Restrictions on Use of Bulk Power Equipment from Chinese Companies

Legal Alert

January 7, 2021

abstract business interior double exposure

Electric utilities supplying “Critical Defense Facilities” (i.e.,“Responsible Utilities”) face new restrictions on the use of bulk power equipment produced by companies with ties to China. Effective January 16, 2021, electric utilities designated by the Department of Energy (“DOE”) as Responsible Utilities are prohibited from “acquiring, importing, transferring or installing” bulk power equipment operating at 69 kV or higher (i.e., “Regulated Equipment”) “manufactured or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction” of the Peoples Republic of China. (Department of Energy Prohibition Order Securing Critical Defense Facilities, No. 6450-01-P) Unlike the prior ban on Chinese telecommunication equipment, the Prohibition Order bans all Chinese supplied Regulated Equipment, not just those produced by certain manufacturers. DOE’s guidance issued with the Prohibition Order advises that implementing regulations will address how the order applies to components produced in China and included in domestically assembled bulk power equipment.

In the wake of the COVID-19 supply chain concerns, companies working for or with the United States Government should be aware of the foreign-made products used in their business operations. The incoming Biden Administration has stated an intent to continue encouraging companies to “onshore” their supply chains by using more domestically produced products. At the same time, the current Administration is restricting the use on federally funded contracts of products from “any foreign adversary”.

If you would like additional information about efforts to promote domestic production or about restrictions on materials and equipment used on federally funded contracts, please contact Peter Crofton or Greg Smith.