select and
certify an ERO,\9\ and subsequently certified NERC.\10\
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    \8\ Id.
    \9\ 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, order on reh'g, Order No. 672-A, FERC
Stats. & Regs. ] 31,212 (2006).
    \10\ North American Electric 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. Notice of Proposed Rulemaking

    9. On December 21, 2017, the Commission issued a NOPR proposing to
direct that NERC develop enhanced Cyber Security Incident reporting
requirements. Specifically, pursuant to section 215(d)(5) of the FPA,
the NOPR proposed to direct NERC to develop modifications to the
Reliability Standards to require the reporting of Cyber Security
Incidents that compromise, or attempt to compromise, a responsible
entity's ESP or associated EACMS. The proposed directive was based in
part on a lack of Reportable Cyber Security Incidents in 2015 and 2016,
and NERC's assessment in the 2017 State of Reliability Report that
``[w]hile there were no reportable cyber security incidents during 2016
and therefore none that caused a loss of load, this does not
necessarily suggest that the risk of a cyber security incident is
low.'' \11\ In addition, the NOPR stated that it agreed with the
recommendation by NERC in the 2017 State of Reliability Report to
``redefine reportable incidents to be more granular and include zero-
consequence incidents that might be precursors to something more
serious.'' \12\
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    \11\ NOPR, 161 FERC ] 61,291 at P 28 (citing 2017 NERC State of
Reliability Report at 4).
    \12\ Id. P 29 (citing 2017 NERC State of Reliability Report at
4).
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    10. In justifying the proposed inclusion of ESPs and associated
EACMS within the scope of the enhanced Cyber Security Incident
requirement, the NOPR stated that the purpose of an ESP is to manage
electronic access to BES Cyber Systems to support the protection of the
BES Cyber Systems against compromise that could lead to misoperation or
instability in the BES.\13\ In addition, the NOPR explained that EACMS,
which include, for example, firewalls, authentication servers, security
event monitoring systems, intrusion detection systems and alerting
systems, control electronic access into the ESP and play a significant
role in the protection of high and medium impact BES Cyber Systems.\14\
The NOPR indicated further that, once an EACMS is compromised, an
attacker could more easily enter the ESP and effectively control the
BES Cyber System or Protected Cyber Asset.
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    \13\ See id. P 33 (citing Reliability Standard CIP-005-5 (Cyber
Security--Electronic Security Perimeter(s)).
    \14\ See id. (citing Reliability Standard CIP-002-5.1 (Cyber
Security--BES Cyber System Categorization), Background at 6;
Reliability Standard CIP-007-6 (Cyber Security--System Security
Management), Background at 4).
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    11. The NOPR discussed the scope of the present Cyber Security
Incident reporting requirement. The NOPR observed that Reliability
Standard CIP-008-5, Requirement R1.2 currently requires that each
responsible entity shall document one or more Cyber Security Incident
Plan(s) with one or more processes to determine if an identified Cyber
Security Incident is a Reportable Cyber Security Incident. And where a
Cyber Security Incident is determined to qualify as a Reportable Cyber
Security Incident, the NOPR explained that responsible entities are
required to notify the E-ISAC with initial notification within one hour
from the determination of a Reportable Cyber Security Incident. The
NOPR stated, however, that the NERC Glossary defines a Reportable Cyber
Security Incident as ``[a] Cyber Security Incident that has compromised
or disrupted one or more reliability tasks of a functional entity.''
The NOPR indicated that the definition of Reportable Cyber Security
Incident, insofar as it excludes unsuccessful attempts to compromise or
disrupt a responsible entity's core activities, is thus more narrow
than the definition of ``cybersecurity incident'' in FPA section
215(a)(8), which encompasses ``a malicious act or suspicious event that
disrupts, or was an attempt to disrupt, the operation of those
programmable electronic devices and communication networks including
hardware, software and data that are essential to the reliable
operation of the bulk power system.'' \15\
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    \15\ 16 U.S.C. 824o(a)(8).
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    12. The NOPR stated that altering the Cyber Security Incident
reporting

threshold to require reporting of attempts to compromise, instead of
only successful compromises, is consistent with information already
logged by registered entities pursuant to current monitoring
requirements in the Reliability Standards. The NOPR explained that
Reliability Standard CIP-007-6, Requirement R4.1, mandates logging of
detected successful login attempts, detected failed access attempts,
and failed login attempts, and the Guidelines and Technical Basis for
Requirement R4.1 states that events should be logged even if access
attempts were blocked or otherwise unsuccessful.\16\
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    \16\ See Reliability Standard CIP-007-6 (Cyber Security--Systems
Security Management), Requirement R4.1.
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    13. In addition to modifying the reporting threshold, the NOPR
proposed to direct NERC to modify the Reliability Standards to specify
the required information in Cyber Security Incident reports to improve
the quality of reporting and allow for ease of comparison by ensuring
that each report includes specified fields of information, as well as
the deadlines for submitting a report. Specifically, the NOPR proposed
that the minimum set of attributes to be reported should include: (1)
The functional impact, where possible, that the Cyber Security Incident
achieved or attempted to achieve; (2) the attack vector used to achieve
or attempt to achieve the Cyber Security Incident; and (3) the level of
intrusion achieved or attempted by the Cyber Security Incident. The
NOPR explained that knowledge of these attributes regarding a specific
Cyber Security Incident will improve awareness of cyber threats to BES
reliability. The NOPR also noted that the proposed attributes are the
same as attributes already used by DHS for its multi-sector reporting
and summarized by DHS in an annual report.\17\
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    \17\ NOPR, 161 FERC ] 61,291 at P 38 (citing 2016 ICS-CERT Year
in Review, https://ics-cert.us-cert.gov/Year-Review-2016).
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    14. The NOPR also proposed to continue to require that Cyber
Security Incident reports be sent to the E-ISAC instead of the
Commission, but the NOPR proposed to require that such reports also be
sent to ICS-CERT and that NERC file with the Commission an annual,
public, and anonymized summary of such reports.
    15. Finally, the NOPR sought comment on potential alternatives to
modifying the mandatory reporting requirements in the NERC Reliability
Standards. Specifically, the NOPR sought comment on whether a request
for data or information pursuant to Section 1600 of the NERC Rules of
Procedure would effectively address the reporting gap and current lack
of awareness of cyber-related incidents among NERC, responsible
entities and the Commission, and satisfy the goals of the proposed
directive.

II. Discussion

    16. Pursuant to section 215(d)(5) of the FPA, we adopt the NOPR
proposal and direct NERC to develop and submit modifications to the
NERC Reliability Standards to augment current mandatory reporting of
Cyber Security Incidents, including incidents that might facilitate
subsequent efforts to harm the reliable operation of the BES. We direct
NERC, subject to the discussion below, to develop and submit
Reliability Standard requirements that: (1) Require responsible
entities to report Cyber Security Incidents that compromise, or attempt
to compromise, a responsible entity's ESP or associated EACMS; (2)
specify the required information in Cyber Security Incident reports;
(3) establish deadlines for filing Cyber Security Incident reports that
are commensurate with incident severity; and (4) require that Cyber
Security Incident reports be sent to ICS-CERT, in addition to E-ISAC,
and that NERC file with the Commission an annual, public, and
anonymized summary of such reports.
    17. Below, we discuss the following matters: (A) The need for
broadened mandatory Cyber Security Incident reporting; (B) the
threshold for a reportable Cyber Security Incident; (C) the appropriate
procedural approach to augment Cyber Security Incident reporting, i.e.,
new or modified Reliability Standards versus a NERC data request to
applicable entities; (D) the content and timing of Cyber Security
Incident reports; and (E) other issues.

A. Need for Broadened Mandatory Cyber Security Incident Reporting

1. NOPR
    18. In the NOPR, the Commission indicated that cyber-related event
reporting is currently addressed in Reliability Standard CIP-008-5,
Requirement R1.2, which requires that each responsible entity shall
document one or more Cyber Security Incident Plan(s) with one or more
processes to determine if an identified Cyber Security Incident is a
Reportable Cyber Security Incident. The NOPR noted that a Cyber
Security Incident is defined in the NERC Glossary as: ``A malicious act
or suspicious event that: (1) compromises, or was an attempt to
compromise, the Electronic Security Perimeter or Physical Security
Perimeter or (2) disrupts, or was an attempt to disrupt, the operation
of a BES Cyber System.''
    19. The Commission further explained that where a cyber-related
event is determined to qualify as a Reportable Cyber Security Incident,
responsible entities are required to notify the E-ISAC with initial
notification to be made within one hour from the determination of a
Reportable Cyber Security Incident.\18\ However, the NOPR observed that
a Reportable Cyber Security Incident is defined more narrowly in the
NERC Glossary than a Cyber Security Incident because the former
requires that the incident result in the compromise or disruption of
one or more reliability tasks of a functional entity. As the Commission
explained, in order for a cyber-related event to be considered
reportable under the existing CIP Reliability Standards, it must
compromise or disrupt a core activity (e.g., reliability task) of a
responsible entity that is intended to maintain BES reliability.\19\
Therefore, under these definitions, unsuccessful attempts to compromise
or disrupt a responsible entity's core activities are not subject to
the current reporting requirements in Reliability Standard CIP-008-5 or
elsewhere in the CIP Reliability Standards.
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    \18\ See Reliability Standard CIP-008-5 (Cyber Security--
Incident Reporting and Response Planning), Requirement R1, Part 1.2.
This requirement pertains to high impact BES Cyber Systems and
medium impact BES Cyber Systems.
    \19\ The NERC Functional Model ``describes a set of Functions
that are performed to ensure the reliability of the Bulk Electric
System. Each Function consists of a set of related reliability
Tasks. The Model assigns each Function to a functional entity, that
is, the entity that performs the function. The Model also describes
the interrelationships between that functional entity and other
functional entities (that perform other Functions).'' NERC,
Reliability Functional Model: Function Definitions and Functional
Entities, Version 5 at 7 (November 2009), http://www.nerc.com/pa/Stand/Functional%20Model%20Archive%201/Functional_Model_V5_Final_2009Dec1.pdf.
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    20. The NOPR explained that recent NERC State of Reliability
Reports indicate that there were no Reportable Cyber Security Incidents
in 2015 and 2016. The NOPR also highlighted NERC's conclusion that
``[w]hile there were no reportable cyber security incidents during 2016
and therefore none that caused a loss of load, this does not
necessarily suggest that the risk of a cyber security incident is
low.'' \20\ The NOPR contrasted the results reported in the NERC
reports with the 2016 annual summary of the Department of Energy's
(DOE) Electric

