On June 20, 2019, the Federal Energy Regulatory Commission (“FERC”) approved a North American Electric Reliability Corp. (“NERC”) petition to adopt Reliability Standard CIP-008-6 to strengthen the reporting requirements for attempts to compromise the operation of the United States’ bulk electric system. The prior Critical Infrastructure Protection (“CIP”) Reliability Standards only required reporting where an incident compromised or disrupted one or more reliability tasks. The new standard applies to all registered entities subject to the CIP Reliability Standards.
On May 15, 2019, President Donald Trump signed an executive order (EO) declaring a “national emergency” related to certain threats against information and communications technology and services (ICTS) in the United States and authorizing the Department of Commerce to block transactions that involve ICTS with a “foreign adversary.” The EO provides for the possibility of a licensing regime that could allow transactions that would otherwise be blocked. The EO is available here.
The EO itself does not mention any particular countries or companies that would be subject to its prohibitions. However, the EO is widely reported to be aimed at China. Indeed, tensions between the United States and China have intensified over the past week, after negotiations between the two governments to resolve their trade dispute stalled.
On January 25, 2019, the North American Electric Reliability Corporation (“NERC”) asked the Federal Energy Regulatory Commission (“FERC”) to approve a settlement issuing a record $10 million fine against an unidentified utility resulting from violations of critical infrastructure protection standards (“CIP”) occurring mostly between 2015 and 2018 (referred to hereafter as the “Settlement Agreement”). Although none of the violations resulted in any reported outages, NERC concluded that the cumulative effect of the violations posed a serious risk to the reliability of the bulk U.S. power grid because “many of the violations involved long durations, multiple instances of noncompliance, and repeated failures to implement physical and cyber security protections.” Settlement Agreement at 12.
The U.S. Department of Commerce, Bureau of Industry and Security (BIS) has published an advance notice of proposed rulemaking (ANPRM) initiating a 30-day public comment process regarding export controls for certain emerging technologies. The notice launches the implementation of a key provision of the Export Control Reform Act of 2018 (ECRA), part of the National Defense Authorization Act for fiscal year 2019 (NDAA). In the ECRA, Congress authorized BIS to establish controls on the export, reexport and transfer (in country) of “emerging and foundational technologies.” The ANPRM, including a list of the 14 proposed representative technology categories and subcategories subject to review, can be found here. Our prior updates on the NDAA and ECRA can be found here.
A string of Governmental announcements have increasingly sounded the alarm about the growing cybersecurity threat facing the energy sector. Among other things, these reports have announced that state-sponsored cyber actors have successfully gained access to the control rooms of utilities. The hackers, one of the reports notes, could have used such access to cause blackouts.
Former Department of Homeland Security Chief Privacy Officer Hugo Teufel III and Sidley’s Edward McNicholas addressed a packed room on Chinese Cybersecurity Law at the 2018 Privacy + Security Forum hosted at George Washington University. The timely presentation highlighted how, with significant attention in the past few years focused on the GDPR, many have not fully appreciated the significant policy and legal developments coming out of Beijing. In particular, China has been creating a materially different approach to cybersecurity which serves the central purpose of defending the Chinese notion of cyber sovereignty. Much uncertainty remains about the newly-effective laws and regulations, but it is clear that foreign technology and other companies operating in China should rapidly focus on its significant restrictions on outbound data transfer, the expansive definitions of “important data”, as well as reviews of network equipment security. Their presentation is available here.
The Trump Administration continued to put its stamp on federal cybersecurity policy last week, as the White House issued its National Cyber Strategy while the Pentagon announced the Department of Defense Cyber Strategy. The former document is a helpful step forward that continues and advances the cyber policies the Trump Administration inherited from the Obama and Bush Administrations, while the Pentagon’s release primarily focused on the Strategy’s endorsement of “Defense Forward,” which was taken as a signal the United States would be adopting a more aggressive operational posture in the future. Data Matters readers will want to study both strategies, as each contains interesting insights into how the Trump Administration envisions the development of the cybersecurity ecosystem and see the public and private sectors working together to mitigate cyber risks. (more…)
Soon after he took office, President Trump issued Executive Order (EO) 13800, Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure. Given that the President spent much of his campaign and early Presidency trying to distance his Administration from that of his predecessor, commentators noted a surprising amount of continuity between Trump’s cybersecurity EO and the Obama Administration’s approach to cybersecurity. A focus on critical infrastructure and transparency from publicly traded companies that control it; an emphasis on the public and private sectors working together; reliance on standards promulgated by the National Institute of Standards and Technology; a focus on protecting the Federal Government’s networks, including by taking steps toward using shared infrastructure such as the cloud – EO 13800 builds on existing policies and initiatives in each of these areas and others. (more…)
On May 15, 2018, various media outlets reported that the Trump administration decided to eliminate the position of White House Cybersecurity Coordinator. According to reports, John Bolton, appointed as National Security Adviser effective April 2018, had been instrumental in the decision that the position was no longer necessary based on the reasoning that the role was already addressed by other members of President Trump’s national security staff. The administration’s decision was met with sharp criticism, including from Democrats in Congress such as U.S. Senator Mark R. Warner (D-VA) who called the move “mindboggling” and cybersecurity expert Bruce Schneier, who called it “a spectacularly bad idea.”
For defense contractors, January 1, 2018 brought with it not only a new year, but also a new era – an era in which contractors must comply with the entire set of more detailed cybersecurity requirements under Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012. As we have flagged before on Data Matters, this DFRAS provision applies to all Department of Defense (DOD) contracts (except for those involving commercial, off-the-shelf items) and places a number of substantial obligations on contractors, including that they comply with the security requirements in National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations,” and report certain cyber incidents to DOD. (more…)