November 28, 2015

FDA Proposals Take a Fresh Look at Some Stale Food Issues

Tamar June

Tamar June, VP, Strategic Marketing, AssurX, Inc.

That landmark Food Safety Modernization Act (FSMA) just keeps getting more and more important. Earlier this month, the FDA unveiled four proposed amendments that will likely make a tough law even tougher.

FSMA, signed into law in January 2011, is designed to tighten food safety regulations and shift the focus to a proactive mindset and away from FDA’s relatively reactive approach in years past. FDA has now proposed seven rules to implement FSMA. This new wave of proposed revisions target four areas: produce-safety; preventive controls for human food; preventive controls for animal food; and the foreign supplier verification program.

The action follows FDA’s May announcement it was engaging in the rule-making and guidance development process required to establish the new prevention-oriented standards. FDA implementation teams have developed a slew of ideas for how the agency can better oversee the food industry, strengthen the global food safety system, and enhance protection of public health. Planning has also begun for the next phase of FSMA implementation, which involves advancing new public health prevention standards and implementing the strategic and risk-based industry oversight framework at the heart of FSMA.

In just part of what could go into effect next year, FDA calls for revisions to the foreign-supplier verification proposed rule. It aims to give importers more flexibility to determine appropriate supplier verification measures based on risk and previous experience with their suppliers.

Arguably, one of the more important FDA proposals is a new call to develop current Good Manufacturing Practices (cGMPs) more applicable to the animal food industry, provide flexibility for a wider diversity in the types of animal food facilities, and establish standards for producing safe animal food.

foodsafety570However, human food processors already complying with FDA human food safety requirements, such as brewers, would not need to implement additional preventive controls or cGMP regulations when supplying a by-product (e.g., wet spent grains, fruit or vegetable peels, liquid whey) for animal food, except for proposed cGMPs to prevent physical and chemical contamination when holding and distributing the by-product (e.g., ensuring the by-product isn’t co-mingled with garbage). That noted, further processing a by-product for use as animal food (e.g., drying, pelleting, heat treatment) would still require compliance with the preventive controls for animal food rule.

FDA’s new amendments would also make exemptions a bit clearer, and raise the requirements defining a “very small business.” To be considered tiny, a firm must post less than $2.5 million in total annual sales of animal food, adjusted for inflation. FDA expects that exemption to apply to just over 4,000 facilities.

The proposed rules also address some supplier issues. FDA wants new controls addressing those occasions when the receiving facility’s hazard analysis identifies a significant hazard for a raw material or ingredient, and that hazard is controlled before the facility receives the raw material or ingredient from a supplier.

If these new FDA proposals become the law of the land, the facility would have flexibility to determine the appropriate verification activity (such as onsite audit, sampling and testing, review of supplier’s records) unless there is reasonable probability that exposure to the hazard will result in serious adverse health consequences or death to humans or animals.

Industry and any other interested parties have some time to weigh in on the FDA’s proposals. The FDA will accept comments on the proposed revisions of the four proposed rules for 75 days starting next week (September 29) while continuing to review comments already received on the sections of the proposed rules that are going to change. The agency will consider all comments before issuing final rules sometime next year.


It’s Time to ‘Get’ IEC Before It ‘Gets’ You

Russ King, Managing Partner, Methodsense

Russ King, President, Methodsense

FDA medical device recalls are on the rise. An increasingly active FDA, coupled with the rise in software components for medical devices is adding up to new challenges for manufacturers. Given this reality, it’s important to understand how the FDA uses the IEC 62304, an international standard developed that, among other things, says product testing by itself is not enough to prove software is safe for patients using the medical device.

The standard provides a common framework for medical device manufacturers to develop software. Conformance with this standard provides evidence that there is a software development process in place that fulfills the requirements of the Medical Device Directive. Because it has been harmonized with the Medical Device Directive in the EU and recognized as a Consensus Standard by the FDA in the US, IEC 62304 can be used as a benchmark to comply with regulatory requirements in both markets. To date, this standard has been recognized in most countries that use compliance standards to fulfill regulatory requirements.