Disturbance Reporting Form OE-417, which contained four cybersecurity
incidents reported in 2016; two suspected cyber attacks and two actual
cyber attacks.\21\ Moreover, the NOPR noted that ICS-CERT responded to
fifty-nine cybersecurity incidents within the Energy Sector in
2016.\22\
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    \20\ 2017 NERC State of Reliability Report at 4.
    \21\ 2016 DOE Electric Disturbance Events (OE-417) Annual
Summary Archives, https://www.oe.netl.doe.gov/OE417_annual_summary.aspx.
    \22\ ICS-CERT cybersecurity incident statistics for the Energy
Sector combine statistics from the electric subsector and the oil
and natural gas subsector. ICS-CERT does not break out the
cybersecurity incidents that only impact the electric subsector.
2016 ICS-CERT Year in Review, https://ics-cert.us-cert.gov/Year-Review-2016.
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    21. Based on the comparison of information reported by NERC, DOE,
and ICS-CERT, the NOPR concluded that the current reporting threshold
in Reliability Standard CIP-008-5 may not reflect the true scope and
scale of cyber-related threats facing responsible entities. In
particular, the NOPR raised a concern that the disparity in the
reporting of cyber-related incidents under existing reporting
requirements, in particular the lack of any incidents reported to NERC
in 2015 and 2016, suggests a gap in the current reporting requirements.
The NOPR highlighted the fact that this concern is echoed in the 2017
NERC State of Reliability Report, which includes a recommendation that
NERC and industry should ``redefine reportable incidents to be more
granular and include zero-consequence incidents that might be
precursors to something more serious.'' \23\ Agreeing with NERC's
recommendation in the 2017 State of Reliability report, the NOPR
proposed to direct NERC to address the apparent gap in cyber incident
reporting.
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    \23\ 2017 NERC State of Reliability Report at 4.
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2. Comments
    22. NERC supports improving the reporting of Cyber Security
Incidents, stating that ``[b]roadening the mandatory reporting of Cyber
Security Incidents would help enhance awareness of cyber security risks
facing entities.'' \24\ NERC maintains that enhanced reporting ``would
create a more extensive baseline understanding of the nature of cyber
security threats and vulnerabilities.'' \25\ NERC notes that broadening
the scope of Cyber Security Incident reporting ``is consistent with
recommendations in NERC's 2017 State of Reliability Report.'' \26\
While NERC recognizes the need for enhanced Cyber Security Incident
reporting, as discussed in the following sections, NERC does not
support all aspects of the NOPR, including requiring enhanced cyber
incident reporting through a modified Reliability Standard.
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    \24\ NERC Comments at 4.
    \25\ Id. at 4.
    \26\ Id. at 4.
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    23. BPA, ITC, IRC, NYPSC, and NRG also support the NOPR proposal to
direct NERC to address the gap in reporting Cyber Security Incidents.
As noted by BPA, the current definition of Reportable Cyber Security
Incident only addresses successful attempts to compromise or disrupt
operations and, therefore, ``a broader definition of a Reportable Cyber
Security incident is warranted'' because ``information about certain
attempts to compromise will likely better assist the industry in
preventing successful cyber attacks.'' \27\ BPA, ITC, and IRC raise
concerns, however, regarding the risk of over-reporting. IRC states
that the proposed requirement to report all attempts to compromise an
ESP or associated EACMS ``needs further clarification.'' \28\ BPA
states that any new reporting requirement ``must ensure that the
information reported is useful and does not result in under and over
reporting of information.'' \29\ NRG recommends that the term
``attempt'' should be clarified (i.e., as a more serious risk than a
port scan) and ``should be provided in technical guidance or glossary
definition relating to the context of [the] existing NERC glossary
term: Cyber Security Incident.'' \30\
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    \27\ BPA Comments at 3.
    \28\ IRC Comments at 1.
    \29\ BPA Comments at 3.
    \30\ NRG Comments at 3.
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    24. EEI/NRECA, Trade Associations, APS, Chamber, EnergySec,
Eversource, Idaho Power, and LPPC do not support the NOPR proposal to
direct NERC to address the gap in reporting Cyber Security Incidents.
EEI/NRECA, Trade Associations, and Chamber suggest that the Commission
support existing voluntary reporting practices as opposed to mandating
the reporting of Cyber Security Incidents through the CIP Reliability
Standards. EEI/NRECA state that ``[s]ignificant resources from
responsible entities and government are engaged in [. . .]
partnerships'' to share threat and vulnerability information.\31\ EEI/
NRECA argue that ``[m]andating such sharing will overlap with these
voluntary efforts and may harm the partnerships and ability of the
programs to enhance cybersecurity for the electric grid.'' \32\ In
addition, EEI/NRECA state that mandating Cyber Security Incident
reporting ``may weaken the ability of electric companies to participate
in these [voluntary reporting] programs by shifting their focus to
compliance activity.'' \33\ Eversource states that the NOPR proposal
would ``introduce new technical and administrative challenges that will
likely impact responsible entities' ability to participate in existing
voluntary threat information sharing programs.'' \34\ LPPC states that
whatever action the Commission takes on Cyber Security Incident
reporting, it ``must be done with an eye towards causing as little
disruption to existing information sharing programs as possible.'' \35\
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    \31\ EEI/NRECA Comments at 12.
    \32\ Id. at 12.
    \33\ Id. at 14-15.
    \34\ Eversource Comments at 5.
    \35\ LPPC Comments at 4.
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    25. Trade Associations state that while improving Cyber Security
Incident reporting is an appropriate objective, ``directing new or
revised mandatory reliability standards is not the only tool that NERC
and the Commission have for achieving that reliability objective.''
\36\ Trade Associations contend that, in light of the constantly
evolving state of cyber security, ``the Commission should consider and
utilize the most flexible tools to achieve its reliability goals
without imposing undue burden on registered entities.'' \37\
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    \36\ APPA, et al. Comments at 3-4.
    \37\ Id. at 4.
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    26. APS states that while it ``supports the Commission's objectives
expressed in the NOPR,'' it does not agree that modifying the CIP
Reliability Standards is the appropriate solution.\38\ APS asserts that
``the reporting requirements that already exist under Form OE-417 meet
the same objectives as the Commission is attempting to satisfy by
requiring additional reporting under the CIP Standards as proposed in
the NOPR.'' \39\ APS instead suggests that ``the Commission . . .
direct NERC to modify the CIP Standards to include a requirement for
Responsible Entities to submit copies of its Form OE-417 to the E-ISAC
and ICS-CERT.'' \40\
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    \38\ APS Comments at 5.
    \39\ Id. at 7.
    \40\ Id. at 5.
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    27. EnergySec states that it is ``generally in agreement with the
Commission's goal of increasing the frequency and detail of incident
reporting,'' but raises concerns with the specifics of the NOPR
proposal.\41\ EnergySec maintains that ```compromise' as used in the
definition of Reportable Cybersecurity Incident does not necessarily
imply harm.'' \42\ Therefore, EnergySec argues that ``an incident
should be considered a `compromise' if an attacker has obtained

the ability to disrupt, even if no disruption occurs.'' \43\ EnergySec
states further that it believes ``that a clarified understanding of the
current definition of Reportable Cybersecurity Incident can
sufficiently address the Commission's concerns'' since it ``can be
construed to include certain non-impactful incidents, as well as
incidents affecting [ESPs] and [EACMS].'' \44\
---------------------------------------------------------------------------

    \41\ EnergySec Comments at 2.
    \42\ Id. at 2.
    \43\ Id. at 2.
    \44\ Id. at 3.
---------------------------------------------------------------------------

    28. EnergySec also raises a concern that the NOPR proposal is too
broad. EnergySec argues that determining incidents that might
facilitate future cyber incidents ``would be highly subjective and
could easily be construed to include systems and networks that are
outside the scope of the Commission's authority.'' \45\ EnergySec notes
that most failed login or access attempts are benign in nature and
``the volume of such events is orders of magnitude larger than what
would be an appropriate volume for mandatory reporting.'' \46\
EnergySec states further that while it agrees that successful attacks
against ESPs and EACMS should be reported, it does not support
including attempted compromise in the reporting requirements since the
``[d]etermination of attempted compromise is highly subjective and it
would therefore be difficult at best to clearly define within the
standards a basis for such determinations.'' \47\
---------------------------------------------------------------------------

    \45\ Id. at 3.
    \46\ Id. at 3.
    \47\ Id. at 3-4.
---------------------------------------------------------------------------

    29. Eversource and Idaho Power do not support the NOPR proposal due
to the anticipated increased burden that could result from increased
mandatory reporting. Eversource states that ``expanding the amount of
required information to be reported and increasing the number of
recipients of the reports will create undue administrative burdens.''
\48\ In addition, Eversource contends that ``the meaning of an
attempted compromise is currently undefined and may impose significant
burdens on responsible entities to identify such attempts.'' \49\ Idaho
Power states that even though ``additional reporting can provide some
visibility into the types of threats that entities face, additional
administrative burdens such as reporting requirements reduce the finite
resources that entities have to monitor and defend their critical
infrastructure.'' \50\
---------------------------------------------------------------------------

    \48\ Eversource Comments at 1.
    \49\ Id. at 6.
    \50\ Idaho Power Comments at 2.
---------------------------------------------------------------------------

