The White House published EO 13920 in Monday’s (available
online Saturday) Federal Register (85
FR 26595-26599) addressing “Securing the United States Bulk-Power System”.
The EO provides the Secretary of Energy the authority to prohibit the use of
foreign made electric equipment in the US bulk-power system.
To justify the authority, the EO explains that:
• The bulk-power system is a target
of those seeking to commit malicious acts against the United States and its
people; and
• The unrestricted acquisition or
use in the United States of bulk-power system electric equipment designed,
developed, manufactured, or supplied by persons owned by, controlled by, or
subject to the jurisdiction or direction of foreign adversaries augments the
ability of foreign adversaries to create and exploit vulnerabilities in
bulk-power system electric equipment.
The President then states:
“I therefore determine that the
unrestricted foreign supply of bulk-power system electric equipment constitutes
an unusual and extraordinary threat to the national security, foreign policy,
and economy of the United States, which has its source in whole or in
substantial part outside the United States. This threat exists both in the case
of individual acquisitions and when acquisitions are considered as a class.
Although maintaining an open investment climate in bulk-power system electric
equipment, and in the United States economy more generally, is important for
the overall growth and prosperity of the United States, such openness must be
balanced with the need to protect our Nation against a critical national
security threat. To address this threat, additional steps are required to
protect the security, integrity, and reliability of bulk-power system electric
equipment used in the United States. In light of these findings, I hereby
declare a national emergency with respect to the threat to the United States
bulk-power system.”
Prohibitions
Section 1(a) of the EO prohibits “any
acquisition, importation, transfer, or installation of any bulk-power system
electric equipment” where the Secretary of Energy (in consultation with the
Director of OMB) finds that “the transaction involves bulk-power system
electric equipment designed, developed, manufactured, or supplied, by persons
owned by, controlled by, or subject to the jurisdiction or direction of a
foreign adversary” and the transaction:
• Poses an undue risk of sabotage
to or subversion of the design, integrity, manufacturing, production,
distribution, installation, operation, or maintenance of the bulk-power system
in the United States;
• Poses an undue risk of
catastrophic effects on the security or resiliency of United States critical
infrastructure or the economy of the United States; or
• Otherwise poses an unacceptable
risk to the national security of the United States or the security and safety
of United States persons.
Designated Actions
Section 1(b) allows the
Secretary to “design or negotiate measures to mitigate concerns identified
under section 1(a)” and use such measures as a precondition to approvals of
transactions that would otherwise be prohibited.
Section 2(a) authorizes the
Secretary to:
• Direct the timing and manner of
the cessation of pending and future transactions prohibited pursuant to section
1 of this order,
• Adopt appropriate rules and
regulations, and
• Employing all other powers
granted to the President by the International Emergency Economic Powers Act (50
USC 1701 et seq.; IEEPA) as may be necessary to implement this order.
Section 2(b) directs the
Secretary to issue rules and regulations implementing this EO. Those would
include rules or regulation that would:
• Determine that particular
countries or persons are foreign adversaries exclusively for the purposes of
this order;
• Identify persons owned by,
controlled by, or subject to the jurisdiction or direction of foreign
adversaries exclusively for the purposes of this order;
• Identify particular equipment or
countries with respect to which transactions involving bulk-power system
electric equipment warrant particular scrutiny under the provisions of this
order;
• Establish procedures to license
transactions otherwise prohibited pursuant to this order; and
• Identify a mechanism and relevant
factors for the negotiation of agreements to mitigate concerns raised in
connection with subsection 1(a) of this order.
Section 2(d)(i) directs the
Secretary to “identify bulk-power system electric equipment designed,
developed, manufactured, or supplied, by persons owned by, controlled by, or
subject to the jurisdiction or direction of a foreign adversary that poses an
undue risk of sabotage to or subversion of the design, integrity,
manufacturing, production, distribution, installation, operation, or
maintenance of the bulk-power system in the United States” that:
• Poses an undue risk of
catastrophic effects on the security or resiliency of United States critical
infrastructure or the economy of the United States, or
• Otherwise poses an unacceptable
risk to the national security of the United States or the security and safety
of United States persons.
Task Force Established
Section 3 establishes the Task
Force on Federal Energy Infrastructure Procurement Policies Related to National
Security. The Task Force will be chaired by the Secretary and include representatives
from at least six listed federal agencies. The Task Force will:
• Develop a recommended consistent
set of energy infrastructure procurement policies and procedures for agencies,
to the extent consistent with law, to ensure that national security
considerations are fully integrated across the Federal Government, and submit
such recommendations to the Federal Acquisition Regulatory Council (FAR
Council);
• Evaluate the methods and criteria
used to incorporate national security considerations into energy security and
cybersecurity policymaking;
• Consult with the Electricity
Subsector Coordinating Council and the Oil and Natural Gas Subsector
Coordinating Council in developing the recommendations and evaluation described
in subsections (c)(i) through (ii) of this section; and
• Conduct any other studies,
develop any other recommendations, and submit any such studies and
recommendations to the President, as appropriate and as directed by the
Secretary.
Definitions
Section 4 provides definitions
for key terms used in this EO. The terms defined include:
• Bulk-power system,
• Bulk-power system electric
equipment,
• Entity,
• Foreign adversary,
• Person,
• Procurement, and
• United States person
Most of these definitions are generic descriptions of standard
regulatory terms. The interesting exception is the term ‘Bulk-power system
electric equipment’. This
definition starts off with a lengthy list of industrial power equipment
that includes:
• Reactors,
• Capacitors,
• Substation transformers,
• Current coupling capacitors,
• Large generators,
• Backup generators,
• Substation voltage regulators,
• Shunt capacitor equipment,
• Automatic circuit reclosers,
• Instrument transformers,
• Coupling capacity voltage
transformers,
• Protective relaying,
• Metering equipment,
• High voltage circuit breakers,
• Generation turbines,
• Industrial control systems,
• Distributed control systems, and
• Safety instrumented systems.
The definition then concludes by stating that: “Items not
included in the preceding list and that have broader application of use beyond
the bulk-power system are outside the scope of this order.” Thus,
communications equipment, security software and access control systems, for
example, could not be addressed under this Executive Order.
Commentary
It seems clear to me that this EO is primarily directed at
limiting the spread of Chinese equipment in the bulk-power system; certainly
the President is not concerned with US companies using equipment made in North
Korea or Iran, or designed by Hezbollah. Unfortunately, failing to actually
name the Chinese government as the intended foreign adversary paves the way for
this EO to be used in a wide variety of trade disputes around the world.
It is particularly odd that the President is providing the Secretary
of Energy with broad powers (employing all other powers granted to the
President) under IEEPA. Those authorities include levying economic sanctions
and taking control of foreign owned property and assets within the United
States. Those authorities are typically limited to the State Department or
Treasury Department. Providing blanket authority to the Secretary of Energy in
this way greatly expands the reach of the Energy Department well beyond that
defined by Congress.
One final oddity here, the distressing lack of discussion of
cybersecurity issues. There is only a single mention of cybersecurity in the EO
and that is in describing the duties of the Task Force; “evaluate the methods
and criteria used to incorporate national security considerations into energy
security and cybersecurity policymaking”. Certainly, a major portion of the perceived
threat is via cyber attacks on components of the bulk-power systems. Failure to
specifically require the Secretary to address those concerns in consultation
with the Cybersecurity and Infrastructure Security Agency is a major oversight
in this EO.
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