Complying with 62304 enhances the reliability of your device’s software by requiring attention to detail in design, testing and verification, ultimately improving the overall safety of the medical device.

Here’s the $64,000, or usually much higher, question: Does your device have to meet IEC 60601-1 requirements?

The EU has been using IEC 62304 since 2008, but it has gained even more traction with its incorporation into the third edition of IEC 60601-1’s Amendment 1. The inclusion of Amendment 1 shifted the standard from a recommendation to a requirement if your device utilizes software.

For those who design or manufacture electromedical equipment, 60601-1 is one of the most important safety and performance standards to meet. The standard addresses critical safety issues, including electrical shocks and mechanical hazards, such as pinching, crushing, and breaking. Devices that must meet IEC 60601-1 requirements include those which:

  • Diagnose, treat, or monitor the patient under medical supervision
  • Make physical or electrical contact with the patient
  • Transfer energy to or from the patient; and/or
  • Detect such energy transfer to or from the patient.

60601-1 Clause 14 requires manufacturers to comply with IEC 62304 unless the device’s software has no role in providing basic safety or essential performance or risk analysis demonstrates that a failure of any Programmable Electronic Safety System (PESS) does not lead to an unacceptable risk.

insulin pumpBasic safety is the main focus of IEC 60601-1. It’s important that you conduct a risk analysis to identify your device’s level of unacceptable risk and determine the role of software in risk mitigation. This analysis will determine the applicable basic safety requirements for your device, and, for some requirements, the test parameters that need to be used by the test laboratory.

The most common mistake that medical device manufacturers make is that they do not always assess which elements of risk their software mitigates. These are the elements that must be addressed by IEC 62304. For example, what would happen if the creator of a hoist didn’t properly vet the software that signaled the hoist to lower the patient at a certain speed? If a patient were lowered to quickly–or not  at all –there would be a risk management nightmare. Since software plays a role in the Basic Safety functions of the hoist, it must comply with 62304’s requirements.

In conjunction with IEC 60601-1, 62304 is intended to minimize the occurrence of these situations. When device software is mitigating a known potential hazard, ensuring that the code is developed properly is critical for the management of patient safety, as well as liability to the manufacture.

It can be difficult to determine if a device’s software is tied to its Essential Performance (EP), especially because the definition of EP has been widely debated for years. Thankfully, the definition and requirements for Essential Performance changed with Amendment 1 of IEC 60601-1 to help provide more clarity.

Determining Essential Performance begins with a list of all functional aspects of your device, including accuracy, measurements and its capabilities. Once you identify these items, determine whether any of these are already covered by the Basic Safety requirements of IEC 60601-1 or whether any item is not part of the device’s intended use. Then, and this is key, every item remaining gets posed the question, “If this item degrades, will it create a risk for the patient?”If the answer is yes, you must identify how its functionality must be maintained so the risk is still acceptable. This is your Essential Performance.

A good example to help clarify the impact of Essential Performance on IEC 62304 is accuracy. Consider a device that claims its EP is accurate within 5%. If the device is relying on software to maintain that accuracy or provide an alert when outside of 5%, and that software fails, then the manufacturer will be unable to detect if the device’s Essential Performance is being met. This means the software is providing Essential Performance.

Once you know your device software is responsible for Essential Performance, you must comply with IEC 62304 to ensure there is no unacceptable risk to a patient.

There are several situations that manufacturers often don’t realize require compliance with IEC 62304. These product features can create major headaches and costly delays if they are not properly developed. These scenarios include:

Alarms & Alerts
Alarms are often an Essential Performance requirement because they are intended to detect abnormalities. If the alarm was removed, the device would no longer meet it’s performance requirements, making the risk unacceptable. Software is used to detect the issue, instigate the alarm and make the sound.

Speed & Position Sensors
These sensors are in place to address Basic Safety concerns. For example, a hospital bed has a position sensor to keep it from crushing the operator’s foot and mammography has sensors to gauge compression. Devices like these use software to limit range of motion, speed and force.

