Pipeline Companies Face $7K-a-Day Fines if New Biden Ransomware Directives Ignored

A new Biden administration directive in response to the ransomware hack that disrupted a major fuel pipeline will require pipeline operators to conduct a cybersecurity assessment, the Transportation Security Administration (TSA) said Thursday.

Those who don't comply with the order could face fines starting at $7,000 a day. Department of Homeland Security (DHS) officials said the security measure predates the May attack on Colonial Pipeline and is part of an overall administrative emphasis on cybersecurity. The directive would also require pipeline owners and operators to report any cyberincidents to the federal government, with a cybersecurity coordinator on hand to work with authorities should another attack like the one on Colonial occur.

"The evolution of ransomware attacks in the last 12 to 18 months has gotten to a point that it poses a national security risk and that we are concerned about the impact on national critical functions," one of the officials told the Associated Press, speaking on condition of anonymity.

President Joe Biden delivers remarks on the Colonial Pipeline ransomware situation on May 13. T.J. Kirkpatrick-Pool/Getty Images

For more reporting from the Associated Press, see below:

The six-page directive, which takes effect Friday, applies to owners and operators of hazardous liquids or natural gas pipelines or natural gas facilities that have been deemed part of the nation's "critical" infrastructure that must be protected from cyberthreats such as ransomware.

Criminal syndicates, often based in Russia or elsewhere in Eastern Europe, have unleashed a wave of ransomware attacks in which they scramble a target's data with encryption and demand a ransom.

Victims have included state and local governments, hospitals and medical researchers and businesses large and small, leaving some victims unable to perform even routine operations.

The hack that targeted Colonial Pipeline prompted the company to shut down a system that delivers about 45 percent of the gasoline consumed on the East Coast for about a week. It led to panic buying and shortages at gas stations from Washington, D.C., to Florida.

It came up in Congress on Wednesday as DHS Secretary Alejandro Mayorkas outlined the agency's budget next year to the House Appropriations Committee's subcommittee for homeland security.

"The Colonial Pipeline breach, in particular, was a wake-up call to many Americans about how malicious cyber actors, often backed by foreign states, can disrupt the U.S. economy and all of our lives," said Representative Lucille Roybal-Allard, D-Calif., the panel's chair.

The Colonial Pipeline company, based in Alpharetta, Georgia, later disclosed it paid a ransom of $4.4 million to retrieve access to its data from the gang of hackers, linked by the FBI to a Russian-speaking criminal syndicate known as DarkSide.

The episode exposed the threat to the vast network of pipeline used to transport oil, other liquids and natural gas around the U.S.

The TSA is responsible for the physical security and cybersecurity of this network and has worked with owners and operators, about 100 companies in all, to develop the voluntary guidelines and conducts on-site assessments. Lawmakers and experts have been critical of industry security standards.

DHS, under Mayorkas, launched a "60-day sprint" to focus the agency on the ransomware threat weeks before the Colonial Pipeline hack became publicly known on May 7. The directive is intended to address issues that emerged in the response and may have enabled the hack to occur in the first place.

Pipeline owners will be required to do the assessment within 30 days. They will have to show how their processes line up with the voluntary guidelines, identify any gaps and provide a plan for addressing them, the officials said.

Operators will be required for the first time to report any cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency (CISA), another DHS component. Companies have been reluctant to report breaches in the past for a variety of reasons, including embarrassment and concern that they could expose themselves to legal liability.

Pipeline companies will also have to designate a cybersecurity coordinator who would be on duty 24 hours a day, seven days a week to work with TSA and CISA in case of a breach like the one at Colonial Pipeline.

Colonial Pipeline
The entrance to the Colonial Pipeline in Charlotte, North Carolina. Under a new Biden administration directive, pipeline operators will be required to conduct a cybersecurity assessment. AP Photo/Chris Carlson, file