INSIGHTi Recent Presidential Trade Actions Affecting the U S Power Grid May 21 2020 Introduction Over the past several weeks the Trump Administration has taken actions to limit the use of foreign manufactured products in the U S power grid On May 1 2020 the President declared a national emergency E O 13920 invoking the International Emergency Economic Powers Act IEEPA to prohibit certain international transactions for bulk-power system electric equipment used to operate the national grid On May 4 Secretary of Commerce Wilbur Ross announced a new investigation under Section 232 of the Trade Expansion Act of 1962 into whether imports of certain large electrical transformers and their parts threaten national security These actions may suggest a pattern begun last year of making use of executive national security authorities to restrict imports of goods that may be used for critical infrastructure e g telecommunications and electrical equipment The U S Power Grid and National Security Issues The federal government recognizes the U S bulk-power system as critical infrastructure whose “disruption corruption or dysfunction” would have severe impacts across critical infrastructure sectors The Department of Energy DOE administers voluntary public-private partnerships in the electricity subsector to promote information sharing on best practices and common threats affecting bulk-power systems These systems enable long-distance transmission and distribution of electricity from generation facilities to end users In addition the Federal Energy Regulatory Commission FERC an independent federal agency oversees mandatory and enforceable reliability standards for industry stakeholders Risk assessments by subsector stakeholders have generally focused on threats and hazards that may disable or permanently damage large numbers of high-voltage electric-power transformers LPTs simultaneously LPTs are critical to the movement of electricity across the bulk-power system Because LPTs require long lead times for manufacture transport and installation loss of these systems for any reason may have severe long-term consequences for electric reliability Experts have expressed increasing concern about the threat of coordinated cyberattacks through the nation’s networked control systems that might significantly impair the nation’s electric grid by damaging LPTs and other bulk-power equipment Congressional Research Service https crsreports congress gov IN11401 CRS INSIGHT Prepared for Members and Committees of Congress Congressional Research Service 2 Widely recognized cyber supply chain vulnerabilities may increase cybersecurity risks to the electricity subsector In 2016 FERC initiated development of a new reliability standard to address supply chain risk management issues affecting cybersecurity of bulk-power systems The rule would require industry stakeholders to formalize cybersecurity risk management and implement more rigorous vetting of vendors and software among other measures In April 2020 FERC delayed implementation of the rule due to COVID-19 contingencies Policies developed under the recent emergency declaration or because of an affirmative Section 232 investigation see below might block procurement of bulk-power systems from certain foreign-owned vendors and subcontractors on national security grounds rather than allowing industry stakeholders to purchase these systems and then assume corporate responsibility for carrying out risk mitigation measures mandated by applicable FERC reliability standards International Emergency Economic Powers Act Action On May 1 2020 President Trump declared a national emergency finding that “foreign adversaries are increasingly creating and exploiting vulnerabilities in the United States bulk-power system ” The finding determined that “the unrestricted foreign supply of bulk-power system electric equipment constitutes an unusual and extraordinary threat to the national security foreign policy and economy of the United States ” In declaring the emergency President Trump invoked IEEPA which provides the President broad authority to regulate international economic transactions during a declared national emergency While the statute has been most commonly used as part of U S sanctions measures the Trump Administration has used it in new ways including in actions to protect national infrastructure like telecommunications In this case the President banned “any acquisition importation transfer or installation of any bulk-power system electric equipment … by any person or with respect to any property subject to the jurisdiction of the United States” when 1 that transaction involves property in which a foreign country or a foreign national has an interest and 2 the Secretary of Energy in consultation with other interested officials finds that such a transaction would impair national security He also ordered the establishment of a Task Force on Federal Energy Infrastructure Procurement Policies Related to National Security to recommend policies and assess their effectiveness Section 232 Investigation On May 4 2020 Commerce Secretary Ross announced the self-initiation of an investigation under Section 232 into whether imports of certain electrical transformers or their parts including laminations and cores made of grain-oriented electrical steel GOES threaten to impair national security GOES products are incorporated into transformers used in critical energy infrastructure Commerce has 270 days to conduct the investigation in consultation with the Secretary of Defense and other U S officials and submit a report to the President advising whether the imports of GOES derivatives threaten to impair national security and provide recommendations This marks the Trump Administration’s sixth Section 232 investigation After a 2018 investigation President Trump applied 25% tariffs on imports of certain steel products and in January 2020 expanded the tariffs to cover certain derivative steel products While some Members of Congress raised various concerns at the time about the increased tariffs other Members have since argued that the tariffs were insufficient because they did not cover GOES derivative products like laminations and cores They also argue that some firms had avoided tariffs by increasing imports of such derivative products from Mexico and Canada which do not presently face tariff restrictions AK Steel with manufacturing operations in Pennsylvania and Ohio is currently the sole domestic GOES producer Congressional Research Service 3 Potential Impact of Actions and Issues for Congress Article I Section 8 of the U S Constitution grants to Congress the power to regulate commerce with foreign nations As one scholar has argued over the 20th century Congress has delegated different levels of authority to the President Congress has generally tightly controlled trade-liberalizing measures like Trade Promotion Authority but it has also more fully delegated trade-restricting measures related to timesensitive and national security matters through mechanisms like IEEPA and Section 232 Over the past several years the Trump Administration has increasingly made use of trade-restricting national security measures to pursue various long-term trade-related strategies Previously such actions have sparked concern among some Members leading to debate over whether such actions reflect Congress’s purpose in delegating national security authorities over trade The question is particularly acute for time-sensitive situations when some argue that the legislative branch may be as John Locke described it “too numerous and so too slow for the dispatch requisite to execution ” Author Information Christopher A Casey Analyst in International Trade and Finance Brian E Humphreys Analyst in Science and Technology Policy Rachel F Fefer Analyst in International Trade and Finance Disclaimer This document was prepared by the Congressional Research Service CRS CRS serves as nonpartisan shared staff to congressional committees and Members of Congress It operates solely at the behest of and under the direction of Congress Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role CRS Reports as a work of the United States Government are not subject to copyright protection in the United States Any CRS Report may be reproduced and distributed in its entirety without permission from CRS However as a CRS Report may include copyrighted images or material from a third party you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material IN11401 · VERSION 1 · NEW