Scope 

Invoking authority under the International Emergency Economic Powers Act (“IEEPA”) and the National Emergencies Act (“NEA”), the President found that the foreign supply of equipment used in the U.S. bulk-power system presents an “unusual and extraordinary” threat to national security, foreign policy, and the economy. The Order declares a national emergency and creates a new security-review process for foreign-made equipment used in the power grid.

In practical terms, the Order generally bars the purchase or installation of certain foreign-made bulk-power system electric equipment from countries subject to a U.S. arms embargo or sanctions regime, including China, Iran, and Russia, from being purchased or installed in the United States, or appropriately places conditions upon purchases and installations to address identified risks.

Key Definitions 

The Order defines several key terms that will shape how it is applied:

• “Bulk‑power system” refers to (i) facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof) rated at 69,000 volts (69 kV) or more, not including facilities used in the local distribution of electric energy; and (ii) electric energy from generation facilities needed to maintain electric system reliability.
•  “Bulk‑power system electric equipment” covers hardware used in bulk‑power system substations, control rooms, or power generating stations, such as reactors, capacitors, large transformers, and utility-scale inverters, when that hardware implicates the national security concerns the Order addresses.
•  “Foreign‑produced” means equipment that was not manufactured, produced, or assembled in the United States.
• “Covered Foreign Entity” means a foreign country, or any person owned, controlled, or directed by such a country, that is subject to a U.S. arms embargo or sanctions regime, or that the Secretary of Energy, in coordination with the Secretary of War, the Director of National Intelligence, and the National Security Advisor, determines is engaged in conduct harmful to U.S. national security or foreign policy.

Core Prohibitions and Exemptions

The prohibition targets transactions involving equipment “designed, developed, manufactured, or supplied” by persons linked to a Covered Foreign Entity, where that equipment poses a serious risk to the design, operation, or maintenance of the U.S. bulk-power system, or otherwise threatens critical infrastructure, the economy, or national security.

Under Section 2(a), the prohibition applies to transactions involving bulk-power system electric equipment—or any critical component, software, firmware, digital service, maintenance service, or remote-access capability associated with such equipment—that is designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a Covered Foreign Entity.

The transaction must also pose one of the following types of risk:

• an undue risk of sabotage, subversion, unauthorized access, malicious remote action, or supply disruption affecting the bulk-power system;
• an undue risk of catastrophic effects on U.S. critical infrastructure or the economy; or
• an otherwise unacceptable risk to national security or the security and safety of U.S. persons.

Under Section 2(b), the Secretary of Energy may 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 this order. Before making this determination, the Secretary shall consider effects on reliability and safety, the availability of secure replacements, and continuity of essential service, and may establish phased compliance.

The Secretary may also create a “pre-qualification” pathway, with criteria and procedures for certifying specific equipment or vendors as approved in advance, so that future transactions involving those products or suppliers would not require case-by-case review.

Delegated Authorities and Regulatory Framework

The Order gives the Secretary of Energy broad authority to implement its requirements, backed by the full range of presidential powers under IEEPA. Among other things, the Secretary may halt pending or future prohibited transactions and require the removal of equipment that poses an unacceptable national security risk.

The Secretary may also issue regulations to:

• designate specific countries or persons as “Covered Foreign Entities” for purposes of the Order;
• identify persons linked to a Covered Foreign Entity;
• flag specific equipment or source countries for heightened scrutiny; and
• create a licensing process for transactions that would otherwise be prohibited.

Finally, the President directs the Secretary of Energy to identify foreign-produced bulk-power system electric equipment that poses an undue or unacceptable risk to the United States and develop and submit recommendations to the President on ways to identify, inventory, isolate, monitor, or replace such items, taking into consideration overall risk to the bulk-power system.

Federal Procurement and Energy Infrastructure Policy 

The Order also calls for updated federal procurement rules to account for national security risks in energy‑related purchases and to favor domestically produced equipment.

Within 180 days, the Secretary of Energy, in consultation with the Federal Acquisition Regulatory Council (FAR Council) and other appropriate officials, must submit recommended FAR revisions to ensure that national security risks are adequately considered in federal procurement concerning energy infrastructure and to prioritize acquisition of U.S.-manufactured energy infrastructure.

Within 90 days after receiving those recommendations, the FAR Council is to consider proposing amendments for public notice and comment.

Key Takeaways 

Executive Order 14420 establishes a new, security‑driven framework for scrutinizing and, where necessary, prohibiting or conditioning U.S. transactions involving foreign‑made bulk‑power system electric equipment associated with Covered Foreign Entities and identified national security risks. It also empowers the government to impose conditions on equipment already installed on the grid and to revise federal procurement rules to prioritize U.S.-manufactured energy infrastructure and explicitly account for national security considerations. 

Companies that participate in the bulk‑power system, including generators, transmission owners, equipment manufacturers, vendors, and federal contractors on energy projects, including those developing energy capacity for data center development projects, should promptly conduct a comprehensive supply chain investigation to inventory all bulk-power system electric equipment, whether installed, on order, or planned. 

Companies should review their supplier contracts to include compliance representations, termination rights, and cost allocation provisions; customer contracts should include force majeure and schedule adjustment language. Finally, companies should closely monitor upcoming Department of Energy regulations and potential FAR amendments. These will determine how the new requirements apply in practice and what they mean for procurement decisions, existing assets, and future investments.