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Pipeline Back by Weekend      05/11 06:49


   WASHINGTON (AP) -- Hit by a cyberattack, the operator of a major U.S. fuel 
pipeline said it hopes to have services mostly restored by the end of the week 
as the FBI and administration officials identified the culprits as a gang of 
criminal hackers.

   U.S. officials sought to soothe concerns about price spikes or damage to the 
economy by stressing that the fuel supply had so far not experienced widespread 
disruptions, and the company said Monday that it was working toward 
"substantially restoring operational service" by the weekend.

   The White House said in a statement late Monday that it was monitoring 
supply shortages in parts of the Southeast and that President Joe Biden had 
directed federal agencies to bring their resources to bear.

   Colonial Pipeline, which delivers about 45% of the fuel consumed on the East 
Coast, halted operations last week after revealing a ransomware attack that it 
said had affected some of its systems.

   Nonetheless, the attack underscored the vulnerabilities of the nation's 
energy sector and other critical industries whose infrastructure is largely 
privately owned. Ransomware attacks are typically carried out by criminal 
hackers who scramble data, paralyzing victim networks, and demand large 
payments to decrypt it.

   The Colonial attack was a potent reminder of the real-world implications of 
the burgeoning threat. Even as the Biden administration works to confront 
organized hacking campaigns sponsored by foreign governments, it must still 
contend with difficult-to-prevent attacks from cybercriminals.

   "We need to invest to safeguard our critical infrastructure," Biden said 
Monday. Energy Secretary Jennifer Granholm said the attack "tells you how 
utterly vulnerable we are" to cyberattacks on U.S. infrastructure.

   The attack came as the administration, still grappling with its response to 
massive breaches by Russia of federal agencies and private corporations, works 
on an executive order aimed at bolstering cybersecurity defenses. The Justice 
Department, meanwhile, has formed a ransomware task force designed for 
situations just like Colonial Pipeline, and the Energy Department on April 20 
announced a 100-day initiative focused on protecting energy infrastructure from 
cyber threats. Similar actions are planned for other critical industries, such 
as water and natural gas.

   Despite that, the challenge facing the government and the private sector 
remains immense.

   In this case, the FBI publicly assigned blame Monday by saying the criminal 
syndicate whose ransomware was used in the attack is named DarkSide. The 
group's members are Russian speakers, and the syndicate's malware is coded not 
to attack networks using Russian-language keyboards. Russia, however, denied 
any involvement in the attack.

   Anne Neuberger, the White House deputy national security adviser for cyber 
and emerging technology, said at a briefing that the group has been on the 
FBI's radar for months. She said its business model is to demand ransom 
payments from victims and then split the proceeds with the ransomware 
developers, relying on what she said was a "new and very troubling variant."

   She declined to say if Colonial Pipeline had paid any ransom, and the 
company has not given any indication of that one way or the other. Though the 
FBI has historically discouraged victims from making payments for fear of 
promoting additional attacks, she acknowledged "the very difficult" situation 
that victims face and said the administration needs to look "thoughtfully at 
this area" of how best to deter ransomware.

   "Given the rise in ransomware, that is one area we're definitely looking at 
now to say, 'What should be the government's approach to ransomware actors and 
to ransoms overall?'"

   Speaking later in the day at a conference on national security, Neuberger 
said the administration was committed to leveraging the government's massive 
buying power to ensure that software makers make their products less vulnerable 
to hackers.

   "Security can't be an afterthought," Neuberger said. "We don't buy a car and 
only then decide if we want to pay for seatbelts and airbags."

   The U.S. sanctioned the Kremlin last month for a hack of federal government 
agencies, known as the SolarWinds breach, that officials have linked to a 
Russian intelligence unit and characterized as an intelligence-gathering 

   In this case, though, the hackers are not known to be working at the behest 
of any foreign government. The group posted a statement on its dark web site 
describing itself as apolitical. "Our goal is to make money, and not creating 
problems for society," DarkSide said.

   Asked Monday whether Russia was involved, Biden said, ""I'm going to be 
meeting with President (Vladimir) Putin, and so far there is no evidence based 
on, from our intelligence people, that Russia is involved, although there is 
evidence that the actors, ransomware, is in Russia.

   "They have some responsibility to deal with this," he added.

   The Kremlin on Tuesday rejected any suggestion it was involved in the attack.

   "Russia has nothing to do with these hacking attacks. Russia didn't have 
anything to do with hacking attacks that had taken place earlier," Kremlin 
spokesman Dmitry Peskov said during a conference call with reporters. "We 
categorically don't accept any accusations against us in this regard."

   U.S. officials have sought to head off anxieties about the prospect of a 
lingering economic impact and disruption to the fuel supply, especially given 
Colonial Pipeline's key role in transporting gasoline, jet fuel, diesel and 
other petroleum products between Texas and the East Coast.

   Colonial is restarting portions of its network. It said Monday that it was 
evaluating the product inventory in storage tanks at its facilities. 
Administration officials stressed that Colonial proactively took some of its 
systems offline to prevent the ransomware from migrating from business computer 
systems to those that control and operate the pipeline.

   In response to the attack, the administration loosened regulations for the 
transport of petroleum products on highways as part of an "all-hands-on-deck" 
effort to avoid disruptions in the fuel supply.

   "The time of the outage is now approaching critical levels and if it 
continues to remain down we do expect an increase in East Coast gasoline and 
diesel prices," said Debnil Chowdhury, IHS Markit Executive Director. The last 
time there was an outage of this magnitude was in 2016, he said, when gas 
prices rose 15 to 20 cents per gallon. The Northeast had significantly more 
local refining capacity at that time.

   The pipeline utilizes both common and custom technology systems, which could 
complicate efforts to bring the entire network back online, according to 
analysts at Third Bridge.

   Granholm, the Energy secretary, said "Cyber attacks on our critical 
infrastructure -- especially energy infrastructure -- is not going away."

   "This is a serious example of what we're seeing across the board in many 
places and it tells you that we need to invest in our systems, our transmission 
grid for electricity. We need to invest in cyber defense in these energy 
systems," she told Bloomberg TV.

   The attack has not affected the supply of gasoline, she said, "but if it 
goes on too long, of course that will change."

   Gasoline futures ticked higher Monday. Futures for crude and fuel, prices 
that traders pay for contracts for delivery in the future, typically begin to 
rise anyway each year as the driving season approaches. The price you pay at 
the pump tends to follow.

   The average U.S. price of regular-grade gasoline has jumped 6 cents over the 
past two weeks, to $3.02 per gallon, which is $1.05 higher than a year ago. The 
year-ago numbers are skewed somewhat because the nation was going into lockdown 
due to the pandemic.

   The attack on the Colonial Pipeline could exacerbate the upward pressure on 
prices if it is unresolved for a period of time.

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