    30. LPPC asserts that the NOPR proposal ``may yield a substantial
quantity of unhelpful information and confusing analysis, while
needlessly burdening Registered Entities.'' \51\ LPPC states that it
supports NERC's request for flexibility in addressing enhanced Cyber
Security Incident reporting and concludes that ``a technical conference
may productively explore the nature and scope of the various programs
that currently exist for information sharing regarding threats and the
incremental value of any new requirements.'' \52\ Resilient Societies
states that ``the modifications proposed to improve the reporting of
cybersecurity incidents are unlikely to have any significant positive
effect.'' \53\ Specifically, Resilient Societies states that the
proposed reporting parameters are not broad enough because ``reporting
of malware infection is not necessarily within thresholds set on other
criteria, such as `compromise,' `breach,' `impact,' or `disruption.' ''
\54\ Resilient Societies also suggests that the Commission convene a
public technical conference.
---------------------------------------------------------------------------

    \51\ LPPC Comments at 1.
    \52\ Id. at 5-6.
    \53\ Resilient Societies Comments at 12.
    \54\ Id. at 10.
---------------------------------------------------------------------------

3. Commission Determination
    31. We adopt the NOPR proposal and, pursuant to section 215(d)(5)
of the FPA, direct NERC to develop and submit modifications to the
Reliability Standards to augment the mandatory reporting of Cyber
Security Incidents, including incidents that might facilitate
subsequent efforts to harm the reliable operation of the BES. Comments
submitted by NERC and others support our determination that enhanced
reporting of Cyber Security Incidents will address an existing gap in
Cyber Security Incident reporting and will provide useful information
on existing and future cyber security risks, as well as provide
entities with better visibility into malicious activity prior to an
event occurring. As noted in NERC's comments, ``[b]roadening the
mandatory reporting of Cyber Security Incidents would help enhance
awareness of cyber security risks facing entities.'' \55\ Similarly,
BPA agrees with the directive to include attempted compromises in an
enhanced reporting regime, stating that ``information about certain
attempts to compromise will likely better assist the industry in
preventing successful cyber attacks.'' \56\ Moreover, while the record
reflects differing views on whether broadened Cyber Security Incident
reporting should be mandatory or voluntary, there is general agreement
that improved reporting is an appropriate objective.\57\
---------------------------------------------------------------------------

    \55\ NERC Comments at 4.
    \56\ BPA Comments at 3.
    \57\ See NERC Comments at 4, Trade Associations Comments at 3,
APS Comments at 1, BPA Comments at 3, EnergySec Comments at 1, Idaho
Power Comments at 2, ITC Comments at 5, IRC Comments at 1, NRG
Comments at 2-3.
---------------------------------------------------------------------------

    32. Some commenters contend that the directive to require mandatory
reporting of Cyber Security Incidents that compromise, or attempt to
compromise, a responsible entity's ESP or associated EACMS is vague and
requires clarification. Recognizing this concern, NERC states that
``[t]he challenge is to scope any additional mandatory reporting
requirements in a manner that collects meaningful data about security
risks without creating an unduly burdensome reporting requirement.''
\58\ While we address the threshold for a broadened reporting
requirement issue in the next section, as a general matter, we agree
with NERC that the scope of any new reporting requirement should be
tailored to provide better information on cyber security threats and
vulnerabilities without imposing an undue burden on responsible
entities. Indeed, the NOPR proposal was not intended to be prescriptive
or overly broad, but rather support NERC's efforts to enhance the
reporting of Cyber Security Incidents as outlined in NERC's 2017 State
of Reliability Report through the standards development process.
---------------------------------------------------------------------------

    \58\ NERC Comments at 3.
---------------------------------------------------------------------------

    33. Some commenters assert that a broadened reporting requirement
will overlap, duplicate or otherwise chill voluntary reporting
programs, potentially diverting resources away from such programs.
Other commenters, however, assert that voluntary reporting does not
adequately address the gap identified in the NOPR because voluntary
reporting and mandatory reporting under currently-effective Reliability
Standard CIP-008-5 have not resulted in adequate reporting of
cybersecurity threats to the BES.\59\ As Appelbaum notes, ``[w]ithout
mandatory reporting scheme a degraded threat image will result.'' \60\
---------------------------------------------------------------------------

    \59\ See id. at 4-5.
    \60\ Appelbaum Comments at 7.
---------------------------------------------------------------------------

    34. Based on the record, we are not persuaded that our directive to
augment current mandatory reporting requirements will adversely impact
existing voluntary information sharing efforts. Instead, we agree with
NERC's comment that the new ``baseline understanding [resulting from
broadened mandatory reporting], coupled with the additional context
from voluntary reports received by the E-ISAC, [will] allow NERC and
the E-

ISAC to share that information broadly through the electric industry to
better prepare entities to protect their critical infrastructure.''
\61\ Moreover, we do not anticipate that the incremental burden of the
directed modifications will divert significant resources from other
information sharing programs since responsible entities are already
required to monitor and log successful login attempts, detected failed
access attempts, and failed login attempts under Reliability Standard
CIP-007-6, Requirement R4.1. Nor do we anticipate that the incremental
burden of complying with the directed Reliability Standards
modifications would be significantly more than the burden of responding
to a standing data or information request under Section 1600. We also
do not believe that broadened mandatory reporting is at cross-purposes
with voluntary cybersecurity-related programs offered by DHS and other
government agencies. We believe that voluntary programs that focus on
cyber response and sharing of cyber threat information across industry
are important initiatives that should be supported. However, the
comments do not provide a compelling explanation why the broadening of
mandatory reporting will supplant or inhibit voluntary programs.
---------------------------------------------------------------------------

    \61\ NERC Comments at 4.
---------------------------------------------------------------------------

    35. While we agree with EnergySec that revisions to the current
definition of Reportable Cyber Security Incident could address some
aspects of our directive, a modified definition alone would not address
the need to specify the required information in Cyber Security Incident
reports to improve the quality of reporting and allow for ease of
comparison, or establish deadlines for submitting a report to
facilitate timely information sharing. Therefore, while we believe that
a modified definition of Reportable Cyber Security Incident could
address part of the Commission's concerns, additional modifications
would be necessary to meet the full scope of our directive.
    36. In addition, we do not agree with Resilient Societies that the
detection of malware infecting a responsible entity's ESP or associated
EACMS would fall outside the new reporting requirement. While Resilient
Societies asserts that a malware infection would not meet the threshold
of a compromise, breach, impact, or disruption, we believe that it
would fall within the parameters of an attempted compromise. As
discussed in the next section, however, we believe that it is
appropriate for NERC to address the reporting threshold through the
standards development process in order to weigh the diverse technical
opinions on how to identify the appropriate assets and the level of
attempted compromise that warrants reporting. Accordingly, we are not
persuaded to convene a technical conference. Rather, persons interested
in the development of appropriate detailed parameters of the augmented
reporting requirements should participate in the NERC standards
development process.
    37. In sum, we conclude that the record supports our determination
that directing NERC to develop and submit modifications to the
Reliability Standards to require the reporting of Cyber Security
Incidents that compromise, or attempt to compromise, a responsible
entity's ESP, as well as associated EACMS, is appropriate to carry out
FPA section 215. Therefore, pursuant to FPA section 215(d)(5), we
direct NERC to develop and submit modifications to the Reliability
Standards to include the mandatory reporting of Cyber Security
Incidents that compromise, or attempt to compromise, a responsible
entity's ESP or associated EACMS. As noted above, we direct NERC to
submit the directed modifications within six-months of the effective
date of this Final Rule.

B. Threshold for a Reportable Cyber Security Incident

1. NOPR
    38. The NOPR proposed to direct NERC to modify the Reliability
Standards to include the mandatory reporting of Cyber Security
Incidents that compromise, or attempt to compromise, a responsible
entity's ESP or associated EACMS. The NOPR explained that reporting
attempts to compromise, instead of only successful compromises, is
consistent with current monitoring requirements in Reliability Standard
CIP-007-6, Requirement R4.1, which mandates logging of detected
successful login attempts, detected failed access attempts and failed
login attempts.\62\ In addition, the NOPR identified other reporting
regimes that include attempts within the general definition of a
``cyber incident.'' Specifically, DHS defines a ``cyber incident'' as
``attempts (either failed or successful) to gain unauthorized access to
a system or its data. . . .'' \63\ The E-ISAC defines a ``cyber
incident'' as including unauthorized access through the electronic
perimeter as well as ``a detected effort . . . without obvious
success.'' \64\ And ICS-CERT defines a ``cyber incident'' as an
``occurrence that actually or potentially results in adverse
consequences. . . .'' \65\
---------------------------------------------------------------------------

    \62\ See Reliability Standard CIP-007-6 (Cyber Security--Systems
Security Management), Requirement R4.1.
    \63\ See United States Computer Emergency Readiness Team (US-
CERT) Incident Definition: https://www.us-cert.gov/government-users/compliance-and-reporting/incident-definition.
    \64\ See E-ISAC Incident Reporting Fact Sheet document: http://www.nerc.com/files/Incident-Reporting.pdf.
    \65\ See ICS-CERT Published ``Common Cyber Security Language''
document: https://ics-cert.us-cert.gov/sites/default/files/documents/Common%20Cyber%20Language_S508C.pdf.
---------------------------------------------------------------------------

    39. As noted above, an ESP is defined in the NERC Glossary as the
``logical border surrounding a network to which BES Cyber Systems are
connected using a routable protocol.'' The purpose of an ESP is to
manage electronic access to BES Cyber Systems to support the protection
of the BES Cyber Systems against compromise that could lead to
misoperation or instability in the BES. The NOPR explained that since
an ESP is intended to protect BES Cyber Systems, it is reasonable to
establish the compromise of, or attempt to compromise, an ESP as the
minimum reporting threshold.
    40. In addition, the NOPR identified an ESP's associated EACMS as
another threshold for a Reportable Cyber Security Incident. As
explained in the NOPR, EACMS are defined in the NERC Glossary as
``Cyber Assets that perform electronic access control or electronic
access monitoring of the Electronic Security Perimeter(s) or BES Cyber
Systems. This includes Intermediate Systems.'' More specifically, EACMS
include, for example, firewalls, authentication servers, security event
monitoring systems, intrusion detection systems and alerting systems.
    41. While the Commission proposed to include EACMS within the scope
of the proposed directive, the Commission also sought comment on the
possibility of excluding EACMS from the scope of the proposed
directive.
2. Comments
    42. NERC supports the NOPR proposal to limit the scope of Cyber
Security Incident reporting to incidents that compromise or attempt to
compromise a responsible entity's ESP or associated EACMS. NERC
explains that any new reporting requirements ``need to be scoped in a
manner that provides for meaningful reporting of cyber security risks
but does not unduly burden entities.'' \66\ Specifically, NERC states:
---------------------------------------------------------------------------

    \66\ NERC Comments at 6.

