On April 20, 2021, the US Department of Energy (“DOE”) revoked a December 2020 Prohibition Order issued by the Trump Administration which banned the acquisition, importation, transfer, or installation of certain bulk-power system (“BPS”) electric equipment manufactured or supplied by “persons owned by, controlled by, or subject to the jurisdiction or direction of the {People’s Republic of China (“China”)}.” The Prohibition Order was issued pursuant to EO 13920, “Securing the United States Bulk-Power System” (May 1, 2020), which was promulgated to address “foreign adversary countries creating and exploiting vulnerabilities in the United States bulk-power system.” In response to this alleged exploitation, the EO declared an emergency and authorized the Secretary of Energy to prohibit transactions involving certain BPS electric equipment sourced from “foreign adversary” countries for one year. In the recent revocation notice, DOE cited the need to “create a stable policy environment” while the Department conducts a new review of how best to apply its EO 13920 authorities.
On January 20, 2021, the Biden Administration suspended EO 13920 for a period of 90 days to afford the Secretary of Energy and Director of the Office of Management and Budget time to consider whether to recommend a replacement Executive Order that “appropriately balances national security, economic, and administrability considerations,” Pursuant to last week’s Request for Information, DOE is now soliciting comments from electric utilities, academia, research laboratories, government agencies, and other stakeholders on various aspects of electric infrastructure. Specifically, DOE is soliciting comments on the following questions concerning the development of a long-term strategy:
- What technical assistance would States, Indian Tribes, or units of local government need to enhance their security efforts relative to the electric system?
- What specific additional actions could be taken by regulators to address the security of critical electric infrastructure and the incorporation of criteria for evaluating foreign ownership, control, and influence into supply chain risk management, and how can the Department of Energy best inform those actions?
- What actions can the Department take to facilitate responsible and effective procurement practices by the private sector? What are the potential costs and benefits of those actions?
- Are there particular criteria the Department could issue to inform utility procurement policies, state requirements, or FERC mandatory reliability standards to mitigate foreign ownership, control, and influence risks?
DOE is also soliciting comments on the following questions concerning its prohibition authority:
- To ensure the national security, should the Secretary seek to issue a Prohibition Order or other action that applies to equipment installed on parts of the electric distribution system, i.e., distribution equipment and facilities?
- In addition to Defense Critical Electric Infrastructure (DCEI), should the Secretary seek to issue a Prohibition Order or other action that covers electric infrastructure serving other critical infrastructure sectors including communications, emergency services, healthcare and public health, information technology, and transportation systems?
- In addition to critical infrastructure, should the Secretary seek to issue a Prohibition Order or other action that covers electric infrastructure enabling the national critical functions?
- Are utilities sufficiently able to identify critical infrastructure within their service territory that would enable compliance with such requirements?
Interested parties, including those with interests in the supply chain pertinent to BPS electric equipment, should consider submitting comments to DOE in relation to the above questions by the June 7, 2021 deadline.
Steptoe will continue to monitor this issue closely. For more information about the revocation and any potential subsequent action taken by DOE, contact a member of Steptoe’s Energy, Export Controls, or International Trade teams.