Algorithms are frequently used with physiological monitoring. If the software is removed, the device is no longer able to operate as intended, resulting in the algorithms being part of Essential Performance.

It is important to note that these situations apply to the patient, operator or service personnel.

Once you know you must comply with IEC 62304, how do you go about preparing for it? To start, know that compliance with this standard is defined as implementing all of the processes, activities and tasks identified in the standard in accordance with the software safety class. 62304 itself does not prescribe a particular organizational structure or specific format for documentation, however. Compliance is determined by a review of all required documentation, including the risk management file.

Editor’s Note: In Part Two, we’ll take a look at the best way to approach risk management.

About the author:

Russ King is President of MethodSense, a life science consulting firm with offices in the US and Europe. They guide medical device, biotech and pharmaceutical companies with quality, regulatory and technology solutions. Their services enable clients to operate more effectively during the commercialization process and beyond. As it relates to IEC 60601-1 and 62304, MethodSense provides expert guidance and interpretation, helping you with:

  • Reviewing the standard you must comply with
  • Conducting a gap analysis of your Risk Management Program against ISO 14971
  • Updating your Risk Management Documentation
  • Completing the IEC 60601-1 and other relevant tables
  • Submitting your documentation for review

MethodSense offers special thanks for the input of Medical Equipment Compliance Associates, LLC for information that significantly contributed to the content of this article. 

For questions and information, contact Russ King,


FDA IDE Guidance Offers Industry Important Clarity

Michael Causey, Editor & Publisher,

Michael Causey, Editor & Publisher,

In its August 19 guidance for Investigation Device Exemption (IDE) Clinical Investigators, the FDA attempts to better outline its thought process for reviewing, accepting, accepting with conditions, or denying an IDE. It can literally be a matter of life and death for patients and trial subjects. Thus, the agency and industry continue to take it seriously.

FDA approval of an IDE allows the initiation of subject enrollment in a clinical investigation of a medical device that has potentially significant risks — widely defined as a device that could pose a serious health risk or death to the user, is used to support to prolong life, or is part of a diagnosis tool also being used to support or sustain life.

The guidance covers a number of important areas, some with new wrinkles, including:

IDE Decisions

FDAlogoFDA must inform sponsors or sponsor-investigator of its decision, or must notify the sponsor that the investigation may not begin, within 30 days from the date of receipt of the IDE application, or the IDE application will be deemed approved. If an IDE application is approved or approved with conditions, the sponsor may begin subject enrollment, up to the number of subjects and investigational sites specified in FDA’s decision letter, upon receipt of Institutional Review Board (IRB) approval, which may occur prior to FDA approval.

IDE Approval

An IDE application is approved if FDA has determined that: the sponsor has provided sufficient data to support initiation of a human clinical study; no subject protection concerns preclude initiation of the investigation; and no additional conditions must be met. 

IDE Approval with Conditions

FDA has clarified matters here somewhat, and appears to have given industry a touch more leeway if used wisely and safely.

If FDA approves an IDE application with conditions, the sponsor may begin subject enrollment upon receipt of IRB approval and in accordance with the limits described in FDA’s decision letter, including the maximum numbers of U.S. subjects and investigational sites, and must submit information addressing the issues identified as conditions of approval in FDA’s letter within 45 days.

An IDE application is approved with conditions if FDA has determined that: the sponsor has provided sufficient data to support initiation of subject enrollment in a human clinical study; no subject protection concerns preclude initiation of subject enrollment; but additional conditions must be met to address certain outstanding issues.

Previously known as “conditional approval,” the phrase “approval with conditions” is now used to convey that the outstanding issues do not raise concerns that preclude FDA from granting approval for initiation of subject enrollment in the clinical investigation. FDA now says resolution of those issues isn’t required prior to initiation of subject enrollment in the study, except for certain issues related to the informed consent document.

The guidance reiterates how seriously FDA takes clear, simply informed consent forms for trial participants, noting it “closely reviews” those as part of an IDE determination.

