On December 7, 2016, the Department of Energy (DOE) issued proposed procedures that would govern emergency orders issued by the Secretary of DOE, following the president’s declaration of a Grid Security Emergency. These procedures are required by an amendment to the Federal Power Act (FPA) included in the Fixing America's Surface Transportation (FAST) Act at the end of 2015. The FAST Act created new FPA section 215A, giving DOE authority, upon declaration of a Grid Security Emergency by the president, to issue emergency orders to protect the grid or to restore reliability. Grid Security Emergencies may include a physical/cyberattack, geomagnetic disturbance, electromagnetic pulse or natural disaster, and DOE's emergency orders in such circumstances may apply to all users, owners and operators of critical infrastructure in the U.S., as well as to the North American Electric Reliability Corp. (NERC) and the regional reliability entities. Compliance with DOE's emergency orders would exempt those entities from any otherwise-applicable violations of mandatory electric reliability standards.
The FAST Act left to DOE's discretion much of the detail regarding these emergency orders, including the types of security measures that DOE can direct, but it required DOE to develop procedures through a public process to implement its new authority within 180 days, or by early June 2016. Now, six months later, DOE has for the first time made public a set of draft procedures to carry out its FAST Act obligations. DOE seeks comments by February 6, 2017.
Key features of DOE's proposed procedures for issuing emergency orders following the president’s declaration of a Grid Security Emergency are these:
- Application of emergency order: An order for emergency measures under FPA section 215A(b) may apply to the Electric Reliability Organization (i.e., NERC), a regional entity, or any owner, user, or operator of critical electric infrastructure or of defense-critical electric infrastructure within the US.
- Procedures for issuing an emergency order: When DOE is notified that the president has declared a Grid Security Emergency, DOE will immediately activate its unified command structure and coordinate outreach efforts. DOE's Emergency & Incident Management Council (EIMC) will convene at least one emergency meeting, and will create task groups and provide recommendations to the Secretary of DOE regarding what actions to take, as well as coordinate other consultation efforts for DOE. After EIMC makes its recommendations, the Secretary of DOE will issue the emergency order. Based on the nature and timing of the emergency, however, the Secretary of DOE maintains discretion to issue an emergency order without EIMC input.
- Outreach and consultation: DOE's Office of Electric Delivery and Energy Reliability (OE) will consult, to the extent practicable prior to issuance of an emergency order, with the following entities:
- Appropriate federal agencies, including the Federal Energy Regulatory Commission (FERC)
- The Electricity Subsector Coordinating Council (ESCC), NERC and its regional entities
- Owners, users, or operators of critical electric infrastructure and defense critical electric infrastructure
- Canadian and Mexican governmental authorities
DOE further states that it will work with other federal agencies to obtain waivers or special permits necessary to comply with an emergency order from the Secretary of DOE.
- Communication of DOE orders: DOE will communicate the content of its emergency order to all parties subject to the order. DOE also will enlist the ESCC and the Electricity Information Sharing and Analysis Center (ES-ISAC) to communicate with affected entities.
- Clarification or reconsideration of a DOE emergency order: DOE outlines general requirements for an affected entity to seek clarification or reconsideration of an emergency order. Under the proposal, anyone subject to an order may seek clarification or reconsideration in writing to DOE, which would be posted on the DOE website. DOE may grant or deny the request, or may abrogate or modify the final emergency order with or without further proceedings. A request for clarification or reconsideration would not stay an emergency order unless the Secretary of DOE so determines.
- Temporary access to classified information: To ensure optimal sharing of information, DOE may allow key personnel of ordered entities temporary access to classified information, where warranted and to the extent practicable. The Secretary of DOE may also declassify information to ensure maximum distribution of information critical to the emergency response.
- Termination of an emergency order: An emergency order remains effective for up to15 days and may be extended for subsequent periods of up to 15 days if the president issues another directive to the Secretary of DOE that the original emergency has not ended or that the emergency measures already ordered are still required. The Secretary of DOE also may rescind or terminate an order before the 15-day period ends. Entities subject to the emergency order may also request that the Secretary of DOE terminate an order if the entity/entities believes that the Grid Security Emergency ceases to exist and that protection or restoration of the grid has been achieved.
- Compliance and enforcement: DOE may assess compliance with its orders, and DOE may require parties to provide detailed accounts of their compliance. DOE may take or seek enforcement action against parties who fail to comply with the terms of an emergency order, per the enforcement provisions in FPA Part III.
- Cost recovery: DOE will not adjudicate cost recovery for actions taken under an emergency order, as that determination is reserved for FERC, state regulators, or the United States Court of Federal Claims. DOE notes that under the FAST Act, FERC may "establish a mechanism" allowing an aggrieved party to recover costs, but only if it determines that such a party has "incurred substantial costs to comply with an order for emergency measures issued under [section 215A] and that such costs were prudently incurred and cannot reasonably be recovered through regulated rates or market prices for the electric energy or services sold by" the aggrieved party.
- Liability exemptions: DOE's proposed procedures describe the protections outlined in new FPA section 215A(f), which shield parties affected by emergency orders from liability for what would otherwise be violations of the FPA or of specific reliability standards, except in cases of gross negligence.
DOE's draft procedures closely track the FAST Act's broad requirements for emergency DOE orders, but are otherwise light on detail, leaving many questions as to how and in what circumstances DOE will execute its new authority. We expect the electric industry to make an effort to flesh out these details with DOE in the months to come.