Executive Order Restricts U.S. Imports of Certain Bulk-Power System Equipment

On August 26, 2026, President Trump issued Executive Order 14420, which directs the Secretary of Energy to impose new restrictions on certain foreign-produced bulk-power system electrical equipment.

Citing national security threats to the U.S. power grid, the executive order mandates prohibitions on importation and installation of bulk-power system equipment produced in and sourced from certain countries—most notably China—that the Secretary of Energy determines present certain risks. The executive order directs the Secretary of Energy to issue implementing regulations within 120 days.

The executive order imposes no immediate obligations on private parties, but its potential consequences for power system equipment procurement merit close scrutiny by energy suppliers, developers and contractors.

Scope of Executive Order 14420

Equipment: “Bulk-power system electric equipment” is defined broadly as items used in bulk-power system substations, control rooms or power generating systems, including, among other things, reactors, capacitators, substation transformers, utility-scale and other grid-connected inverters, battery energy storage systems (BESS), generators, and industrial control systems, and potentially includes associated software and firmware with remote access capabilities.

The order prohibits the acquisition, importation, transfer or installation of foreign-produced bulk-power system electric equipment by any U.S. person initiated after the date of the order where the Secretary of Energy determines that:

1. The transaction involves bulk-power system equipment (or any associated critical component, software, firmware, digital or maintenance service or remote-access capability) designed, developed, manufactured or supplied by persons owned by, controlled by or subject to the jurisdiction or direction of a “Covered Foreign Entity”; and
2. The transaction:
   1. Poses an undue risk of sabotage, subversion, unauthorized access, malicious remote action or supply disruption to the bulk-power system.
   2. Poses an undue risk of catastrophic effects on the security or resilience of U.S. critical infrastructure or economy; or 
   3. Otherwise poses an unacceptable risk to U.S. national security or the safety of U.S. persons.

While the order’s prohibitions do not apply to the acquisition, importation, transfer or installation of any equipment prior to August 26, 2026, the Secretary of Energy may later place conditions on the continued maintenance and operation of already-imported equipment, as discussed further below.

Covered Suppliers and Manufacturers: A “Covered Foreign Entity” is a country or a person owned by, controlled by or subject to the jurisdiction or direction of a government of a foreign country that is subject to a U.S. arms embargo or sanctions regime under the International Traffic in Arms Regulations (ITAR), or that the Secretary of Energy later determines has engaged in conduct posing a threat to U.S. national security or foreign policy. Countries currently covered by the definition include, most notably, China and Russia.

The Secretary of Energy may prohibit the importation or installation of bulk-power system electrical equipment designed, developed, manufactured or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the Chinese government — subject to limited exceptions, if he makes certain risk determinations.

Implementation and Next Steps

Executive Order 14420 directs the Secretary of Energy to issue implementing regulations by December 24, 2026. These regulations are likely to include criteria for determining whether certain equipment poses a national security risk and may include conditions on the continued use, operation, maintenance, servicing or updating of already-installed equipment —including requirements to identify, isolate, monitor, secure, disconnect, replace or remove such equipment.

The Secretary of Energy may also establish and publish a list of pre-qualified equipment and vendors that are exempt from the executive order’s import and installation ban. Previously, following a similar executive order from 2020 (which expired before regulations were issued), the Department of Energy (DOE) considered pre-qualifying components that support defense critical electric infrastructure and other infrastructure central to meeting grid reliability.

Potential Consequences for Bulk-Power System Development

Executive Order 14420 introduces uncertainty regarding contracts that directly or indirectly involve procurement of equipment designed, developed, manufactured or supplied by parties connected to China and certain other countries, including offtake, procurement and construction contracts. Many specific procurement, contracting and compliance obligations will not become clear until after the Secretary of Energy promulgates regulations or releases guidance, including any list of pre-qualified equipment and vendors.

In the meantime, project developers should begin to consider potential supply chain impacts of Executive Order 14420. This could include:

• identifying which bulk-power system electric equipment they procure is “foreign produced,” that is, manufactured, produced and assembled outside the United States;
• determining whether suppliers or manufacturers of foreign produced equipment are owned by, controlled by or subject to the jurisdiction or direction of China or another covered foreign government; and
• determining whether the relevant equipment contains critical components, software or firmware designed, developed, manufactured or supplied by any such entities.

Contractual protections in supply contracts could also help mitigate the uncertainty and associated risks to developers of the executive order. Parties can leverage force majeure and change in law definitions, and try to obtain cost and schedule relief for covered supply chain delays and other disruptions.

Because power purchase agreements and other offtake contracts rarely afford sellers of energy cost relief for force majeure or change in law, owners may want to negotiate an express right to schedule relief due to the potential effects of Executive Order 14420. While the specific provisions in contracts for potentially affected parties will vary based on circumstances and bargaining power of the parties, it would be prudent for owners, contractors and vendors to address these issues in their negotiations.

Orrick’s International Trade & Investment team will monitor developments related to this Executive Order. Please contact the authors with questions about compliance.