US Declares National Emergency Over Foreign Power-Grid Gear
A new executive order declares a national emergency and authorizes the Secretary of Energy to prohibit or unwind transactions involving bulk-power system equipment from designated foreign adversaries.
Executive Order 14420 declares a national emergency to address the threat posed by the unrestricted acquisition or use of bulk-power system electric equipment sourced from foreign adversaries. The order authorizes the Secretary of Energy, in consultation with other agency heads, to prohibit or impose mitigation measures on any transaction that involves such equipment and poses an undue risk to the US power grid or national security. This grants the government broad power to scrutinize and potentially block acquisitions, unwind completed deals, and demand the removal of installed components.
Clients in the energy and utility sectors, as well as their suppliers and investors, must immediately re-evaluate supply-chain security and transactional due diligence. The order will likely disrupt existing procurement strategies and complicate project finance for major infrastructure. Counsel should advise potentially affected clients to identify any reliance on equipment from nations likely to be designated as "foreign adversaries." The next key development will be the issuance of implementing regulations by the Department of Energy, which are expected to define critical terms and identify specific countries or equipment subject to the new restrictions.