On August 26, 2026, President Trump issued Executive Order 14420, “Declaring a National Emergency to Secure the United States Bulk-Power System,” which declares a national emergency under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA), and authorizes the U.S. Department of Energy (DOE) to prohibit or restrict certain transactions involving foreign-produced bulk-power system equipment linked to certain “Covered Foreign Entities” (e.g., China and Russia-linked companies) determined to present specified national-security risks.

Key Takeaways

• For transactions initiated after August 26, 2026, the Secretary of Energy may prohibit, condition or mitigate certain transactions involving foreign-produced bulk-power system electric equipment if the equipment is associated with a Covered Foreign Entity and presents specified risks to the bulk-power system, critical infrastructure, the U.S. economy, national security, or the safety and security of U.S. persons.
• In connection with such prohibited transactions, DOE may review equipment acquired or installed before the date of the Order and impose conditions on their continued use, operation, maintenance, servicing or updating, including requirements to identify, isolate, monitor, secure, disconnect, replace or remove such equipment.
• The Order authorizes DOE to recognize certain bulk-power system electric equipment and vendors as pre-qualified for future transactions and exempt from the Order’s prohibitions. However, DOE retains authority to prohibit, condition or otherwise regulate transactions involving even pre-qualified equipment or vendors, meaning companies should not treat prequalification as eliminating transaction-specific risk.
• Within 120 days of the Order (i.e., December 24, 2026), DOE must issue implementing rules or regulations and may establish licensing procedure and further scoping clarifications.
• Potential procurement restrictions are also forthcoming. Within 180 days of the Order, DOE must consult with the FAR Council and other appropriate officials and submit recommended FAR revisions intended to ensure national security risks are considered in federal procurements involving energy infrastructure and to prioritize U.S.-manufactured energy infrastructure; the FAR Council must then consider whether to propose implementing FAR amendments for notice and comment within 90 days of receiving DOE’s recommendations.

Background

Pursuant to the Order, the President determined that the situation with respect to the foreign supply of bulk-power system electric equipment constitutes an unusual and extraordinary threat, and declared a national emergency with respect to that threat. In support of that determination, the Order cites to U.S. dependence on abundant, reliable electricity due to the rapid growth of advanced manufacturing, data centers, artificial intelligence (AI), and defense production, which has magnified the consequences of a successful attack or supply disruption on the bulk-power system. This mirrors broader federal concerns about resource adequacy. Within the U.S. power industry, significant recent attention has been focused on the unprecedented load growth from data centers and manufacturing development. Notably, the Order highlights the risks of potential exploitation of vulnerabilities in equipment by foreign entities, including, through remote access, and supply chain vulnerability from continued U.S. reliance on foreign sources of such equipment.

The Order revives and expands the May 1, 2020 Executive Order 13920 (2020 Order) that President Trump issued in 2020 during his first administration and that President Biden later revoked which similarly declared a national emergency relating to foreign-sourced bulk-power equipment and directed the DOE to establish restrictions on risky suppliers.¹ The Order arrives, however, in a dramatically different U.S. power industry environment than the one that existed in 2020.

The Order’s practical impact will depend heavily on forthcoming regulatory implementation by DOE.

What the Order Does

The Order prohibits any acquisition, importation, transfer or installation of any “foreign-produced” (i.e., not manufactured, produced, or assembled in the United States) “bulk-power system electric equipment” (transaction) by any person, or with respect to any property, subject to the jurisdiction of the United States, where, among other requirements, the transaction was initiated after the date of the Order and where the Secretary of Energy determines, in coordination with other executive departments and agencies, that:

• The transaction involves bulk-power system electric equipment—or any critical component, software, firmware, digital service, maintenance service or remote-access capability associated with such equipment—designed, developed, manufactured or supplied by persons owned by, controlled by or subject to the jurisdiction or direction of a Covered Foreign Entity; and
• The transaction (i) poses an undue risk of sabotage, subversion, unauthorized access, malicious remote action, or supply disruption affecting the design, integrity, manufacturing, production, distribution, installation, operation or maintenance of the bulk-power system, (ii) poses an undue risk of catastrophic effects on the security or resilience of United States critical infrastructure or the economy, or (iii) otherwise poses an unacceptable risk to the national security or the safety and security of U.S. persons.

The Order defines Covered Foreign Entity to include a country or any person owned by, controlled by or subject to the jurisdiction or direction of a government of a foreign country that is subject to a United States arms embargo or sanctions regime, under the International Traffic in Arms Regulations (22 C.F.R. 126.1), or that the Secretary of Energy, in consultation with other officials, has determined is engaged in conduct that is detrimental to the national security or foreign policy of the United States. In practice, this is likely to include several countries such as China, Russia, Iran, North Korea, Belarus, Cuba, Syria and Venezuela.

In connection with prohibited transactions, DOE may also impose conditions on the continued use, operation, maintenance, servicing or updating of foreign manufactured or operated bulk-power system electric equipment acquired or installed before the date of the Order, including requirements to identify, isolate, monitor, secure, disconnect, replace or remove such equipment. DOE is also authorized to mitigate national security risks and such mitigation measures may serve as a precondition to the approval of a transaction or class of transactions that would otherwise be prohibited pursuant to the Order.

