FERC Approved NERC’s Technical Feasibility Exception Procedures Subject to a Compliance Filing

North American Electric Reliability Corporation, 130 FERC ¶ 61,050 (2010)

On January 21, 2010, FERC issued an order approving two amendments to the NERC Rules of Procedure that establish the procedures a Responsible Entity must follow to obtain a Technical Feasibility Exception (TFE) for certain requirements in the Critical Infrastructure Protection (CIP) Reliability Standards. FERC also required that NERC make a compliance filing within 90 days of the date of the order to address several issues.

NERC revised the Rules of Procedure in response to FERC’s Order No. 706 directive that it permit Responsible Entities to obtain TFEs for legacy equipment on the Bulk Electric System that may not meet the CIP requirements on the effective date of the CIP Reliability Standards and that is not worthwhile to replace before the end of its useful life. The revised Rules of Procedure include a new section 412, “Requests for Technical Feasibility Exceptions to NERC Critical Infrastructure Protection Reliability Standards,” which identifies and incorporates the TFE procedure as set forth in Appendix 4D, and a new Appendix 4D, “Procedure for Requesting and Receiving Technical Feasibility Exceptions to NERC Critical Infrastructure Protection Standards,” which sets forth the procedure by which a Responsible Entity may obtain an exception from Strict Compliance with a requirement in certain CIP Reliability Standards. Under the new TFE procedure, TFEs are available for CIP-005-1: R2.4, R2.6, R3.1, and R3.2, and CIP 007-1: R2.3, R4, R5.3, R5.3.1, R5.3.2, R5.3.3, R6, and R6.3.

Under the TFE procedure, the Responsible Entity must demonstrate that, evaluated in the context of its covered assets, Strict Compliance with an applicable requirement:

(i) Is not technically possible or is precluded by technical limitations;

(ii) Is operationally infeasible or could adversely affect reliability of the Bulk Electric System to an extent that outweighs the reliability benefits of Strict Compliance with the applicable requirements;

(iii) While technically possible and operationally feasible, cannot be achieved by the Responsible Entity’s compliance date for the applicable requirement due to factors such as scarce technical resources, limitations on the availability of required equipment or components, or the need to construct, install or modify equipment during planned outages;

(iv) Would pose safety risks or issues that outweigh the reliability benefits of Strict Compliance with the applicable requirement;

(v) Would conflict with, or cause the Responsible Entity to be non-compliant with, a separate statutory or regulatory requirement applicable to the Responsible Entity, the covered asset or the related facility that must be complied with and cannot be waived;

(vi) Would require the incurrence of costs that far exceed the benefits to the reliability of the Bulk Electric System of Strict Compliance; or,

(vii) Is a Class-Type TFE as posted by NERC.

FERC has noted a number of concerns with the proposed TFE procedures and has requested that NERC make a compliance filing within 90 days of the date of the order. At FERC’s direction, NERC must revise its TFE process to extend to CIP-006-1 R1.1 and CIP-007-1 R3. NERC must also provide more detailed descriptions of the TFE approval process, ensure that it is consistent across all regions, and place the burden of meeting the requirements for TFE approval on the Responsible Entity rather than the Regional Entity.

The TFE procedures have the ability to reduce Responsible Entities’ CIP compliance responsibilities and risks, especially with respect to legacy computer systems that involve interactive Electronic Security Perimeter access. Since the version 2 CIP Reliability Standards go into effect in April, it is important that Responsible Entities ensure that they meet the requirements before NERC commences an audit or conducts a spot check. BGM is available to discuss the implications and potential advantages of applying for a TFE. We are also available to guide clients through the TFE application and approval process.

To view the FERC order, please click here.