    Because the ESP protects some of the most important Cyber Assets
and the EACMS control or monitor access to those Cyber

Assets, NERC agrees that reporting on attempts to compromise these
security measures would provide valuable data while also imposing a
reasonable burden on entities given the limited traffic they should
experience.\67\
---------------------------------------------------------------------------

    \67\ Id. at 7.

    NERC notes that some EACMS devices ``may provide important early
indicators of future compromise'' and, therefore, NERC states that it
``supports including EACMS in the reporting threshold in addition to
the ESP and notes that logging attempts to compromise the ESP and some
EACMS devices does not impose an unreasonable burden on entities.''
\68\
---------------------------------------------------------------------------

    \68\ Id. at 8.
---------------------------------------------------------------------------

    43. While NERC supports adopting the compromise or attempt to
compromise a responsible entity's ESP or an EACMS associated with an
ESP as a threshold for Cyber Security Incident reporting, NERC explains
that ``there is still a need to refine the scope of the proposed
directive to ensure that it would provide meaningful data without
overburdening entities.'' \69\ Specifically, NERC states that there is
a need to ``outline the parameters of an `attempt to compromise' in
order to issue a precise data request.'' \70\ In particular, NERC
states that it ``would consider the common understanding of adverse
activities that are early indicators of compromise, such as campaigns
against industrial control systems, to help refine the parameters.''
\71\ In addition, NERC notes that EACMS, as defined in the NERC
Glossary, include a wide variety of devices that perform control and
monitoring functions. NERC states further that it ``needs to consider
whether to define the reporting threshold to differentiate between the
various types of EACMS for reporting purposes.'' \72\ Therefore, NERC
requests that the Commission provide flexibility in refining the
threshold for Cyber Security Incident reporting.
---------------------------------------------------------------------------

    \69\ Id. at 9.
    \70\ Id. at 9.
    \71\ Id. at 9.
    \72\ Id. at 9.
---------------------------------------------------------------------------

    44. Trade Associations, APS, BPA, EnergySec, Resilient Societies,
IRC, ITC, and NYPSC generally support the reporting threshold proposed
in the NOPR, but caution that any new or modified requirements should
be properly scoped. Trade Associations state that the NOPR proposal
``is potentially overbroad and could result in unduly burdensome
reporting requirements that reduce awareness of significant cyber
threats.'' \73\ Trade Associations also contend that a new or revised
Reliability Standard ``should not include the proposed generic
threshold of reporting any incidents that compromise or attempt to
compromise an ESP or EACMS.'' \74\ Instead, Trade Associations
recommend that the Commission ``give NERC sufficient flexibility to
define appropriate reporting thresholds for attempted compromises of an
ESP or EACMS.'' \75\
---------------------------------------------------------------------------

    \73\ APPA, et al. Comments at 5 (emphasis in original).
    \74\ Id. (emphasis in original).
    \75\ Id. at 5.
---------------------------------------------------------------------------

    45. APS asserts that, given the differences among EACMS, it does
not support the inclusion of all EACMS or the exclusion of all EACMS
from an enhanced reporting requirement. APS states that while it
``concurs that the incidents impacting the ESP should certainly be in
scope of reporting, it is concerned that the exclusion of EACMS (which
includes [Electronic Access Points (EAP)]) results in a likely
compromise scenario going unreported.'' \76\ Specifically, APS notes
that ``a user's credentials to an Intermediate System, which includes/
can be classified as an EAP(s) and/or EACMS, could be compromised.''
\77\ APS contends that such a compromise would not implicate the ESP,
but could impact or attempt to impact a BES Cyber Asset or System. APS
states, however, that ``there are numerous EACMS for which a compromise
scenario would not be critical or allow potential access to an ESP.''
\78\ Therefore, APS maintains that an evaluation of the functions of
various EACMS is needed before they can be included in any reporting
requirement.
---------------------------------------------------------------------------

    \76\ APS Comments at 9.
    \77\ Id.
    \78\ Id.
---------------------------------------------------------------------------

    46. BPA states that a broader definition of a Reportable Cyber
Security Incident is necessary since the current definition only
addresses actual compromises. BPA avers that ``information about
certain attempts to compromise will likely better assist the industry
in preventing successful cyber attacks.'' \79\ BPA states that the
current definition of a Cyber Security Incident is a good starting
point for a revision since it includes attempts to compromise or
disrupt. BPA cautions, however, that the current definition of Cyber
Security Incident ``may be too broad and result in overreporting of
information.'' \80\
---------------------------------------------------------------------------

    \79\ BPA Comments at 3.
    \80\ Id. at 3.
---------------------------------------------------------------------------

    47. EnergySec states that it ``generally agree[s] that successful
attacks against ESPs and EACMS should be within the scope of reporting;
[but] disagree[s] with the proposal to include attempted compromise in
the reporting requirements.'' \81\ In addition, EnergySec suggests that
monitoring-only systems be excluded from any reporting requirement,
stating that ``[a]lthough compromise of monitoring systems could assist
an attack, such a compromise would not directly permit access.'' \82\
Resilient Societies states that ``[e]xcluding [EACMS] from the
Commission directive could exempt reporting of attempted compromises.''
\83\ IRC states that ``adding EACMS to the requirement for mandatory
reporting would be beneficial, not only because of their role as a
boundary point, but also because EACMS perform other roles that support
the BES Cyber Systems.'' \84\ IRC cautions, however, that ``[w]ithout
providing further definitions or criteria, the NOPR's proposal to
require reporting of all `attempts to compromise' the ESP or EACMS is
unclear and potentially unachievable.'' \85\
---------------------------------------------------------------------------

    \81\ EnergySec Comments at 3-4.
    \82\ Id. at 4.
    \83\ Resilient Societies Comments at 14.
    \84\ IRC Comments at 5.
    \85\ Id. at 3-4.
---------------------------------------------------------------------------

    48. While ITC generally supports the NOPR proposal, ITC ``requests
that the Commission refrain from including unsuccessful attempts to
compromise an ESP-associated EACMS in the revised definition of a Cyber
Security Incident.'' \86\ ITC notes that responsible entity systems
with publicly-visible IP addresses ``sustain a regular stream of denial
of service attempts, phishing emails, attempted firewall breaches,
untargeted and targeted malware, and other common cybersecurity threats
for which countermeasures are well-established and which pose a
miniscule chance of success.'' \87\ ITC states that including
``attempted compromises of ESP-associated EACMS would appear to require
reporting for a sizeable number of these common events.'' \88\
Therefore, ITC states that while it ``supports expanding the definition
of Reportable Cyber Incidents to include incidents that compromise, or
attempt to compromise, a responsible entity's ESP, ITC would urge the
Commission to direct NERC to include only actual breaches of a
responsible entity's ESP-associated EACMS, and not attempted-but-
unsuccessful compromises.'' \89\ NYPSC notes that ``[f]ailed cyber
attacks occur on a continuous basis, all the time. . .'' and,
therefore, ``[a] reporting requirement of every attempted security

attack may be overly burdensome for reporting entities.'' \90\ NYPSC
``suggests FERC consider developing clear criteria of the required
reporting based on its review of the comments and recommendations from
reporting entities.'' \91\
---------------------------------------------------------------------------

    \86\ ITC Comments at 5.
    \87\ Id. at 5.
    \88\ Id. at 5.
    \89\ Id. at 5.
    \90\ NYPSC Comments at 5-6.
    \91\ Id. at 6.
---------------------------------------------------------------------------

    49. Idaho Power states that ``additional reporting requirements do
not increase cyber security.'' \92\ Idaho Power contends that
``additional administrative burdens such as reporting requirements
reduce the finite resources that entities have to monitor and defend
their critical infrastructure.'' \93\ In addition, Idaho Power states
that EACMS ``should be excluded from any additional requirements and
only BES Cyber Systems and associated devices should be included in any
further reporting requirements.'' \94\
---------------------------------------------------------------------------

    \92\ Idaho Power Comments at 2.
    \93\ Id.
    \94\ Id.
---------------------------------------------------------------------------

    50. Other commenters support expanding the enhanced reporting
requirement beyond what was proposed in the NOPR. NRG supports the NOPR
proposal to direct NERC to develop modifications to the CIP Reliability
Standards to improve the reporting of Cyber Security Incidents. NRG
also supports including EACMS as a threshold for reporting. In
addition, NRG ``recommends that the scope of the NOPR avoid limiting
the requirement to High and Medium Impact BES Cyber Systems.'' \95\
Specifically, NRG notes that the NOPR proposal ``would limit the
requirement to High and Medium Impact BES Cyber Systems as ESPs and
EACMS are not required establishments at Low Impact BES Cyber
Systems.'' \96\ Therefore, NRG states that ``any modification to the
referenced CIP Reliability Standards should be applicable to all BES
Cyber Systems with External Routable Communications.'' \97\
---------------------------------------------------------------------------

    \95\ NRG Comments at 5.
    \96\ Id. at 2.
    \97\ Id.
---------------------------------------------------------------------------

    51. Appelbaum supports the NOPR proposal to include the attempted
or actual compromise of an ESP or EACMS in the mandatory reporting
requirement. However, Appelbaum ``propose[s] the Commission consider
adding Physical Security Perimeters and Physical Access Control Systems
(PACS) as well.''\98\ Simon supports the NOPR proposal, but encourages
the Commission to broaden the directive to include low impact BES Cyber
Systems. Specifically, Simon states that ``[o]mission of mandatory
reporting for the disruption, or an attempt to disrupt, the operation
of electronic access controls for BES assets with low impact BES Cyber
Systems leaves a large blind spot in the Commission's effort to learn
of efforts to harm the reliable operation of the bulk electric
system.'' \99\ Isologic does not support limiting Cyber Security
Incident reporting to situations involving an entity's ESP or
associated EACMS. Isologic states that ``there are few CIP standards
for `secure perimeters' and for the mass of BES Low Impact Facilities,
(substations), security is at the fence line, not in ESPs.'' \100\
---------------------------------------------------------------------------

