Power & Pipes

FERC, CFTC, and State Energy Law Developments

In May 2020, US President Donald Trump issued Executive Order 13920, banning the unrestricted import or use of certain categories of bulk-power system electric equipment from foreign adversaries, with a focus on Russian and Chinese equipment suppliers. The future of that regulation is now up in the air.

In the months following the order’s issuance, the US Department of Energy (DOE) had undertaken the initial steps to issue implementing regulations. But that action was halted following the change in administration, when President Joe Biden issued an executive order that “suspended” Executive Order 13920 for 90 days. This suspension did not revoke the executive order, however, resulting in confusion about the future of the order and DOE’s more recent prohibition order prohibiting the use of Chinese-supplied equipment in the electric facilities serving designated Critical Defense Facilities.

On February 9, 2021, DOE issued its initial guidance to address the confusion about the status of utility compliance obligations during the suspension period. The new guidance lifts the obligation to provide immediate reports on the status of implementing the prohibition order—which would have been due this month and next—but makes clear that DOE expects electric utilities to implement those controls regardless of the change.

What Should Electric Utilities Do About the Prohibition Order?

The immediate deadlines related to the protection of Defense Critical Electric Infrastructure and the Critical Defense Facilities served by those electric facilities have been lifted. As a result, electric utilities need not certify that they have prioritized Critical Defense Facilities in their load shedding and restoration plans. Electric utilities are also no longer required to certify that they have not entered into prohibited transactions involving Chinese-supplied equipment in their Defense Critical Electric Infrastructure and have implemented controls to avoid such transactions in the future.

Nonetheless, the new guidance emphasizes that utilities are expected to continue to implement those directives. DOE notes that throughout the suspension period, utilities should refrain from installing prohibited equipment and should continue to prioritize the load of Critical Defense Facilities. As the guidance explains, “The Department’s engagements with utilities on energy security issues will continue, and our commitment to mitigating threats affecting critical defense facilities and the electric sector remains unchanged.”

What Is the Future of Executive Order 13920?

For now, the order will return to effectiveness at the end of the 90-day suspension period unless President Biden orders otherwise. In the meantime, DOE and the director of the Office of Management and Budget plan to consider whether to recommend replacement of Executive Order 13920. During the suspension period, DOE’s work on the implementing regulations for the order has also been suspended.

Despite this halt in formal regulation of bulk-power system supply chain security, DOE’s new guidance explains that it will continue to work closely with FERC, NERC, and the North American Transmission Forum to address supply chain security risks within the electric sector. But this engagement will emphasize cooperation and coordination—rather than regulation—for now.