On May 1, 2020, the Trump Administration issued Executive Order 13920 on “Securing the United States Bulk-Power System” (“Bulk-Power System EO”), which aims to prevent “foreign adversaries” from exploiting vulnerabilities in the US bulk-power system in furtherance of US national security. As explained in further detail in the press release concurrently published by the Department of Energy, the Bulk-Power System EO is meant to prohibit certain transactions involving bulk-power system equipment where the Secretary of Energy has determined that:
- The transaction involves bulk-power system equipment designed, developed, manufactured, or supplied by persons owned/controlled by, or subject to the jurisdiction of a foreign adversary; and
- The transaction:
- Poses an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of the US bulk-power system;
- Poses an undue risk of catastrophic effects on the security or resiliency of US critical infrastructure or the US economy; or
- Otherwise poses an unacceptable risk to US national security or the security and safety of US persons.
The Bulk-Power System EO authorizes the Secretary of Energy to establish criteria for recognizing certain bulk-power system equipment and vendors as pre-qualified for future transactions, and to publish a pre-qualified equipment and vendors list.
The Secretary of Energy is required to publish rules or regulations implementing the Bulk-Power System EO within 150 days of its issuance (i.e., by September 28, 2020). These rules and regulations may (i) identify particular countries or persons as “foreign adversaries,” as none are currently identified; (ii) identify persons owned/controlled by “foreign adversaries”; (iii) identify particular equipment or countries with respect to which transactions warrant particular scrutiny; (iv) establish licensing procedures for otherwise prohibited transactions; and (v) identify a mechanism and relevant factors for negotiation of agreements that may mitigate the national security concerns identified in the Bulk-Power System EO.
The Bulk-Power System EO also tasks the Secretary of Energy with identifying bulk-power system equipment presenting a threat to the security of the US bulk-power system and to develop recommendations on ways to identify, isolate, monitor, or replace such equipment “as soon as practicable,” while considering the overall risk to the system.
Lastly, the Bulk-Power System EO establishes an interagency “Task Force on Federal Energy Infrastructure Procurement Policies Related to National Security” (the “Task Force”). Chaired by the Secretary of Energy, the Task Force will develop federal energy infrastructure procurement policies to integrate the national security considerations described in the order into broader energy security and cybersecurity policymaking, in coordination with the Electricity and Oil and Natural Gas Subsector Coordinating Councils. We note that the Bulk Power System EO is similar in aim to Executive Order 13873, “Securing the Information and Communications Technology and Services Supply Chain,” which was issued last year and is discussed in detail in our previous blog posts here and here. These EOs appear to be part of a broader strategy undertaken by the Trump Administration to address potential national security concerns in US infrastructure projects and could have significant impacts on companies operating in the targeted sectors.