FERC, CFTC, and State Energy Law Developments

American national security officials believe that spies working on behalf of an adversarial nation-state successfully carried out an attack against US companies by compromising a key hardware supply chain, according to a report issued October 4 by Bloomberg Businessweek. The report details how the attackers implemented a “seeding” attack by installing tiny, malicious microchips on motherboards—a type of computer circuit board that houses processing and other essential components—that were assembled in Chinese factories. The exploit apparently had a ripple effect, as the compromised motherboards were ultimately installed in commercial servers that are widely distributed in the United States. One official estimates that the attack affected almost 30 companies, including a major bank and government contractors, and may have enabled the attackers to communicate with or infiltrate the sabotaged servers.

The Nuclear Regulatory Commission (NRC) and the Federal Energy Regulatory Commission (FERC) entered into a Memorandum of Understanding (MOU) on June 6 regarding the care and protection of critical energy/electric infrastructure information (CEII). The MOU delineates how the two agencies will cooperate to identify, process, and protect CEII that the NRC holds, explaining that the two independent agencies “mutually agree that it is important to protect CEII to ensure the safety and security of the electric grid.” Under the MOU, the NRC will be able to consult with FERC to designate certain NRC-held information as CEII—and therefore FOIA-exempt—if requested by a third-party under that open records law.

The MOU is another step in the US government’s attempt to address growing concerns about physical and cybersecurity threats to the electricity grid. Congress, recognizing these threats, directed the US Department of Energy and FERC to identify and protect CEII when it passed the “Fixing America’s Surface Transportation Act” (FAST Act) in 2015. FERC issued its CEII regulations in late 2016.