Staged Approval, Staged Approval with Conditions

In the guidance, FDA says it may grant IDE approval or approval with conditions for a portion of the intended study cohort, enabling certain outstanding questions to be answered concurrently with enrollment in this cohort. Staged approval permits the clinical investigation to begin in a timely manner while maintaining appropriate subject protections. In some cases, the sponsor proposes a staged enrollment in the IDE application. In other cases, the sponsor requests approval for the full subject cohort but the agency may decide to grant staged approval for a limited number of subjects as an alternative to outright disapproving the IDE.

IDE Disapproval

Broadly speaking, little has changed here in regards to what the FDA deems most important in an IDE request. If the agency raises patient risk issues the device company cannot adequately address, and/or if the device maker is unable to persuade the FDA that the product is important enough (e.g. life-saving) to quality for IDE designation, it will get the thumbs down.

FDA Communications

The agency says it will send a letter discussing any rejection or question about an IDE request. The letter should include the agency’s thoughts on how the study design assessment, considerations, and other suggested improvements the device maker should consider if it plans to try again.



Cyber Security and Reliability Assurance Initiatives Top Priority at NERC Board Meetings


Trey Kirkpatrick, Vice President, Energy & Utilities Compliance, AssurX Inc.

Vice President, Energy & Utilities Compliance, AssurX Inc.

NERC held their Board of Trustees (BOT) and Member Representatives Committee (MRC) meetings in Vancouver, BC on August 13 – 14, 2014. The meeting included lively discussions on all the initiatives underway at NERC and impacting all the Registered Entities. Two of the most talked about topics were the CIP Version 5 transition and the Reliability Assurance Initiative (RAI). NERC is dealing with some very tight timelines on both of these initiatives.

The CIP Version 5 transition involves a continuous outreach program that includes conferences, workshops and training. NERC is working with the CIP auditors to ensure consistent application of audits and enforcement. A CIP Auditor Workshop is scheduled for September 2014. These will address areas of industry concern and enable input into guidance documents. There is also an effort for the coordination with CIP version 5 revisions and the Reliability Assurance Initiative. Project 2014-02 continues to be a priority for NERC and the industry as well as the new CIP Reliability Standard Audit Worksheets (RSAWs) documents. NERC and the industry are still moving forward to ensure they meet the FERC deadline of February 2015 with the required revisions to the CIP Version 5 standards.

ElectricitySunsetBlue150The Reliability Assurance Initiative (RAI) Progress report was discussed at the NERC BOT Compliance Committee meeting. The RAI has gone through various joint pilot programs with NERC, Regional Entities and Registered Entities that volunteered for the pilot programs. The RAI is focused on risks to reliability; enforcement resources are focused on noncompliance that poses a serious and substantial risk to reliability. There are many aspects to this initiative including Compliance Exception Program and Aggregation/Logging Program. The release of the RAI documentation for industry comment is coming out soon. There were questions regarding the quick turnaround for comments. NERC said that would evaluate this to ensure that the industry has enough time to comment. The RAI program will be a work in progress as it is implemented. The timeline of January 2015 is quickly approaching with lots of activities that still need to take place.

The presentation given at the NERC BOTCC meeting was very detailed and included some important slides from various regions and registered entities from the pilot programs.

Other important discussions that took place involved:

NERC and the industry are going through some major implementation challenges in 2014 and 2015. The meetings in Vancouver included some very important discussions and what impact it is having on resources, strategic direction of the ERO, and the impact all this has on reliability to the grid.

Click here to request to view the AssurX CIP Solution Webinar.



FDA Guidance Advises Device Makers to Think About Home-Use

Michael Causey, Editor & Publisher,

Michael Causey, Editor & Publisher,

Medical device manufacturers would be well-advised to address any potential home-use products risk at the design state, says an August guidance from the FDA.

As the agency notes, “Failure to adequately consider potentially hazardous situations during the design of home use devices may result in inappropriate use, use error, or incompatibilities between the use environment, the user, and the device. This could cause the device to malfunction, possibly contributing to death or serious injury.”

