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Pursuant to Executive Order 13920 issued May 1, 2020, entitled "Securing the United States Bulk-Power System," the U. S. Department of Energy (DOE) proposes to implement regulations that would govern the process and procedures that the Secretary of Energy (Secretary) will use to identify, assess, and address the acquisition or use in the United States of bulk-power electric equipment that poses an undue risk to the bulk-power system (BPS), and/or constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States, which is sourced in whole or in substantial part, outside the United States.

Statement of Need:

The BPS provides the electricity that supports our national defense, vital emergency services, critical infrastructure, economy, and way of life.  The BPS is a target of those seeking to commit acts against the U.S. and its people, including cyber-attacks or other sabotage, because a successful attack on the BPS would present significant risks to the U.S. economy and to public health and safety, and would render the U.S. less capable of defending itself and its allies. The 2018 National Defense Strategy states that the homeland is no longer a sanctuary, and that malicious cyber activity against personal, commercial, or government infrastructure is growing significantly. According to the 2019 Worldwide Threat Assessment, near-peer foreign adversaries have the capability and the integrated plans to launch cyber-attacks that cause localized, disruptive effects on critical infrastructure such as disruption of a natural gas pipeline for days to weeks in the U.S. These foreign adversaries continue to map U.S. critical infrastructure with the long-term goal of being able to cause substantial damage.  The 2020 U.S. Counterintelligence Strategy states that foreign adversaries to include nation-states, organizations, and individuals are employing innovative combinations of traditional spying, economic espionage, and supply chain and cyber operations to gain access to critical infrastructure. These foreign adversaries are also attempting to access our Nation’s key supply chains at multiple points from concept to design, manufacture, integration, deployment, and maintenance by inserting malware into important information technology networks and communications systems.

Due to these growing threats, the President determined that the unrestricted acquisition or use in the U.S. of BPS 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 BPS electric equipment, with potentially catastrophic effects. Therefore, the President determined that the unrestricted foreign supply of BPS electric equipment constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the U.S.  Through EO 13920, the President directed DOE to issue regulations implementing the authorities delegated to the Secretary.  This rulemaking fulfills that directive.

Anticipated Costs and Benefits:

DOE anticipates that businesses impacted by the regulatory action could face increased product and compliance costs which would be offset by benefits accrued through grid security.