President issues Executive Order on foreign-produced bulk-power system electric equipment
President Trump’s recent Executive Order 14420 complements the Federal Communications Commission’s (FCC) addition of foreign-produced power inverters to its Covered List. Together, these actions signal heightened federal scrutiny over U.S. electric grid security. The Order restricts the acquisition, importation, transfer, and installation of “bulk-power system electric equipment” produced by “Covered Foreign Entities.”
But the EO is different from the FCC’s Covered List additions in important ways. It is not self-executing and will require the U.S. Department of Energy (DoE) to establish a regulatory regime, which will include provisions for licensing and mitigations. It is also more targeted and will only affect equipment from specifically identified foreign countries.
More generally, the EO continues the steady rollout of measures intended to secure and/or reshore critical components of U.S. infrastructure to reduce and prevent foreign adversaries’ abilities to collect information, corrupt data integrity, disable physical devices, take over their functions, and cause potentially catastrophic real-world effects. These efforts began before the current Trump administration and reflect a centralized effort to use and expand available authorities through multiple agencies such as DoE, the U.S. Department of Commerce, and FCC. As U.S. cyber and infrastructure defense takes more advantage of regulatory authorities, industry should expect additional regulations in critical industry sectors.
Legal basis and scrutiny over the electric grid
The EO declares a national emergency regarding the foreign supply of bulk-power system electric equipment under the International Emergency Economic Powers Act (IEEPA). IEEPA allows the president to regulate commerce after declaring a national emergency in response to an unusual and extraordinary threat originating largely outside the United States.
The EO notes that growth in advanced manufacturing, data centers, AI, and defense production has increased the nation's reliance on reliable electricity. Threats associated with foreign-produced equipment include sabotage, subversion, unauthorized access, malicious remote action, and supply disruption.
Defining the scope of the restrictions
The EO identifies foreign actors creating and exploiting vulnerabilities in the U.S. bulk-power system as “Covered Foreign Entities.” Covered Foreign Entities include:
- Countries or entities under U.S. arms embargoes or sanctions regimes
- Any country, business, or individual that DoE, in consultation with defense and intelligence agencies, designates based on national security or foreign policy considerations
- Entities owned or controlled by a sanctioned or designated foreign government
- Entities subject to the jurisdiction or direction of a sanctioned or designated foreign government
The EO defines the infrastructure (the “bulk-power system”) and hardware (“bulk-power system electric equipment”) subject to the forthcoming rules:
1. The bulk-power system is defined as facilities and control systems necessary to operate an interconnected electric energy transmission network, and electric energy from generation facilities needed to maintain system reliability. This includes transmission lines rated at 69,000 volts (69 kV) or higher. The EO excludes facilities used in local distribution of electric energy.
2. Bulk-power system electric equipment (BPSEE) includes specific hardware used within substations, control rooms, or power generating stations, which can be categorized as follows:
- Power management and storage: Reactors, capacitors, substation transformers, utility-scale and grid-connected inverters, battery energy storage systems, and uninterruptible power supply systems supporting critical infrastructure, current coupling capacitors, substation voltage regulators, and shunt capacitor equipment.
- Generation and protection: Large generators, small generators, backup generators, generation turbines, high voltage circuit breakers, automatic circuit reclosers, instrument transformers, coupling capacity voltage transformers, protective relaying, and metering equipment.
- Control systems: Industrial control systems, distributed control systems, and safety instrumented systems. This includes remote terminal units, programmable logic controllers (which have been the target of Iranian attacks recently), and intelligent electronic devices.
- Digital dependencies: In determining whether equipment is within the scope of this order, agencies also may consider associated software, firmware, remote access capabilities, and life cycle maintenance and update mechanisms.
Implementation
EO 14420 is not self-executing and does not take effect immediately. It directs the Secretary of Energy, in coordination with other federal agencies, to implement regulations under IEEPA. Unlike other recent Executive Branch actions, this regulatory process ordinarily includes a rulemaking notice and an opportunity for public comment.
Once finalized, the DoE regulations will affect “transactions” (acquisition, importation, transfer, or installation of covered foreign-produced BPSEE) and may affect the continued use of previously acquired or installed equipment. Subject to licensing, mitigation, or other exceptions, DoE will prohibit transactions that both (1) involve foreign-produced BPSEE designed, developed, manufactured, or supplied by persons owned or controlled by, or subject to the jurisdiction of a Covered Foreign Entity and (2) present an undue risk to national security (including risks to the bulk-power system, critical infrastructure, or the economy). DoE is also authorized to impose conditions on previously acquired or installed BPSEE, up to and including isolation, disconnection, replacement, or removal.
The regulatory framework will include mechanisms for licensing and exemptions. DoE may establish a process to license specific transactions that would otherwise be prohibited and negotiate mitigation measures as a precondition to approval. DoE may also establish criteria and procedures for pre-qualifying and exempting particular equipment and vendors.
The EO also directs DoE “as soon as possible” to identify existing covered BPSEE that poses an undue risk to the U.S. bulk-power system, critical infrastructure, economy, or national security and recommend ways to identify, inventory, isolate, monitor, or replace such equipment in a manner that accounts for risks to the bulk-power system.
Federal procurement and industry obligations
The Order also addresses federal procurement policy. Within 180 days, DoE and the Federal Acquisition Regulatory Council (FAR Council) must develop recommended revisions to the Federal Acquisition Regulation (FAR). These revisions are intended to ensure that national security risks are evaluated in federal procurement for energy infrastructure and to prioritize acquisition of U.S.-manufactured energy infrastructure. After receiving these recommendations, the FAR Council has 90 days to consider proposing amendments for notice and public comment.
Timeline and considerations
The EO appears to initiate normal processes for proposing rules and regulations. It directs DoE, in consultation with other departments and agencies, to publish implementing rules or regulations within 120 days. That deadline, if it holds, is December 24, 2026.
Entities operating within the bulk-power system and its supply chains should evaluate how these rules affect their existing infrastructure and future procurement. Reliance on BPSEE from China-based producers or suppliers in particular should be assessed, but the Covered Foreign Entity definition will probably cover a wider range of national security concerns.
Because the Order requires a rulemaking period, industry participants have the opportunity to engage with the DoE directly or through industry associations. The processes and criteria for licensing and mitigation stand to have significant impacts on companies that rely on foreign supply chains, and such companies may benefit from proactively proposing measures that would secure infrastructure without unduly imposing costs, creating unmanageable compliance programs, or impairing operations.
Similarly, companies that supply the federal government with products or services relating to energy infrastructure should monitor the FAR Council recommendations and consider providing input into potential acquisition process changes. The initial recommendations are due February 22, 2027, and the FAR Council must consider proposing amendments by May 23, 2027.