    \98\ Appelbaum Comments at 7.
    \99\ Simon Comments at 4.
    \100\ Isologic Comments at 7.
---------------------------------------------------------------------------

3. Commission Determination
    52. The record in this proceeding supports establishing the
compromise or attempted compromise of an ESP as the appropriate
threshold for a Reportable Cyber Security incident. In addition, with
exceptions, the comments support including EACMS associated with an ESP
as part of the reporting threshold. As NERC notes, an ``ESP protects
some of the most important Cyber Assets and the EACMS control or
monitor access to those Cyber Assets.'' \101\ While we believe that
ESPs and EACMS should be within the scope of a broadened reporting
requirement, the comments, correctly in our view, point to the need to
establish an appropriate scope for reporting. As NERC states, ``there
is still a need to refine the scope of the proposed directive to ensure
that it would provide meaningful data without overburdening entities.''
\102\ This concern is reflected in a number of comments, pointing to
the need to identify the appropriate assets to monitor (for example,
only EACMS associated with an ESP) and to clearly define an ``attempt
to compromise.'' \103\
---------------------------------------------------------------------------

    \101\ NERC Comments at 7.
    \102\ Id. at 9.
    \103\ See NERC Comments at 9, APPA, et al. Comments at 5, APS
Comments at 9, BPA Comments at 3, EnergySec Comments at 3, IRC
Comments at 3-4, ITC Comments at 5, NYPSC Comments at 6.
---------------------------------------------------------------------------

    53. The comments generally support the view that NERC should have
the flexibility to establish an appropriate reporting threshold. We
recognize the need for a certain level of flexibility and believe that
it is appropriate for NERC to address the specific reporting threshold
through the standards development process. However, as discussed
further below, we provide guidance on certain aspects of how NERC
should identify EACMS for reporting purposes and what types of
attempted compromise must be reported.
    54. With regard to identifying EACMS for reporting purposes, NERC's
reporting threshold should encompass the functions that various
electronic access control and monitoring technologies provide. Those
functions must include, at a minimum: (1) Authentication; (2)
monitoring and logging; (3) access control; (4) interactive remote
access; and (5) alerting.\104\ Reporting a malicious act or suspicious
event that has compromised, or attempted to compromise, a responsible
entity's EACMS that perform any of these five functions would meet the
intended scope of the directive by improving awareness of existing and
future cyber security threats and potential vulnerabilities. Since
responsible entities are already required to monitor and log system
activity under Reliability Standard CIP-007-6, the incremental burden
of reporting of the compromise or attempted compromise of an EACMS that
performs the identified functions should be limited, especially when
compared to the benefit of the enhanced situational awareness that such
reporting will provide.
---------------------------------------------------------------------------

    \104\ See NERC Glossary of Terms definition of EACMS. See also
Reliability Standard CIP-006-6, Requirement R1.5 (Physical Security
Plan) at 10 (``[i]ssue an alarm or alert in response to detected
unauthorized access'' to certain High and Medium Impact BES Cyber
Systems and associated EACMS); Reliability Standard CIP-007-6,
Requirement R4.2 (Security Event Monitoring) at 16; and Reliability
Standard CIP-007-6, Requirement R5.7 (System Access Control) at 25.
---------------------------------------------------------------------------

    55. With regard to the definition of ``attempted compromise'' for
reporting purposes, we consider attempted compromise to include an
unauthorized access attempt or other confirmed suspicious activity. ITC
raises a concern that including unsuccessful attempts to compromise an
EACMS associated with an ESP would require reporting a significant
number of events. We note, however, that limiting the reporting
threshold to only EACMS that are associated with an ESP should limit
the reporting burden since these assets should be located apart from
the responsible entity's broader business IT networks. Moreover, as
discussed in the next section, we also believe that a flexible
reporting timeline that reflects the severity of a Cyber Security
Incident could also help address the potential burden of reporting
attempted compromises.
    56. With regard to BPA's suggestion that a revised definition of
Reportable Cyber Security Incident is necessary, as discussed above,
revisions to the current definition of Reportable Cyber Security

Incident could address certain aspects of the NOPR proposal, although a
modified definition alone would not address the need to specify the
required information in cyber security incident reports to improve the
quality of reporting and allow for ease of comparison, or establish
deadlines for submitting a report to facilitate timely information
sharing. Therefore, although we believe that a modified definition of
Reportable Cyber Security Incident could address part of the
Commission's concerns, additional modifications to the Reliability
Standards would be necessary to meet the security objective of the
directives discussed herein.
    57. A number of commenters request that we expand the directive to
include a broader scope of assets, including low impact BES Cyber
Systems. However, we decline to expand the scope of Cyber Security
Incident reporting beyond the ESP and associated EACMS at this time.
The focus on ESPs and associated EACMS is intended to provide threat
information on BES Cyber Systems that have the greatest impact on BES
reliability while imposing a reasonable reporting burden on responsible
entities. Nevertheless, the Commission could revisit this issue if
there is demonstrated need for expanded Cyber Security Incident
reporting.
    58. Therefore, we adopt the NOPR proposal and conclude that the
compromise, or attempt to compromise, a responsible entity's ESP or
associated EACMS is a reasonable threshold for augmented Cyber Security
Incident reporting.

C. Appropriate Procedural Approach To Augment Cyber Security Incident
Reporting

1. NOPR
    59. The NOPR proposed to direct NERC to modify the CIP Reliability
Standards to augment the mandatory reporting of Cyber Security
Incidents, while also seeking comment on whether a request for data or
information pursuant to Section 1600 of the NERC Rules of Procedure
would effectively address the reporting gap.
2. Comments
    60. While NERC supports broadened mandatory Cyber Security Incident
reporting, NERC does not support the NOPR proposal to direct a
modification to the Reliability Standards. Instead, NERC requests
flexibility to determine the appropriate reporting procedure.
Specifically, NERC proposes to ``use the [Rules of Procedure] Section
1600 process for gathering data used for system performance.'' \105\
NERC maintains that it has ``successfully shifted to using Section 1600
for other data collection efforts, such as the collection of reports on
Protection System Misoperation.'' \106\ NERC explains further that the
Section 1600 process would be used to ``supplement the existing
voluntary reporting of cyber security threats to E-ISAC.'' \107\
---------------------------------------------------------------------------

    \105\ NERC Comments at 10.
    \106\ Id.
    \107\ Id.
---------------------------------------------------------------------------

    61. NERC states that the Section 1600 process ``provides many of
the same benefits as Reliability Standards,'' such as stakeholder and
Commission staff input.\108\ NERC also states that, similar to
Reliability Standards, compliance with Section 1600 is mandatory. NERC
explains that if a responsible entity does not respond to a Section
1600 data request, ``NERC has the authority under the [Rules of
Procedure] to take such action as NERC deems appropriate to address a
situation where a Rule of Procedure cannot practically be complied with
or has been violated.'' \109\ NERC explains that the Section 1600 data
request process provides the flexibility to revise or update the data
request, if necessary, as well as ``the flexibility to determine the
appropriate timeline for submitting the data.'' \110\ NERC states that
while it may continue to use the Reliability Standards for data
collection for evidence of compliance or to facilitate sharing of
information between entities for BES operations, it ``has found the
[Rules of Procedure] Section 1600 process to be effective for data
collection to assess system performance.'' \111\ NERC cites a standing
Section 1600 data request for entities to submit quarterly data on
Protection System Misoperations as an example.
---------------------------------------------------------------------------

    \108\ Id.
    \109\ Id. at 11.
    \110\ Id. at 12-13.
    \111\ Id. at 12.
---------------------------------------------------------------------------

    62. LPPC supports the use of the Section 1600 process to facilitate
enhanced Cyber Security Incident reporting. LPPC states that it
``supports a more flexible approach to collection of actionable
information through the data request process outlined in NERC ROP
Section 1600.'' \112\ LPPC asserts that the data request approach
offers flexibility that the standards development process does not.
Specifically, LPPC states that ``compliance with a NERC data request is
mandatory for applicable entities, while the data request procedures
specified under [Rules of Procedure] Section 1600 also provide a more
efficient process to update or revise a data request as needed to
respond to rapidly-changing security threats.'' \113\ Finally, LPPC
opines that ``it seems appropriate to remove the data collection
process from the enforcement process associated with mandatory
Reliability Standards.'' \114\
---------------------------------------------------------------------------

    \112\ LPPC Comments at 6-7.
    \113\ Id. at 7.
    \114\ Id.
---------------------------------------------------------------------------

    63. APS, BPA, Resilient Societies, IRC, and NRG oppose the use of
the Section 1600 process to facilitate enhanced Cyber Security Incident
reporting. APS asserts that a request for data pursuant to Section 1600
would not effectively address the reporting gap and current lack of
awareness of cyber-related incidents. Specifically, APS argues that a
data request would create an independent, redundant reporting
obligation to NERC or a regional entity and would subject the
provisions of reported information to the confidentiality and data
sharing processes set forth in Rules of Procedure Section 1500,
unnecessarily delaying sharing and distribution of information.\115\
APS states further that the Section 1600 process ``adds significant
additional administrative burden for all involved entities, which is
inefficient and unnecessary and presents a potential obstacle to the
very sharing and distribution that is a critical part of the
Commission's objectives set forth in the NOPR.'' \116\
---------------------------------------------------------------------------

    \115\ APS Comments at 16.
    \116\ Id. at 16-17.
---------------------------------------------------------------------------

    64. BPA comments that a data request is not an effective means of
obtaining information about cyber security incidents. BPA explains that
Section 1600 data requests ``are one time requests for existing data,
and [. . .] not the appropriate vehicle for ensuring ongoing reporting
necessary to make data about Cyber Security Incidents effective.''
\117\ Resilient Societies states that ``[e]xamination of NERC Rules of
Procedure Section 1600 shows the intent of [the] rule is to facilitate
one-time requests for data.'' \118\ Therefore, Resilient Societies
asserts that the Section 1600 reporting procedures ``would be a poor
fit for a standing order for data on cybersecurity incidents that occur
continually.'' \119\ NRG opposes the use of the Section 1600 data
request process asserting that a request for data or information would
neither address the current lack of awareness of cyber-related
incidents, nor satisfy the goals of the proposed directive.
---------------------------------------------------------------------------

