From  http://www.csmonitor.com/USA/2012/0517/Cybersecurity-How-US-utilities-passed-up-chance-to-protect-their-networks?google_editors_picks=true:

Cybersecurity: How US utilities passed up chance to protect their networks

Cybersecurity needs are not hypothetical, as the recent DHS warning of a cyberattack on the US natural gas industry shows. Why then was a post-9/11 initiative to secure US utilities dropped?

By Mark Clayton, Staff writer / May 17, 2012

With America now trying to thwart a cyberattack on its natural gas industry, it is helpful to recall the hectic days after 9/11, when industry scientists raced to shield from potential terrorist cyberattacks hundreds of thousands of vulnerable devices that control vital valves and switches on America’s gas pipelines, water plants, and power grid.

It was a race that seemed winnable. After five years of intense effort, a 35-member team of industrial-control-system wizards from the gas, water, and electric utilities industries had created a powerful new encryption system to shield substations, pipeline compressors, and other key infrastructure from cyberattack.

But just weeks before it was to be finalized in 2006, the funding plug was pulled on the encryption system, called AGA-12, by the American Gas Association and its partners at the electric power and water utility industries, some who worked on the project recall.

To this day, the cancelation of the project has called into question whether US utilities will, on their own, invest in measures necessary to protect their networks.

Tested at a Los Angeles water treatment plant, a gas utility in Chicago, and other locations, AGA-12 worked well. National labs verified it. Experts said it was good to go. Yet with 9/11 receding in memory, utility industry executives had begun worrying anew about the cost of deploying the system, former project participants say.

Today, six years after AGA-12 was aborted and 11 years after the World Trade Center attacks, the US natural gas industry is trying to thwart a real cyberattack campaign, according to the US Department of Homeland Security (DHS). Congress, meanwhile, is still debating whether voluntary or mandatory security standards are the best way to secure America’s critical infrastructure.

All of which leaves researchers who helped develop AGA-12 frustrated and a little wistful about the digital shield that they say would have provided a badly needed layer of security – especially in light of a trend toward cyberattacks on critical infrastructure companies.

“Technically it was an excellent standard and we were almost done with it when the project was terminated,” says William Rush, a now-retired scientist formerly with the Gas Technology Institute, who chaired the effort to create the AGA-12 standard. “One of the things I wake up in the middle of night and worry about is what to do if we’ve just been attacked. That’s not the time to worry about it – now’s the time.”

AGA-12, he says, was designed to secure older industrial control system devices out in the field, many of which still today communicate by modem and phone line, radio, or even wireless signal, but were never designed with cybersecurity in mind and remain highly vulnerable today.

It’s not clear that AGA-12 could have stopped the “spear-phishing” type of cyberattack now under way against the natural gas industry, experts say. But it could stop at least one kind: attacks directly on systems in the field of the kind DHS has highlighted in numerous studies and reports.

Installed in front of each vulnerable device would have been an AGA-12 gatekeeper, a sealed black box with a processor and cryptographic software inside, he explains. That “bump in the wire” would sift and decipher commands coming in from legitimate operators, but shield the vulnerable industrial control systems behind them from any false signals that might allow a hacker to take over.

“It was never intended to be a silver bullet,” Dr. Rush says. “But it would definitely have provided quite a lot more protection for critical infrastructure like gas pipelines and the power grid than we have right now.”

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The reality of the cyberthreat was driven home in late March, when DHS issued the first of four confidential “alerts” warning of a cyberattack campaign against US natural gas pipeline companies’ computer networks. Some researchers have linked the attack to a 2011 attack for which US officials blame China.

Those recent attacks follow a trend in which corporate and industrial networks belonging to critical infrastructure companies are seen to be a growing target. In April, the cybersecurity company McAfee and the Center for Strategic and International Studies (CSIS), a Washington think tank, found that 40 percent of electric utility company officials in 14 countries said their networks were under attack and more vulnerable than ever.

Meanwhile, in an election year, Congress and the Obama administration are wrangling over new cybersecurity standards for critical infrastructure companies – primarily whether they should be based on a voluntary or mandatory approach.

“The issue isn’t a lack of standards,” says James Lewis, director of the Technology and Public Policy Program at CSIS. “It’s the lack of a business case for individual companies to spend for public safety. This [AGA-12 case] just confirms it. They know what to do to make things secure and have chosen not to do it for sound business reasons. A voluntary approach doesn’t work.”

At least six energy industry organizations that have developed voluntary cybersecurity standards for their industrial control systems would disagree. They include the North American Electric Reliability Corporation (NERC), International Electrotechnical Commission, American Petroleum Institute, and the AGA. But because the standards are voluntary or are “guidelines,” it’s unclear how widely they have been acted upon.

Asked if field devices have received added protections that supplanted the need for AGA-12, Jake Rubin, an AGA spokesman, says the AGA, federal government, and industry groups “have put cybersecurity guidelines in place that independent operators are using currently in the field.” However, he adds, “The ‘bump in the wire’ concept cannot be applied to all existing systems.”

“AGA members are committed to the safe and reliable delivery of clean natural gas to their customers at affordable and stable prices,” says Mr. Rubin, an AGA spokesman in an e-mail response. “They must make decisions that balance these factors, with safety always being the top priority for America’s natural gas utilities.”

But other observers say that while some newer equipment with better security has been adopted in recent years, many of the same vulnerabilities remain because long-lived industrial control systems are rarely replaced if still functioning. Without a mandate, few companies will incur the cost to deploy enhanced security systems, they say.

“We found that the adoption of security measures in important civilian industries badly trailed the increase in threats over the last year,” Stewart Baker, a former DHS official who led the CSIS and McAfee study, said in a statement in April.

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