It could also make the FDA really angry.

The guidance offers advice designed to address then entire manufacturing process — and beyond. It covers environmental issues, user issues, design issues, human factors, labeling challenges, postmarket considerations, and the always fun human factor

Digging a little deeper into the guidance, FDA covers many layers of these topics, including:

  • Environmental considers such as location, contaminants, water supply, temperature, dampness and humidity, atmospheric pressure changes, air flow, travel and international use, fluid exposure and storage.
  • User considerations such as physical location, sensor/perception requirements, plus cognitive and emotional product demand.
  • Design issues, including lock-out mechanisms, maintenance and calibration, mechanical issues and special emphasis of electrical issues. As noted earlier, this is probably the section deserving the closest examination by medical device makers.
  • Human factors ranging from user training to certifications.
  • Labeling issues including describing the basic handling of the device, how to dispose of it in an emergency, disposal, and hygienic maintenance.
  • Post-market considerations such as robust customer service and medical device reporting.

electronic document managementFDA’s Medical Device Reporting (MDR) regulation requires manufacturers to submit reports to the FDA whenever it becomes aware of information that reasonably suggests that a device it sells may have caused or contributed to a reportable death or serious injury, or has malfunctioned and the malfunction would be likely to cause or contribute to a reportable death or serious injury should it recur.

For the FDA Form 3500A, instructions for completing specific items on the form, and the coding manual see MedWatch: The FDA Safety Information and Adverse Event Reporting Program.

For additional guidance on the MDR regulation and the reporting requirements refer to FDA’s guidance Medical Device Reporting for Manufacturers (March, 1997). FDA advises medical device manufacturers to also take a look at its draft guidance Medical Device Reporting for Manufacturers (July 9, 2013).


FDA Spreads Regulatory Love Nationwide

Michael Causey, Editor & Publisher,

Michael Causey, Editor & Publisher,

Detroit may be struggling with bankruptcy, but in a flurry of activity that would make industrialist Henry Ford proud, the local FDA office has been active in our latest warning letter round-up.

Indiana-based Med-Mizer, manufacturer of AC powered, adjustable and bariatric hospital beds, was hit by FDA’s Detroit office with a 12-point letter dated July 21.

Among FDA’s accusations, Med-Miser failed to:

  • Establish procedures for reviewing and evaluating incoming complaints
  • Develop, conduct and control and monitor its production process
  • Establish and maintain design controls
  • Validate a manufacturing process
  • Ensure its products meet acceptance criteria

Ventilab LLC, a manufacturer of manual resuscitation bags based in Grand Rapids, was also dinged by the Detroit office for CAPA shortcomings, inadequate complaint management, and failing to establish an acceptable risk management plan.

warning640Moving east to the City of Brotherly Love, FDA’s Philadelphia District office sent a warning letter to the maker of a sleep apnea monitor citing it for failure to ensure its device conformed to specifications and requirements. That June 30 letter was the result of a series of April 2014 inspections.

A June 27 letter called out Zynex Medical, manufacturer of the NexWave multiple mode electrical stimulator and the IF8000 electrical stimulator for perceived CAPA and design control and verification shortcomings. Zynex, baed in Lone Tree, Colorado, was also hit for failure to have adequate device master records and internal audit procedures.

Out in Napa, California where the weather is lovely and the wine flows, June 25 was probably not a day to celebrate for Dexta Corporation, manufacturer of medical chairs used for Lasik surgery and other procedures. FDA hit them for, among other things, failure to adequately train personnel, inability to verify test results, CAPA issues, and process controls problems.

Henry Ford, a man who tried to build his own utopian city in the jungles of the Amazon and modestly name it Fordlandia, would be proud of the FDA’s devotion to hard work these past few months. Perhaps there is an FDAlandia on some city planners drawing board just waiting for the green light. You never know.