    \117\ BPA Comments at 4.
    \118\ Resilient Societies Comments at 15.
    \119\ Id.
---------------------------------------------------------------------------

    65. APS, as discussed above, suggests adopting the DOE Electric
Disturbance

Events, Form OE-417 as the primary reporting tool for Cyber Security
Events. EnergySec, for its part, suggests that the Commission could
direct NERC to require entities to develop and implement an information
sharing plan.\120\ According to EnergySec, such an approach should
provide broad discretion to entities and ensure that compliance
oversight efforts cannot result in second-guessing of decisions
regarding which information to share, when, or with whom. IRC suggests,
alternatively, that the Commission allow entities to comply with the
reporting requirements by participating in the Cyber Risk Information
Sharing program. IRC explains that the program allows entities to
automatically report information to E-ISAC for analysis against
classified information. IRC states that responsible entities that
``automatically report indicators of compromise through these systems
will share information at machine speed, and this should be considered
superior to manual reporting, which requires much slower decision-
making.'' \121\
---------------------------------------------------------------------------

    \120\ EnergySec Comments at 6.
    \121\ IRC Comments at 7.
---------------------------------------------------------------------------

3. Commission Determination
    66. As discussed above, we adopt the NOPR proposal and direct NERC
to develop modifications to the NERC Reliability Standards to improve
mandatory reporting of Cyber Security Incidents, including incidents
that might facilitate subsequent efforts to harm the reliable operation
of the BES. We have considered the arguments raised in the comments for
using Reliability Standards, Section 1600 information and data
requests, and other vehicles to implement augmented Cyber Security
Incident reporting. On balance, we conclude that broadened mandatory
reporting pursuant to Reliability Standard requirements is more aligned
with the seriousness and magnitude of the current threat environment
and the more effective approach to improve awareness of existing and
future cyber security threats and potential vulnerabilities.
    67. First, the development of a Reliability Standard provides the
Commission with an opportunity to review and ultimately approve a new
or modified Reliability Standard, ensuring that the desired goals of
the directive are met. Moreover, the Reliability Standards development
process allows for the collaboration of industry experts in developing
a draft standard and also gives interested entities broader opportunity
to participate and comment on any proposal that is developed. In
contrast, NERC's process for developing a Section 1600 data request
provides for less stakeholder input and only informal review of a draft
data request by Commission staff. Thus, in this circumstance, the
standards development process is preferable for the development of
augmented cyber incident reporting requirements that satisfy the scope
of the Commission's directive.
    68. Second, the development of a Reliability Standard provides
better assurance of accurate, complete, and verifiable reporting of
cyber security incidents. The Commission has well-defined authority and
processes under section 215(e) of the FPA to audit and enforce
compliance with a Reliability Standard. While NERC notes that a
responsible entity must respond to a NERC Section 1600 data request,
NERC cannot impose sanctions on registered entities who fail to respond
to such data requests. Rather, a failure to comply would be a violation
of the Commission's regulations,\122\ requiring a referral to the
Commission for action. Such a process would be a departure from the
clearly defined processes used to enforce compliance with the
Reliability Standards. Moreover, it is unclear how NERC would even
learn of such a failure since, unlike mandatory Reliability Standards,
compliance with Section 1600 data requests are not subject to regular
audit. Accordingly, given the importance of accurate, complete, and
verifiable cyber security incident reporting, we find that the more
robust and well-established compliance and enforcement processes
associated with mandatory Reliability Standards are desirable in this
instance.
---------------------------------------------------------------------------

    \122\ 18 CFR 39.2(b) (2017) (``All entities subject to the
Commission's reliability jurisdiction . . . shall comply with
applicable Reliability Standards, the Commission's regulations, and
applicable Electric Reliability Organization and Regional Entity
Rules made effective under this part.'').
---------------------------------------------------------------------------

    69. Third, we are not persuaded by NERC's assertion that a Section
1600 data request is preferable in this instance because it allows for
flexibility and faster modification should a need arise for future
revisions to the collection of cyber incident reporting data. We do not
anticipate that there would be a need to change the parameters of the
event report, given that the anticipated reporting requirements should
not be technology-specific, but rather, broad enough to capture basic
data even as the nature of cyber security incidents evolve.
Specifically, the NOPR proposed that the minimum set of attributes to
be reported should include: (1) The functional impact, where possible
to determine, that the Cyber Security Incident achieved or attempted to
achieve; (2) the attack vector that was used to achieve or attempted to
achieve the Cyber Security Incident; and (3) the level of intrusion
that was achieved or attempted as a result of the Cyber Security
Incident. Since these attributes are general in nature and not
technology specific, they would not need to be refined as the
underlying cyber threats evolve, nor would they need to be refined
quickly.
    70. In a similar vein, the assets (i.e., EACMS) subject to the
enhanced reporting requirements should be identified based on function,
as opposed to a specific technology that could require a modification
in the reporting requirements should the underlying technology change.
As discussed above, those functions must include, at a minimum: (1)
Authentication; (2) monitoring and logging; (3) access control; (4)
interactive remote access; and (5) alerting. Finally, since the level
of attempted compromise that warrants reporting should reflect
unauthorized access attempts and other confirmed suspicious activity,
we do not anticipate that a modification would be required in the
future. Nevertheless, should the situation demand a more timely change
in data collection or should NERC desire to collect additional
information that is outside the scope of the proposed Reliability
Standard, NERC could use the Section 1600 data request process to
supplement information reported under a mandatory Reliability Standard.
    71. Finally, requiring a data collection in a Reliability Standard
is consistent with existing practices since responsible entities are
currently required to maintain the types of information that would lead
to a reportable Cyber Security Incident pursuant to Reliability
Standard CIP-007-6, Requirement R4.1.
    72. While we recognize that NERC could likely develop a Section
1600 data request more quickly than a mandatory Reliability Standard,
given the potential complexity of considering reporting requirements
for the various EACMS, we believe that the technical depth of a
standard development process is more appropriate for this case.
Although NERC states that it has successfully used ROP Section 1600 to
collect data on system performance, in this circumstance the
information being reported relates to threats and potential compromises
that may require immediate or near-term action as opposed to
retrospective reporting on Misoperations, as Section 1600 has been
used.
    73. We also do not support adopting the DOE Form OE-417 as the
primary

reporting tool for reporting Cyber Security Incidents, as suggested by
some commenters. The reporting criteria in our directive are
distinguishable and more aligned with a risk management approach than
the information requested in the DOE Form OE-417. Specifically, the DOE
Form OE-417 has twelve generic criteria for filing a report to the DOE,
of which only two reflect the criteria outlined in the NOPR proposal,
which are discussed in the following section. The DOE Form OE-417 does
not address factors such as attack vector, functional impact and level
of intrusion. In addition, the definition of a ``Cyber Event'' in the
DOE Form OE-417 filing instructions does not align with the definition
of Cyber Security Incident in the NERC Glossary of Terms, let alone a
Reportable Cyber Security Incident.\123\ Nor does the DOE Form OE-417
require reporting to E-ISAC or ICS-CERT as our directive requires.
---------------------------------------------------------------------------

    \123\ See Department of Energy Electric Emergency Incident and
Disturbance Report--Form OE 417. Form OE-417 defines a Cyber Event
as a disruption on the electrical system and/or communication
system(s) caused by unauthorized access to computer software and
communications systems or networks including hardware, software, and
data. https://www.oe.netl.doe.gov/oe417.aspx.
---------------------------------------------------------------------------

    74. In sum, we conclude that modifications to the NERC Reliability
Standards to improve mandatory reporting of Cyber Security Incidents,
including incidents that might facilitate subsequent efforts to harm
the reliable operation of the BES, is the appropriate approach to
improve Cyber Security Incident reporting.

D. Content and Timing of a Cyber Security Incident Report

1. NOPR
    75. The NOPR proposed to direct that NERC modify the CIP
Reliability Standards to specify the required content in a Cyber
Security Incident report. Specifically, the NOPR proposed that the
minimum set of attributes to be reported should include: (1) The
functional impact, where possible, that the Cyber Security Incident
achieved or attempted to achieve; (2) the attack vector that was used
to achieve or attempt to achieve the Cyber Security Incident; and (3)
the level of intrusion that was achieved or attempted as a result of
the Cyber Security Incident. The NOPR noted that the proposed
attributes are the same as attributes already used by DHS for its
multi-sector reporting and summarized by DHS in an annual report. The
NOPR stated that specifying the required content should improve the
quality of reporting by ensuring that basic information is provided;
and allowing for ease of comparison across reports by ensuring that
each report includes specified fields of information. The NOPR sought
comment on the proposed attributes and, more generally, the appropriate
content for Cyber Security Incident reporting to improve awareness of
existing and future cyber security threats and potential
vulnerabilities.
    76. In addition, the NOPR proposed to direct NERC to establish
requirements outlining deadlines for filing a report once a compromise
or disruption to reliable BES operation, or an attempted compromise or
disruption, is identified by a responsible entity. The NOPR stated that
the reporting timeline should reflect the actual or potential threat to
reliability, with more serious incidents reported in a more timely
fashion. The NOPR explained that a reporting timeline that takes into
consideration the severity of a Cyber Security Incident should minimize
potential burdens on responsible entities.
    77. The NOPR also proposed that the reports submitted under the
enhanced mandatory reporting requirements would be provided to E-ISAC,
similar to the current reporting scheme under Reliability Standard CIP-
008-5, as well as ICS-CERT or any successor organization. While the
NOPR stated that the detailed incident report would not be submitted to
the Commission, the NOPR proposed to direct NERC to file publicly an
annual report reflecting the Cyber Security Incidents reported to NERC
during the previous year. Specifically, the NOPR proposed to direct
NERC to file annually an anonymized report providing an aggregated
summary of the reported information, similar to the ICS-CERT annual
report.\124\
---------------------------------------------------------------------------

    \124\ NOPR, 161 FERC ] 61,291 at 42.
---------------------------------------------------------------------------

