POWER October 2020 - 19

LEGAL & REGULATORY
Industry Wants Clarity
on Trump Order About
Foreign Equipment
Chip Cannon
P
resident Trump on May 1, 2020, issued Executive Order
(EO) 13920, titled " Securing the United States
Bulk-Power System. " Trump said that the unrestricted
foreign supply of certain electric equipment constitutes an
" unusual and extraordinary threat to the national security,
foreign policy, and economy of the United States " and declared
a national emergency with respect to the U.S. " bulkpower
system. "
The EO prohibits U.S. persons from initiating transactions to
acquire, import, transfer, or install " bulk-power system electric
equipment " that was designed, developed, or manufactured
by a " foreign adversary, " where the U.S. Department of Energy
(DOE) has determined that the transaction poses an undue risk
to the nation's electric grid, critical infrastructure, or economy.
While the EO applies to equipment from a number of countries,
it is generally viewed as primarily directed at China.
The electric industry has expressed concern about the potential
scope of the order, especially given the lack of generally
accepted, granular definitions of the terms " bulk-power
system " and " bulk-power system electric equipment. " While
the EO does not apply to distribution facilities or transmission
facilities rated below 69 kV, its applicability to other
components of the grid, including utility-scale renewable and
energy storage projects, is less than clear.
The DOE has sought to assure stakeholders that it will
implement the EO " surgically, " and is not seeking wholesale
replacement of components on the nation's electric grid. Nevertheless,
a number of stakeholders have expressed concern
that the lack of specificity as to what components could be
subject to the EO's restrictions is already having a chilling effect
on investment and procurement decisions. This concern
is underscored by the fact that the EO suggests that existing
electric infrastructure that places the bulk-power system at
risk is also subject to isolation, monitoring, or replacement.
The DOE, tasked by the administration with leading a multiagency
effort to develop implementing regulations for the
order, on July 8 published a Request for Information (RFI)
seeking details about the electric industry's current cybersecurity
and supply chain practices. Almost 100 comments
were filed in response to the RFI, and they provide valuable
insight into the industry's existing practices, including
enterprise risk assessment programs, cybersecurity best
practices, current standards, and programs that can be used
by the DOE in developing regulations (including those of the
North American Electric Reliability Corp., responsible for the
reliability of the U.S. transmission grid), and potential supply
chain risks from sub-tier suppliers.
A number of the comments also address an issue that was
not expressly raised in the RFI-namely, what categories of
October 2020 | POWER
" bulk-power system electric equipment " are subject to the
EO. The Solar Energy Industries Association (SEIA) noted
that the ambiguity of the scope of the order is " hampering
investment today, " and asked the DOE to make clear as soon
as possible " what components or suppliers pose unacceptable
threats to national security, and what equipment may
be safely purchased and installed. " The Business Council for
Sustainable Energy (BCSE) noted the RFI provides some
clarity, but said " concern remains that the [EO] creates
substantial uncertainty in the sector due to its far-reaching
implications. " The group warned that, " [w]ithout timely clarifications,
the [EO] could result in delay or cancellation of
equipment orders as well as impede investment in energy
projects and infrastructure. " Other commenters echoed the
concern that uncertainty in the supply chain resulting from
the lack of DOE guidance on the definition of " bulk-power
system electric equipment " will cause delays, and increase
the cost of infrastructure projects.
Some commenters suggested the DOE could provide
more clarity by expressly excluding equipment that does not
have the communications capabilities necessary for it to be
exploited by a foreign adversary. Securing America's Future
Energy, a nonpartisan, not-for-profit organization focused on
energy security, noted the concern " that the government
[through the order's implementation] might inadvertently
prohibit some equipment or components that do not pose
a security threat [for example, that lack 'intelligence,' connectivity,
or telemetry] from being imported. " Similarly, SEIA
encouraged the DOE to conclude that equipment that contains
no bidirectional communications capabilities, such as
photovoltaic modules and certain inverters, does not pose
an undue risk to the grid. Sungrow Power Supply took a similar
approach, asking the DOE to categorically exclude products
that " do not constitute a threat to the United States'
safety and well-being, " such as inverters and energy storage
solutions without a supervisory control and data acquisition
(SCADA) system.
As demonstrated in the comments to the RFI, the industry
will be evaluating whether the DOE proposal provides sufficient
guidance as to the scope of the EO-in particular, with
respect to the definition of " bulk-power system electric equipment " -to
minimize unnecessary supply chain disruptions.
The proposal could provide some comfort to the industry as to
broad categories of equipment that are excluded from the EO.
It is more likely, however, that the DOE will propose administrative
processes for determining approved components and/
or vendors, in which case the industry will need to be prepared
for the uncertainty to extend for some time. ■
-Chip Cannon is a partner with
Akin Gump Strauss Hauer & Feld LLP.
www.powermag.com
19
http://www.powermag.com
POWER October 2020

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