Unprecedented Energy Demand on Aging Grid: Important Discussions at NYISO Energy Conference

Trey Kirkpatrick, Vice President, Energy & Utilities Compliance, AssurX Inc.

Vice President, Energy & Utilities Compliance, AssurX Inc.

New York Independent System Operator (NYISO) had their 2014 Energy Conference in New York City at the end of June. The topics this year included; addressing the aging infrastructure, grid modernization, distributed resources, and fuel diversity. The panelists were a mix of industry experts from utility executives, a university professor, and government experts.

Steve Whitley, President and Chief Executive Officer of the NYISO, talked about the ongoing energy trends taking place in the northeast and the rest of North America. There are historic patterns of electricity demand that are being influenced by extreme weather patterns, the sluggish economy, and the adoption of more efficient energy technologies. Mr. Whitley discussed that within a span of six months, New York State set two seasonal records for peak electrical loads. Those two involved the summer heat wave in June 2013 and the Polar Vortex in January 2014. New York State successfully met these two extreme challenges by maintaining reliability and not resorting to emergency measures.

When it came to the panel discussions, there was plenty of dialogue for the need of fuel diversity. With coal being phased out in most of the northeast and no nuclear expansion planned, natural gas is the primary fuel source for electricity generation. With one of the coldest winters in years, natural gas price spikes and operational challenges demonstrated the need for coordination between the electrical and gas industries. Many of the panelists called for stronger regulatory policies because of the growing dependence on natural gas in North America for electric generation.

electricityTowersOrangeDistributed energy resources were also discussed along with the aging infrastructure. More than 80 percent of New York’s high-voltage transmission lines went into service before 1980. New York State studies estimate that this will require replacements over the next 30 years costing an estimated $25 billion. On the other hand, photovoltaic systems in New York State increased by over 40 percent from 2012 to 2013. Wind generation in the state continues to grow requiring utilities to complete transmission upgrades to move the power from upstate New York to southeastern New York like the Lower Hudson Valley, New York City, and Long Island.

These are all good examples of what many utilities, independent power producers, and government entities are dealing with across North America. As day-to-day energy use and peak demand diverge, this impacts wholesale electric markets, grid operations and planning, as well as, demand-side management programs.

We are all concerned with electric reliability. There are new standards for physical security and cyber security. More stringent requirements are being implemented for system protection maintenance for the bulk electric system. The utilities and independent power producers are assessing and revising their internal controls and programs so that issues are being identified earlier, mitigated and tracked to completion. They are also implementing new risk management programs so that the high and medium risks are receiving the required attention from their executives.

The electric industry has many changes ahead of them in the coming years. There will always be new competition, extreme weather and new technologies, but the companies that are addressing these issues and taking the proper actions will end up being stronger and more resilient. These initiatives benefit all of us, as customers, with a resource that we cannot live without.


Partnership of Productivity Tools Will Allow You to Focus More on Creating Quality Products

Dennis Payton, Vice President of Product Marketing and Development, Expandable Software, Inc.

Dennis Payton, Vice President of Product Marketing and Development, Expandable Software, Inc.

In 1908, the first Model T was created and more than 15 million were sold through mid-1927, proving that a focus on your core product can create a tidal wave of success. The plan and processes Henry Ford put in place to create the Model T, revolutionized the automotive industry. Having a streamlined set of processes is still important for manufacturing a quality product today. The Model T not only tells the story of efficiency and mass production, it also depicts the story of quality proving that they are not mutually exclusive.

The medical device industry is no doubt tough to do business in, whether it’s the constant threat from multiple competitors or the constant scrutiny from the FDA with 21 CFR Part 820 and Part 11, it’s an eat or get eaten world. Non-compliance with the FDA can result in a number of costly consequences including audits, recalls, production stoppage, substantial fines and potential lawsuits.

With the advancements of technology we are now able to efficiently control and monitor the process with tools such as an Enterprise Resource Planning (ERP) system combined with a Quality Management System (QMS). Having the right partnership between your ERP and QMS vendors allows you to create a reliable support system.