2. Comments
    78. NERC supports the minimum set of reporting attributes proposed
in the NOPR, stating that ``this level of detail regarding each
reported Cyber Security Incident will not only help NERC understand the
specific threat but also help NERC understand trends in threats over
time.'' \125\ NERC also does not oppose either filing an annual,
anonymized summary of the reports with the Commission, or submitting
the reports of U.S.-based entities to the ICS-CERT in addition to E-
ISAC. Finally, while NERC supports the concept of imposing a deadline
for entities to submit full reports of Cyber Security Incidents, NERC
requests flexibility to determine the appropriate timeframe.
Specifically, NERC states that it ``will determine an appropriate
deadline for reports so that NERC can use the data for awareness and
early indicators of potential compromise but also consider whether
reporting for historical analysis can provide insight to the trends and
effectiveness of industry's security controls.'' \126\
---------------------------------------------------------------------------

    \125\ NERC Comments at 14.
    \126\ Id.
---------------------------------------------------------------------------

    79. ITC, IRC, and NRG support the minimum set of reporting
attributes proposed in the NOPR. ITC states that the NOPR proposal
reflects ``a reasonable set of baseline requirements for reporting.''
\127\ While ITC raises a concern that the collective information in a
report could potentially lead to the identification of the reporting
entity, ITC states that it ``will work within the NERC stakeholder and
standards development process to ensure that the Standards submitted in
response to the Commission's final rule are structured to preserve
anonymity to the maximum extent practicable.'' \128\ IRC asserts that
``it will be beneficial for responsible entities to report indicators
of compromise that are detected in potential cyberattacks against their
systems in standard form.'' \129\ NRG recommends that mandatory
reporting include: ``content Date, Time, Duration of Incident,
Origination of the attack, threat vector, targeted system (or OS),
vulnerability exploited, [and] method used to stop/prevent the
attack.'' \130\
---------------------------------------------------------------------------

    \127\ ITC Comments at 6.
    \128\ Id.
    \129\ IRC Comments at 7.
    \130\ NRG Comments at 5.
---------------------------------------------------------------------------

    80. Appelbaum, APS, EnergySec, Resilient Societies, and Idaho Power
raise concerns with the minimum set of reporting attributes proposed in
the NOPR. According to Appelbaum, a count by category of asset, attack
vector, and impact is sufficient for the mandatory reporting. APS
contends that ``because each entity's network topology, architecture,
applications, and other characteristics are different, any requirement
to provide the functional impact and level of intrusion as part of
reporting is of very low value and should not be included as mandatory
attributes of reporting.'' \131\
---------------------------------------------------------------------------

    \131\ APS Comments at 11-12.
---------------------------------------------------------------------------

    81. APS, however, ``agrees that information regarding attack
vectors could be more relevant, actionable information to be shared.''
\132\ EnergySec expresses concern that including the proposed set of
reporting attributes as a requirement could be construed to require
significant forensic and analysis efforts. Resilient Societies suggests
that

the Commission leverage prior work done by the federal government as
opposed to establishing new report content. Specifically, Resilient
Societies suggests that the Commission adopt the US-CERT ``Federal
Incident Notification Guidelines.'' Idaho Power states that a
``description of the event and the system(s) affected along with a fact
pattern describing the situation and known information at the time the
report is submitted should be sufficient.'' \133\
---------------------------------------------------------------------------

    \132\ Id. at 12.
    \133\ Idaho Power Comments at 3.
---------------------------------------------------------------------------

    82. With regard to the timing of reports, ITC questions whether an
initial report of a Cyber Security Incident would have to be submitted
to ICS-CERT as well as E-ISAC. ITC opines that ``the existing one-hour
reporting requirement poses a significant compliance challenge, and
that requiring that the initial report also be provided to ICS-CERT
would be unworkable under that timeframe.'' \134\ IRC states that
``[t]he timeframe for completing a full report depends on the scale and
scope of the investigation [and] FERC should consider requiring that
reports be updated at a certain frequency until the full report is
complete.'' \135\ IRC recommends a 90-day update requirement until a
report is finalized. NRG recommends that Cyber Security Incident
reports should be submitted after existing industry processes have been
followed relating to Incident Reporting and Response Plans. In
addition, NRG recommends that the Commission consider directing NERC to
file a quarterly report in addition to the annual report.
---------------------------------------------------------------------------

    \134\ ITC Comments at 7.
    \135\ IRC Comments at 8.
---------------------------------------------------------------------------

    83. APS recommends aligning the timing of any mandatory reporting
obligations with the timing dictated in Form OE-417. APS contends that
reporting events that ``could, but didn't, cause harm to the BES and/or
facilitate subsequent efforts to harm . . . should be far enough
removed from the incident to not divert resources from incident
response and to ensure that enough details are known about the incident
to provide an accurate, thorough report.\136\
---------------------------------------------------------------------------

    \136\ APS Comments at 13.
---------------------------------------------------------------------------

    84. EnergySec agrees that clear timelines should be included in any
new mandatory Cyber Security Incident requirements. EnergySec further
comments that the timelines should factor in the severity of the
incident and the level of effort required to complete an investigation.
Resilient Societies offers that ``[i]n an ideal world, reporting of
cybersecurity incidents would take place at machine speed'' and
suggests that the Commission ``allow and preferably require automated
reporting, at least for an initial report.'' \137\ Idaho Power states
that, should the Commission require timelines for reporting, it should
ensure that an entity has adequate time to analyze each event before
the reporting deadline.
---------------------------------------------------------------------------

    \137\ Resilient Societies Comments at 15.
---------------------------------------------------------------------------

    85. Lasky supports entities being required to report Cyber Security
Incidents to both E-ISAC and ICS-CERT, and states that ``it would be
prudent to report all incidents to the United States Cyber Emergency
Response Team (US-CERT)'' as well.\138\
---------------------------------------------------------------------------

    \138\ Lasky Comments at 1.
---------------------------------------------------------------------------

3. Commission Determination
    86. As discussed below, we adopt the NOPR proposal on minimum
reporting attributes and timing, in response to the commenters'
concerns, but we also leave discretion to NERC to develop the reporting
timelines in the standards development process by considering several
factors so that the timelines provide for notice based upon the
severity of the event and the risk to BES reliability, with updates to
follow initial reports.
    87. The comments generally support the proposed minimum set of
reporting attributes. For example, NERC supports the proposed content
for a Cyber Security Incident report, while requesting flexibility to
determine the appropriate reporting timeframe. As noted by ITC, the
NOPR proposal reflects ``a reasonable set of baseline requirements for
reporting.'' \139\ Certain comments do raise concerns with the proposed
reporting attributes, especially in the case of attempts versus actual
compromises.
---------------------------------------------------------------------------

    \139\ ITC Comments at 6.
---------------------------------------------------------------------------

    88. In our view, a new or revised Cyber Security Incident report
should include, at a minimum, the information outlined in the NOPR
proposal, where available. Specifically, the minimum set of attributes
to be reported should include: (1) The functional impact, where
possible, that the Cyber Security Incident achieved or attempted to
achieve; (2) the attack vector that was used to achieve or attempted to
achieve the Cyber Security Incident; and (3) the level of intrusion
that was achieved or attempted or as a result of the Cyber Security
Incident. In addition, we agree that any reporting requirement should
not take away from efforts to mitigate a potential compromise.
    89. With regard to timing, we conclude that NERC should establish
reporting timelines for when the responsible entity must submit Cyber
Security Incident reports to the E-ISAC and ICS-CERT based on a risk
impact assessment and incident prioritization approach to incident
reporting.\140\ This approach would establish reporting timelines that
are commensurate with the adverse impact to the BES that loss,
compromise, or misuse of those BES Cyber Systems could have on the
reliable operation of the BES. Higher risk incidents, such as detecting
malware within the ESP and associated EACMS or an incident that
disrupted one or more reliability tasks, could trigger the report to be
submitted to the E-ISAC and ICS-CERT within a more urgent timeframe,
such as within one hour, similar to the current reporting deadline in
Reliability Standard CIP-008-5.\141\ For lower risk incidents, such as
the detection of attempts at unauthorized access to the responsible
entity's ESP or associated EACMS, an initial reporting timeframe
between eight and twenty-four hours would provide an early indication
of potential cyber attacks.\142\ For situations where a responsible
entity identifies other suspicious activity associated with an ESP or
associated EACMS, a monthly report could, as NERC states, assist in the
analysis of trends in activity over time.\143\
---------------------------------------------------------------------------

    \140\ Similar to the Cyber Incident Severity Schema in DHS's
National Cyber Incident Response Plan, Annex D (Reporting Incidents
to the Federal Government) at 41 (2016), https://www.us-cert.gov/sites/default/files/ncirp/National_Cyber_Incident_Response_Plan.pdf.
    \141\ An example of incident categories is the Chairman of the
Joint Chiefs of Staff Manual, Cyber Incident Handling Program,
Enclosure B, Appendix A to Enclosure B (Cyber Incident and
Reportable Cyber Event Categorization) (2012), http://www.jcs.mil/Portals/36/Documents/Library/Manuals/m651001.pdf?ver=2016-02-05-175710-897.
    \142\ See Department of Energy Electric Emergency Incident and
Disturbance Report, Form OE-417 (six-hour reporting deadline for
cyber events that could potentially impact electric power system
reliability) found at: https://www.oe.netl.doe.gov/docs/OE417_Form_05312021.pdf; Nuclear Regulatory Commission Regulatory
Guide 5.71 (four-hour reporting deadline for cyber events that could
have caused an adverse impact) found at: https://www.nrc.gov/docs/ML0903/ML090340159.pdf; see also Reliability Standard EOP-004-3
(Event Reporting), Requirement R2 (requiring a report within twenty-
four hours for an events that impact or may impact BES reliability).
    \143\ See NERC Comments at 14.
---------------------------------------------------------------------------

    90. With regard to the appropriate recipients for Cyber Security
Incident reports, we determine that the reports should be provided to
E-ISAC, similar to the current reporting scheme under Reliability
Standard CIP-008-5, as well as ICS-CERT or its successor.\144\