The Order also authorizes the Secretary of Energy to establish a “white list” process for certain bulk-power system electric equipment and vendors, under which certain equipment or vendors may be deemed pre-qualified for future transactions and exempt from the Order’s prohibitions. However, prequalification does not create a safe harbor: the Secretary retains authority to prohibit, condition or otherwise regulate transactions involving even pre-qualified equipment or vendors. For developers and utilities, the emergence of a federal “pre-qualified vendor” system may become one of the most important commercial outcomes. If widely adopted, such a system could effectively establish a federal approved-supplier framework for critical grid equipment.

Notably, the Order goes beyond traditional hardware concerns, and expressly covers software and firmware, digital services, maintenance services or remote-access capability associated with such equipment, along with lifecycle maintenance and update mechanisms and other supply-chain dependencies associated with bulk-power equipment that could present an unacceptable risk to the bulk-power system. The scope is therefore significantly broader than transformers or switchgear, and rather, encompasses the entire operational technology ecosystem supporting electric generation and transmission facilities.

Potential Equipment Affected

The Order covers a broad set of “bulk-power system electric equipment,” defined as items used in bulk-power system² substations, control rooms or power-generating stations, including:

• Reactors
• Capacitors
• Substation transformers
• Utility-scale and other grid-connected inverters
• Battery energy storage systems
• Uninterruptible power supply systems supporting critical infrastructure, current coupling capacitors, large generators, small 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 (including remote terminal units, programmable logic controllers and intelligent electronic devices), distributed control systems and safety instrumented systems.

The scope of the definition will likely be further clarified through DOE implementing regulations.

The inclusion of utility-scale inverters and battery energy storage systems could be particularly significant. Over the past decade, the solar and storage industries have become heavily dependent on globally sourced equipment. Moreover, the Order arrives during a period of already-constrained equipment markets. Across the industry, procurement timelines for large transformers, breakers, switchgear and certain inverter products remain materially extended compared with pre-pandemic levels. Domestic manufacturing capacity has improved but remains limited in some critical categories.

Next Steps: Regulatory Implementation

The Order sets out several near-term implementation steps that will shape its practical impact. Key milestones include DOE rulemaking, review of bulk-power system electric equipment that pose national security risks and potential revisions to the Federal Acquisition Regulation (FAR).

Implementing Regulations: Within 120 days (i.e., by December 24, 2026), the DOE must publish implementing rules or regulations implementing the Order implementing the Order. Such regulations will provide more clarity on which countries or persons constitute a “Covered Foreign Entity” and who is owned by, controlled by or subject to the jurisdiction or direction of a Covered Foreign Entity, identify covered equipment and establish procedures to license transactions that would otherwise be prohibited. Any such rulemaking would occur against a backdrop of federal policy-makers becoming increasingly concerned about reliability and resource adequacy. Recent federal initiatives have highlighted large-load interconnection challenges, AI-related demand growth, generator retirement concerns, transmission expansion needs and resource adequacy pressures across multiple regions. Industry stakeholders have repeatedly emphasized that the United States is experiencing demand growth not seen in decades, driven largely by data centers, reshoring of manufacturing and electrification trends. Against this backdrop, policy-makers appear increasingly willing to accept higher procurement costs or reduced supplier flexibility in exchange for enhanced grid security and domestic resilience.

Review of Bulk-Power System Electric Equipment: The Order directs the DOE to, as soon as practicable, conduct a comprehensive review of bulk-power system equipment linked to Covered Foreign Entities that poses an undue risk of sabotage to or subversion of the bulk-power system in the United States, an undue risk of catastrophic effects on the security and resilience of U.S. critical infrastructure or economy; or otherwise poses an unacceptable risk to the national security of the United States . The DOE is then to provide recommendations to the President on ways to identify, inventory, isolate, monitor, or replace such items as soon as practicable.

Potential Changes to FAR: In addition, within 180 days (i.e., by February 22, 2027), the DOE shall, in consultation with the FAR Council and other appropriate senior executive branch officials, develop and submit a set of recommended revisions to the FAR aimed at ensuring that national security risks are adequately considered in any federal procurement concerning energy infrastructure and to prioritize the acquisition of United States-manufactured energy infrastructure. Within 90 days of receiving the DOE’s recommendations, the FAR Council is required to consider proposing for notice and public comment amendments to the applicable provisions in the FAR to implement the recommendations provided by the DOE.

¹ Exec. Order No. 13,920, 85 Fed. Reg. 26,595 (May 4, 2020).

² The Executive Order available through the White House’s website defines “bulk-power system” as “a system that: (1) facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof); and (ii) electric energy from generation facilities needed to maintain electric system reliability.” The Order also provides that the definition includes transmission lines rated at 69,000 volts (69 kV) or more, but does not include facilities used in the local distribution of electric energy. It appears that there may be words missing from the definition, which makes its scope difficult to interpret. This language may be cleaned up prior to publication of the order in the Federal Register.