Today, FERC
approved moving the compliance date for NERC CIP version 5 back by three
months, from April 1 to July 1. This allows both v5 and v6 (aka “CIP v5
Revisions”) to take effect on the same day.
For those of
you who haven’t been keeping score at home:
- On Feb. 4, I reported that NERC was being lobbied by the trade associations to move the CIP v5 compliance date back. I assumed NERC would want to see this happen, and suggested they could make this happen either by going the “full Monty” route of petitioning FERC, or by the more subtle (but perhaps less effective) route of issuing auditing guidance that would effectively move the date back. I assumed the only question was which route NERC would choose. I also pointed out, as I have before, that I didn’t think CIP v5 would effectively be enforceable until 6-12 months after April 1 (and more likely 12 months).
- The next day, I reported
that the Trades had gone ahead and petitioned FERC on their own. I must
have written that post very quickly, since I didn’t really consider the
implications of this action (i.e. going ahead without NERC), and I didn’t
question the reasoning that was provided to FERC. I did bet that FERC
would approve the petition (although I didn’t put any money on it! I’ve
looked all over the Internet for a FERC betting site, but I have yet to
find one. My guess is this is because betting on what FERC will do is no
better than betting on the next random number to come up).
- On Feb. 6, I actually thought
about what the Trades’ petition meant. First, I was surprised that
they had petitioned FERC without NERC being on their side; I speculated
this was because NERC wasn’t in agreement with them. Then I went on to
look more closely at the Trades’ stated reason for petitioning FERC: that NERC
entities would have to spend a lot of money and time putting in place a v5
compliance program, only to have to do the same thing for v6 three months
later. I pointed out why this argument didn’t have much merit. I then
stated the main reason why I thought the date should be pushed back (and
why I’ve been saying that for more than a year, although I’ve been
advocating the date be pushed back at least a year, not just three
months): there has been so much confusion over the meaning of the v5
requirements, and NERC has pursued so many different aborted strategies to
fix that confusion, that many entities never felt comfortable starting
their v5 compliance programs until last year.
- My most recent post on this topic was on Monday, Feb. 8,
when I pointed
out that NERC had – seemingly inexplicably – filed comments disputing
what the Trades had asserted. I wasn’t surprised to see NERC had fairly
easily refuted the trades’ argument.[i]
But I reiterated that I thought the date should be moved back, and I added
two new arguments: 1) the rush to comply on 4/1 was taking a huge toll on
some organizations, for no particularly good reason (since CIP v5 won’t be
effectively enforceable for 6-12 months from 4/1, regardless of whether
the date is moved or not); and 2) if the v4 date stands, many entities
would have to devote a huge amount of time to self-reporting
non-compliance for the next three months, and not as much to actually
becoming compliant.
So what happens next? Will entities use the
extra three months wisely and become compliant on July 1? I think they will use
the time wisely, but I’m fairly sure the majority of entities will still be a
good way from fully compliant on July 1. They just won’t be as non-compliant as
they would have been on April 1. But I’m not going to make the argument now that
FERC should push the date back another six months, even though I believe that’s
what they should do. Ya gotta know when to fold ‘em.
There’s one more issue: I know some of the
NERC regions were also against moving the compliance date back, because it
plays havoc with their audit schedules. They really can’t do CIP audits from
April through June of this year, so what becomes of those audits? Audits are
scheduled at least a couple years out, meaning it will be very hard to squeeze
these back into the schedule before say 2018 or 2019.
While I have sympathy for the auditors, I do
feel their inconvenience doesn’t outweigh the greater “inconvenience” the
entities would feel if the date weren’t moved back.
The views and opinions expressed here are my own and don’t
necessarily represent the views or opinions of Deloitte Advisory.
[i]
The Trades did file counter-arguments to NERC’s, but they weren’t terribly more
impressive than the arguments from their first filing, which NERC refuted.
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