Overview
On August 26, 2026, President Trump signed Executive Order 14421, "Declaring a National Emergency to Secure the United States Bulk-Power System." Invoking national security and foreign policy authority under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA), the EO prohibits—on a prospective basis—imports, transfers, or installation of certain foreign-produced bulk-power system electric equipment (or associated critical components and software), that the secretary of energy determines poses an undue risk to national security. The EO also directs the secretary of energy to identify existing equipment on the grid that may present similar risks and to recommend mitigation measures, potentially including isolation, monitoring, or replacement.
While broadly written, the EO is not a categorical ban on all foreign-produced bulk-power system equipment. Its practical reach will heavily depend on forthcoming guidance and implementation from the Department of Energy (DOE), including how DOE determines what equipment warrants heightened scrutiny or what countries are added to the "Covered Foreign Entity" list.
Key Provisions and Impact
Prospective Transaction Prohibition. The EO potentially prohibits "any acquisition, importation, transfer, or installation" of bulk-power system electric equipment by any person or with respect to any property subject to US jurisdiction, where the transaction: (1) involves property in which a foreign country or national has an interest; (2) was initiated after August 26, 2026; and (3) involves equipment that the secretary of energy determines was designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a "Covered Foreign Entity" (meaning a country 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, in consultation with the Secretary of War, the Director of National Intelligence, and the Assistant to the President for National Security Affairs, has determined is engaged in conduct that is detrimental to the national security or foreign policy of the United States").
The EO defines "bulk-power system" as "(i) 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" and applies to "transmission lines rated at 69,000 volts (69 kV) or more," not to include local electric distribution facilities. Affected equipment includes items used in substations, control rooms, or generating facilities—including certain types of transformers, inverters, circuit breakers, metering equipment, control systems, generators, voltage regulators, uninterruptible power supply systems, battery energy storage systems, and protective relay systems.
Importantly, the order also specifies that the prohibition extends to "any critical component, software, firmware, digital service, maintenance service, or remote-access capability associated with such equipment," designed, developed, manufactured, or supplied by a Covered Foreign Entity, meaning that companies should consider the provenance of the component parts of their equipment, regardless of the country of final production.
However, even if equipment meets the above definition, it will not be subject to restriction unless the DOE also determines that it presents an undue national security risk. The order provides avenues for conditional approval of otherwise-covered transactions if DOE determines that appropriate risk mitigation measures can be implemented.
Pre-Qualification and Mitigation. The EO authorizes DOE to establish criteria for pre-qualifying particular equipment and vendors as approved for future bulk power system transactions. Utilities may wish to engage proactively with DOE regarding pre-qualification pathways for critical equipment needs.
Implementing Regulations. The EO directs DOE to publish rules operationalizing and implementing the order within 120 days. Until those rules are finalized, uncertainty remains regarding the precise scope of covered transactions, the complete list of "Covered Foreign Entities," and the procedures for seeking pre-qualification or mitigation.
The order also directs the secretary, in consultation with the Federal Acquisition Regulatory Council, to recommend regulatory revisions for federal procurement consistent with the order.
Existing Equipment Review. Beyond prospective transactions, the EO directs DOE to identify bulk power system electric equipment already installed on the US grid that poses national security vulnerabilities. DOE must then recommend actions to "identify, inventory, isolate, monitor, or replace such items as soon as practicable," taking into consideration reliability, safety, replacement availability, and continuity of service. Utilities should anticipate potential DOE inquiries regarding their installed equipment base and supplier relationships.
Legal Authority: IEEPA and the NEA
The president issued EO 14421 under authority pursuant to IEEPA and the NEA. IEEPA authorizes the president to regulate international economic transactions when facing "any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the president declares a national emergency with respect to such threat." 50 U.S.C. §§ 1701, 1702. Under the NEA, the president must declare a national emergency and explicitly invoke IEEPA to exercise these powers. 50 U.S.C. §§ 1621, 1631. Here, the EO declares that unrestricted "foreign supply of bulk-power system electric equipment constitutes an unusual and extraordinary threat" warranting emergency action.
Steptoe's Integrated Energy and International Trade Capabilities
EO 14421 sits at the intersection of energy regulation and international trade controls—an area where Steptoe offers distinctive, market-leading capabilities. Our Energy practice advises utilities on all aspects of FERC regulation, grid reliability, transmission, and enforcement. Our International Trade and Regulatory Compliance (ITRC) practice brings deep experience with IEEPA-based restrictions, export controls, CFIUS reviews, and supply chain security. Together, these practices position Steptoe to help clients navigate the compliance challenges presented by this EO—from assessing equipment portfolios for foreign-sourcing exposure, to engaging with DOE on pre-qualification and mitigation pathways, to managing potential enforcement risks.
For more information about EO 14421 and its implications for your organization, please contact a member of Steptoe's Energy or International Trade and Regulatory Compliance teams.