Reporting directly to E-ISAC and ICS-CERT will result in cyber threat
information being provided to the organizations best suited to analyze
and, to the extent necessary, timely inform responsible entities of
cyber threats. In addition, reporting directly to E-ISAC and ICS-CERT
addresses the concerns discussed above regarding the confidentiality of
reported Cyber Security Incident information. We also find that it is
reasonable for NERC to file annually an anonymized report providing an
aggregated summary of the reported information, similar to the ICS-CERT
annual report. The annual report will provide the Commission, NERC, and
the public a better understanding of any Cyber Security Incidents that
occurred during the prior year without releasing information on
specific responsible entities or Cyber Security Events.
---------------------------------------------------------------------------

    \144\ The DHS ICS-CERT is undergoing a reorganization and
rebranding effort. In the event that ICS-CERT no longer exists, its
successor will assume the role as incident report recipient.
---------------------------------------------------------------------------

    91. Therefore, we conclude that the minimum set of attributes to be
reported should include: (1) The functional impact, where possible,
that the Cyber Security Incident achieved or attempted to achieve; (2)
the attack vector that was used to achieve or attempted to achieve the
Cyber Security Incident; and (3) the level of intrusion that was
achieved or attempted or as a result of the Cyber Security Incident.
NERC may augment the list should it determine that additional
information would benefit situational awareness of cyber threats. As
discussed above, we also conclude that NERC should establish a
reporting timeline that provides for notice based upon the severity of
the event and the risk to BES reliability, with updates to follow
initial reports. We also support the adoption of an online reporting
tool to streamline reporting and reduce burdens on responsible entities
to the extent the option is available.\145\
---------------------------------------------------------------------------

    \145\ An online reporting tool will streamline the effort and
allow for direct input into a database for a faster turnaround to
those that may need to know about the information. For example, see
https://www.us-cert.gov/forms/report.
---------------------------------------------------------------------------

E. Other Issues

1. Comments
    92. NYPSC supports the NOPR proposal, but notes that if the
Commission adopts the NOPR proposal, ``the only additional information
that state entities would gain is an annual compilation of incidents
reported to federal entities.'' \146\ NYPSC claims that an annual
report would not provide states with sufficient information on a timely
basis so that they can ensure that corrective actions can be taken.
Therefore, NYPSC argues that appropriate state entities should also be
provided with the cyber reporting information when it is filed with the
``federal authorities.''
---------------------------------------------------------------------------

    \146\ NYPSC Comments at 4-5.
---------------------------------------------------------------------------

    93. Microsoft raises a concern that the NOPR proposal is not clear
as to whether the modified CIP Reliability Standards would apply to
responsible entities that use a commercial cloud service to operate
cloud-based BES Cyber Systems. Specifically, Microsoft requests that
the Commission ``confirm that cloud service providers that provide
services to Registered Entities are not required to register with NERC
based on their provision of [cloud-based] services, and . . . are not
responsible for compliance with the CIP Reliability Standards.'' \147\
Microsoft asserts that clarifying the status of cloud service providers
is important to foster technical innovation.
---------------------------------------------------------------------------

    \147\ Microsoft Comments at 1.
---------------------------------------------------------------------------

2. Commission Determination
    94. While we appreciate NYPSC's interest in receiving Cyber
Security Incident reports when reported to E-ISAC and ICS-CERT, state
entities will have access to the same information that is reported to
the Commission (i.e., the annual, anonymized summary). Should a state
entity determine that it requires additional information from a
responsible entity under its jurisdiction, the state entity can work
within its own jurisdiction to procure additional information. Our
directive is intended to enhance the quality of information received by
E-ISAC and ICS-CERT, and directing additional sharing with state
entities is outside the scope of this proceeding.
    95. We decline to grant Microsoft's requested clarification
regarding the potential registration status of cloud service providers
because it is outside the scope of this proceeding. Specifically,
Microsoft's requested clarification addresses a question regarding
registration of cloud service providers under the NERC functional
model, as opposed to the specifics of enhanced Cyber Security Incident
reporting. The purpose of this proceeding is not to make a
determination regarding the registration status of cloud service
providers and we have not received input from other interested
entities.

III. Information Collection Statement

    96. The FERC-725 information collection requirements contained in
this Final Rule are subject to review by the Office of Management and
Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of
1995.\148\ OMB's regulations require approval of certain information
collection requirements imposed by agency rules.\149\ Upon approval of
a collection of information, OMB will assign an OMB control number and
expiration date. Respondents subject to the filing requirements of this
rule will not be penalized for failing to respond to these collections
of information unless the collections of information display a valid
OMB control number. 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.
---------------------------------------------------------------------------

    \148\ 44 U.S.C. 3507(d) (2012).
    \149\ 5 CFR 1320.11 (2017).
---------------------------------------------------------------------------

    97. The Commission will submit these proposed reporting
requirements to OMB for its review and approval under section 3507(d)
of the PRA because the Final Rule results in nonsubstantive/non-
material changes in paperwork burden. The Final Rule directs NERC to
make Cyber Security reporting changes across all applicable Reliability
Standards. These proposed changes will be covered by the FERC-725
information collection (Certification of Electric Reliability
Organization; Procedures for Electric Reliability Standards) [OMB
Control No. 1902-0225]). FERC-725 includes the ERO's overall
responsibility for developing Reliability Standards to include any
Reliability Standards that relate to Cyber Security Incident reporting.
There will be no change to the Public Reporting Burden as it affects
the FERC-725 information collection.
    98. Comments are solicited on the Commission's need for the
information proposed to be reported, whether the information will have
practical utility, ways to enhance the quality, utility, and clarity of
the information to be collected, and any suggested methods for
minimizing the respondent's burden, including the use of automated
information techniques.
    99. Internal review: The Commission has reviewed the approved
changes and has determined that the changes are necessary to ensure the
reliability and integrity of the Nation's Bulk-Power System.
    100. Interested persons may obtain information on the reporting
requirements by contacting the

following: Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive
Director, email: [email protected], phone:<PHONE_NUMBER>, fax:
(202) 273-0873].
    101. For submitting comments concerning the collection(s) of
information and the associated burden estimate(s), please send your
comments to the Commission, and to the Office of Management and Budget,
Office of Information and Regulatory Affairs, 725 17th Street NW,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission, phone:<PHONE_NUMBER>, fax:<PHONE_NUMBER>]. For
security reasons, comments to OMB should be submitted by email to:
[email protected]. Comments submitted to OMB should include
Docket Number RM18-2-000 and OMB Control Number 1902-0225.

IV. Regulatory Flexibility Act Analysis

    102. The Regulatory Flexibility Act of 1980 (RFA) \150\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
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    \150\ 5 U.S.C. 601-612.
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    103. By only proposing to direct NERC, the Commission-certified
ERO, to develop modified Reliability Standards for Cyber Security
Incident reporting, this Final Rule will not have a significant or
substantial impact on entities other than NERC. Therefore, the
Commission certifies that this Final Rule will not have a significant
economic impact on a substantial number of small entities.
    104. Any Reliability Standards proposed by NERC in compliance with
this rulemaking will be considered by the Commission in future
proceedings. As part of any future proceedings, the Commission will
make determinations pertaining to the Regulatory Flexibility Act based
on the content of the Reliability Standards proposed by NERC.

V. Environmental Analysis

    105. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\151\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. Included in the exclusion are rules that are clarifying,
corrective, or procedural or that do not substantially change the
effect of the regulations being amended.\152\ The actions proposed
herein to augment current reporting requirements fall within this
categorical exclusion in the Commission's regulations.
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    \151\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \152\ 18 CFR 380.4(a)(2)(ii) (2017).
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VI. Document Availability

    106. 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.
    107. 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 of this document, excluding the last three digits, in
the docket number field. User assistance is available for eLibrary and
the Commission's website during normal business hours from the
Commission's Online Support at<PHONE_NUMBER> (toll free at 1-866-208-
3676) or email at [email protected], or the Public Reference
Room at<PHONE_NUMBER>, TTY<PHONE_NUMBER>. Email the Public Reference
Room at [email protected].

VII. Effective Date and Congressional Notification

    108. The Final Rule is effective October 1, 2018. The Commission
has determined that this Final Rule imposes no substantial effect upon
either NERC or NERC registered entities \153\ and, with the concurrence
of the Administrator of the Office of Information and Regulatory
Affairs of OMB, that this rule is not a ``major rule'' as defined in
section 351 of the Small Business Regulatory Enforcement Fairness Act
of 1996. This Final Rule is being submitted to the Senate, House, and
Government Accountability Office.
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    \153\ 5 U.S.C 804(3)c.

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    By the Commission.

    Issued: July 19, 2018.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    Note: The following appendix will not appear in the Code of
Federal Regulations.

Appendix Commenters

Jonathan Appelbaum (Appelbaum)
American Public Power Association, Electricity Consumers Resource
Council, and Transmission Access Policy Study Group (Trade
Associations)
Applied Control Solutions (ACS)
Arizona Public Service Company (APS)
Bonneville Power Administration (BPA)
Edison Electric Institute and National Rural Electric Cooperative
Association (EEI/NRECA)
Douglas E. Ellsworth (Ellsworth)
Energy Sector Security Consortium (EnergySec)
Eversource Energy Service Company (Eversource)
Foundation for Resilient Societies (Resilient Societies)
Frank Gaffney (Gaffney)
Idaho Power Company (Idaho Power)
International Transmission Company (ITC)
ISO/RTO Council (IRC)
Isologic LLC (Isologic)
Jerry Ladd (Ladd)
Large Public Power Council (LPPC)
Mary D. Lasky (Lasky)
Michael Mabee (Mabee)
Garland T. McCoy (McCoy)
Microsoft Corporation (Microsoft)
New York Public Service Commission (NYPSC)
North American Electric Reliability Corporation (NERC)
NRG Energy (NRG)
Fred Reitman (Reitman)
Preston L. Schleinkofer (Schleinkofer)
Mark S. Simon (Simon)
Karen Testerman (Testerman)
U.S. Chamber of Commerce (Chamber)

[FR Doc. 2018-16242 Filed 7-30-18; 8:45 am]
 BILLING CODE 6717-01-P