With such a support system in place your company can in turn focus more on your initial quality system, developing a sound and innovative product. The theory being that creating a quality product begins with the inception of the product. A house built on sand, no matter how nice it looks, is not going to work, and the same goes for a medical device, a quality product should be the goal from the very beginning. With today’s tools Henry Ford could create the ultimate formula: efficiency + variety + quality = success

A more detailed paper, Effective Compliance Programs Demand Sound Strategy, Strong Partners written by Michael Causey, outlines some of the key advantages your company stands to gain by selecting and ERP system that is integrated with your QMS. The never-ending challenge of creating and monitoring a quality system can contribute to your company’s increased regulatory compliance and customer satisfaction.

Get the full detailed White Paper here

About the Authors

Dennis Payton is Vice President of product marketing and development with Expandable Software Inc. He has 23 years of engineering, product management and executive management experience. He holds a BS in electrical engineering from California Polytechnic State University, San Louis Obispo, and post studies at Stanford University, University of California, Santa Cruz, and UC Berkley Haas School of Business.

Ryan Hussey is a marketing professional with Expandable Software, Inc. Mr. Hussey holds a BS of Business Marketing from San Jose State University and contributes personal time to coaching youth swimming classes and teams at local South Bay Area swim clubs.


FERC Order to Impose Stricter Physical Security Standards on Electric Utilities

Trey Kirkpatrick, Vice President, Energy & Utilities Compliance, AssurX Inc.

Vice President, Energy & Utilities Compliance, AssurX Inc.

On March 7th, FERC released a new order (Docket No. RD14-6-000) directing the North American Electric Reliability Corporation (NERC) to develop new reliability standards for the NERC registered entities, the owners and operators of the Bulk-Power System, to address the risks due to physical security threats and vulnerabilities.

“Because the grid is so critical to all aspects of our society and economy, protecting its reliability and resilience is a core responsibility of everyone who works in the electric industry.” FERC Acting Chairman Cheryl LaFleur said. “Today’s order enhances the grid’s resilience by requiring physical security for the facilities most critical to the reliable operation of the Bulk-Power System. It will complement the ongoing efforts of FERC and facility owners and operators to ensure the physical security of the grid.”

In the Commission’s release the order directed the owners and operators of the Bulk-Power System to take at least three steps to protect physical security.

Gerry Cauley, NERC President and CEO, released a statement on NERC’s website:

FERClogo2“On Friday evening, March 7th, FERC issued a directive to NERC to develop reliability standards to address risks due to physical security threats and vulnerabilities. As you know, FERC Acting Chairman Cheryl LaFleur asked NERC to work with her staff to determine the need for a mandatory standard for physical security. I believe we identified a path forward that focuses on the most critical assets, incorporates risk assessment and further affirms foundational physical security efforts, while providing enough flexibility to avoid prescriptive, lock-step regulation. Any standard must be dynamic and adaptable to the constantly changing threat environment. As we review the order, I take seriously the comments made by all the Commissioners to ensure that a standard achieves the goals identified in a cost effective manner.”

As mentioned in a previous AssurX blog, NERC and Industry Move in the Right Direction for Greater Reliability, security vulnerabilities of the electric grid has been a focus for the regulators and registered entities since the attack by gunmen at a California (Metcalf) substation.

Commissioner John Norris, writing a separate opinion, wants Congress to act on protecting sensitive security information “I believe that our success in developing a comprehensive approach to addressing physical vulnerabilities relies at least in part on Congress taking steps to ensure the confidentiality of sensitive security information regarding the physical vulnerabilities of our grid. Currently, industry remains concerned that confidential security information submitted to the Commission would be subject to disclosure through Freedom of Information Act requests. These concerns have understandably left industry reluctant to provide the Commission with its most sensitive security information related to potential physical threats or vulnerabilities to our power grid. A reliability standard will likely have limited impact if industry, NERC, and the Commission remain unable to safely and securely exchange such information. Thus, I urge Congress to act expeditiously by creating a clearly-defined exemption to the Freedom of Information Act to allow for such exchange of information without fear of disclosure.”


