What happens if you take NERC to court?

Note from Tom: If you’re only looking for today’s pandemic post, please go to my new blog. If you’re looking for my cyber/NERC CIP post, you’ve come to the right place.

In my post last Thursday, I concluded with this paragraph: “But that’s not the end of this story. This just demonstrates that a good part (or even all) of the NERC CIP regulatory program hangs on very tenuous legal grounds. If one or two entities want to seriously challenge NERC on these grounds, the whole NERC CIP program might be brought crashing down. This means that sooner or later, the NERC community is going to realize that the standards need to be rewritten from the bottom up, as I discussed in this webinar last year.”

Earlier in that post, I’d pointed out that a NERC entity who gets a violation and has made no headway getting NERC’s Enforcement group to change their mind on it, can always file a suit in the administrative court system (since NERC standards are regulatory law). I opined that, in a question like the status of “mitigation” in CIP-013 – where the standard clearly assumes the NERC entity will mitigate risks that are identified, but where the word “mitigate” was actually left out of the requirements – an administrative law judge (ALJ) would probably rule in the entity’s favor, without having to think too hard about it.

However, Kevin Perry, former Chief CIP Auditor of SPP Regional Entity, emailed me over the weekend that he very much disagrees with that position. He said:

In your scenario, you suggest that the entity will prevail before the ALJ and their violation (and fine) will be thrown out.  To that point, I very much disagree.  I am very confident that no ALJ would overturn this violation unless the Region totally bolloxed up their case in front of the judge.

My point is the Region Enforcement staff are not likely to allow a contested violation to get that far, if there is any chance the entity will prevail.  In my experience, Enforcement has overturned violations found at audit -some Regions more than others.  It is all part of the checks and balances built into the CMEP process.  It is very unlikely a violation will ever get to a hearing (before an ALJ) unless the Region is confident that its view of the compliance issue is correct and can be persuasively argued in court.  The Regions will often give the benefit of the doubt to the entity if there is any chance that the entity reasonably interpreted the expectations of a vaguely or incompletely worded Requirement. 

So Kevin’s point is that neither the Region nor NERC wants to have to defend a less-than-solid case in front of an ALJ, mainly because of the huge cost in time and money of doing so. This means that, if there’s any question about whether they’ll win or not, they’re likely to drop the violation before it even gets that far. But in a case where they’re quite sure their position is correct, they’re not likely to lose in court – unless they totally botch their case.

I agree that Kevin’s right. However, I’m not backing away from the last sentence of the post: “This means that sooner or later, the NERC community is going to realize that the standards need to be rewritten from the bottom up, as I discussed in this webinar last year.” My case for saying the CIP standards need to be rewritten doesn’t rest at all on legal grounds, and I shouldn’t have implied that it does.

Any opinions expressed in this blog post are strictly mine and are not necessarily shared by any of the clients of Tom Alrich LLC. If you would like to comment on what you have read here, I would love to hear from you. Please email me at tom@tomalrich.com. Are you working on your CIP-013 plan and you would like some help on it? Or would you like me to review what you’ve written so far and let you know what could be improved? Just drop me an email!