Power & Pipes

FERC, CFTC, and State Energy Law Developments

The US Department of Energy (DOE) issued Order No. 486.1 on June 7 prohibiting DOE employees and contractors from participating in the foreign government “talent recruitment programs” of countries designated by the DOE as a “foreign country of risk,” which apparently include China and Russia. The order aims to balance the DOE’s broad scientific mission with national security interests by preventing the unauthorized transfer of scientific and technical information to certain foreign entities. DOE contractors and subcontractors within the utility and nuclear sectors should be prepared to implement controls to ensure that neither they nor their employees or subcontractors participate in these foreign-sponsored programs for identified countries.

The order represents another step in federal efforts to reduce the ability of certain foreign countries to obtain sensitive technical knowledge from critical US industries. The DOE was driven by concerns that foreign governments use talent recruitment programs to target scientists, engineers, and other technical experts to “reduce costs associated with basic research while focusing investment on military development or dominance in emerging technology sectors.”

List of Foreign Government Talent Recruitment Programs by Foreign Countries of Risk

The order requires the director of the Office of Intelligence and Counterintelligence to create and maintain a list of foreign government talent recruitment programs covered by the order. The list of foreign countries of risk is not yet publically available, and the order does not mandate a deadline for its creation. The order also does not define what a foreign country of risk is, or enumerate the factors considered in determining overall risk. However, media reports identified China and Russia among the countries on the list.

The list of foreign countries of risk may have wider implications beyond the DOE, such as informing the Committee on Foreign Investment in the United States (CFIUS). While the Foreign Investment Risk Review Modernization Act of 2018 (FIRMMA) does not reference creating a list of foreign countries at risk, CFIUS may use the DOE’s list to create its own variation of a list pursuant to Sections 1713 and 1721 of FIRMMA, which relate to exchanging information and best practices with “allies and partners.”

Mandatory Contractor Requirements Document

The order includes a Contractor Requirements Document (CRD) that must be included in all DOE and National Nuclear Security Administration (NNSA) Management and Operating (M&O) contracts, except for specifically listed M&O contracts. The definition of a contractor employee includes any subcontractor employee or joint appointee from another institution performing work within the scope of such a DOE contract either on site at the DOE/NNSA site/facility or in DOE/NNSA/contractor leased space. However, the order does not apply to non-DOE contractor employees working under certain agreements.

The CRD requires DOE contractors to ensure neither they nor any of their employees participate in a foreign government talent recruitment program of a foreign country of risk while performing work within the scope of the DOE contract. It also requires contractors to file quarterly reports stating whether they or their employees are participants in a foreign government talent recruitment program of a foreign country of risk. Finally, contractors must notify the Office of Intelligence and Counterintelligence if it or its employees are, or are believed to be, participants in a foreign government talent recruitment program of a foreign country of risk.

According to the terms of the CRD, a contractor’s responsibilities flow down to research and development (R&D) contracts and demonstration contracts. An R&D subcontract involves efforts and scientific and technological work for scientists, researchers, and engineers involving research activities (which includes training of individuals in research activities), both basic and applied, and all development activities. A demonstration subcontract involves a project designed to determine the technical feasibility and economic potential of a technology on either a pilot or prototype scale.

Any breach of the terms of the CRD may result in the DOE exercising contractual remedies in accordance with federal regulations and the terms of the contract.