NERC and Industry Move in the Right Direction for Greater Reliability

Trey Kirkpatrick, Vice President, Energy & Utilities Compliance, AssurX Inc.

Vice President, Energy & Utilities Compliance, AssurX Inc.

There is a different feel out there in the NERC world, the Electric Reliability Organization (ERO) and the registered entities are working together more than ever since the mandatory implementation of the NERC standards in June 2007. I attended the NERC Member Representatives Committee (MRC) and Board of Trustees (BOT) meetings in Phoenix, AZ on February 5-6, 2014. There are many initiatives that are being implemented and proposed to the registered entities. Not only are the registered entities trying to keep up with very important and impacting standard changes such as COM-002, PRC-005, and the CIP version 5; they are also focused on some serious changes to their existing compliance programs.

Even as we were attending the NERC management meeting in Phoenix, the story of the serious physical attack on a California substation, not far from my own office headquarters, hit the news.

Registered entities have been working hard to manage the ongoing challenges with a struggling economy impacting revenues, more competition, environmental regulations, and cyber security threats. Never has it been more important for large, medium, and small registered entities to focus on risk-management and their internal controls. As the NERC staff was making presentations to the NERC Compliance Committee, the MRC and the NERC BOT, it was obvious that the registered entities have opportunities to improve their overall compliance programs and working relationships with NERC and the Regional Entities.

Some of the ERO’s key initiatives that are:

  • Definition of BES implementation
  • Reliability Assessment Initiative (RAI)
  • Risk-based Registration Assessment Project
  • Cyber Security
  • Human Performance

Electric UtilityIf you have never had the opportunity to experience a NERC MRC and/or BOT meeting, I really encourage you to go to one. You can go to regional workshops and NERC Standards and Compliance workshops, but there is no better way to understand the goals and vision of the ERO unless you are there first hand. There are open discussions, shared industry experience and lessons learned not only from NERC subcommittees, but also the North American Transmission Forum (NATF) and the North American Generator Forum (NAGF) leadership.

Gerry Cauley, NERC President and CEO, also provides a comprehensive overview of the goals, accomplishments, and direction of the ERO. The Regional Entities’ senior management staffs are there and dialogue between industry members is encouraged.

Mr. Cauley highlighted the ERO Enterprise’s top strategic 5 goals:

  • Goal #1: Develop clear, reasonable and technically sound mandatory Reliability Standards in a timely and efficient manner.
  • Goal #2: Be a strong enforcement authority that is independent, without conflict of interest, objective and fair and promote a culture of reliability excellence through risk-informed compliance monitoring and enforcement.
  • Goal #3: Promote a culture of compliance that supports reliability excellence within industry.
  • Goal #4: Identify the most significant risks to reliability, be accountable for mitigating reliability risks and promote a culture of reliability excellence.
  • Goal #5: Improve transparency, consistency, quality and timeliness of results; operate as a collaborative enterprise; and improve efficiencies and cost effectiveness.

These goals have been communicated in prior meetings and workshops, but never to the degree of actual implementation and working with the industry to accomplishing these goals. The real challenge for FERC, the ERO, and the registered entity is the identification of significant risks to reliability and mitigating these risks (Goal #4).

It is extremely important for the registered entities to be engaged in these initiatives and start developing their own risk-management program, the appropriate internal controls, and corrective action programs. Currently, there are pilot programs going on with registered entities and the ERO. Their results along with newly revised auditor handbooks, risk-based registration (not treating every functional entity the same), the RAI program will improve the focus on the critical issues regarding reliability.

After spending years in the industry and consulting with dozens of customers ranging from large to small utilities, co-ops and generators, it is encouraging to see registered entities working to identify their risks, implementing stronger compliance programs from industry experience and lessons learned, and developing internal controls. The transition will be challenging for everyone involved, but companies that build strong internal programs, controls, and focus on human performance will end up as industry leaders, have less burdensome oversight, and most importantly, provide a reliable bulk electric system for their customers and North America.