On May 1, 2020, President Trump issued an Executive Order (EO) declaring a national emergency due to “foreign adversaries” that are “creating and exploiting vulnerabilities” in the U.S. bulk-power system (BPS). The EO prohibits “transactions initiated after May 1, 2020” for BPS electric equipment with voltages 69 kilovolt and above if the transaction would pose an undue risk to U.S. national security, grid security, and resiliency, or the economy. A “transaction” includes “any acquisition, importation, transfer, or installation” of BPS equipment. Because the EO focuses on “transactions” for “equipment,” it also applies to components within equipment, giving it a broad reach.

While not defined by the EO, prior designations of “foreign adversaries” suggest that China and Russia would make the list. Also left to be determined by the Secretary of Energy is whether transactions with a “foreign adversary” “or a national thereof” (and “including through an interest in a contract for the provision of the equipment”) would pose an undue risk of BPS “sabotage,” “subversion,” or “catastrophic effects.”

To that end, the EO directs the Secretary of Energy to coordinate with the Director of the Office of Management and Budget, the Secretary of Defense, the Secretary of Homeland Security, the Director of National Intelligence, and the heads of other executive departments and agencies “as appropriate” in making decisions as to whether a transaction should be prohibited or not.

Read the full GT Alert here.