May 20, 2020

Executive order boots “foreign adversaries” from US electric grid over security concerns

Executive order boots “foreign adversaries” from US electric grid over security concerns

On May 1, the Trump Administration issued an Executive Order on Securing the United States Bulk-Power System. According to the order, the administration found that “foreign adversaries are increasingly creating and exploiting vulnerabilities in the United States bulk-power system, which provides the electricity that supports our national defense, vital emergency services, critical infrastructure, economy, and way of life.”

The executive order (EO), which also encompasses “malicious cyber activities,” determines “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.” It declares “a national emergency with respect to the threat to the United States bulk-power system” and prohibits the purchase or installation of specific equipment from foreign adversaries.

The prohibition applies to only a specified list of electrical equipment that poses an undue risk of sabotage or subversion of the equipment’s design, or poses a national emergency with respect to the threat to the United States bulk-power system or otherwise poses an unacceptable risk to the national security of the US or the security and safety of US persons. The order requires the energy secretary to work with other agencies “to identify bulk-power system electric equipment that poses the types of risks associated with prohibited transactions” and to adopt rules and regulations to implement the order within 150 days.

The equipment covered by the order includes a range of hardware that makes up the bulk power system, including substation transformers, which appear to play a particularly unique role in the order’s emergence. “We are aware that stepped-up transformers that could have an adverse impact on the grid are what’s being targeted here.” David Schwartz, a partner at Latham and Watkins who is focused on energy regulatory policy, tells CSO.

Vulnerability fears behind the executive order

Although the order doesn’t specify which countries are “foreign adversaries,” the consensus among electric utility technologists and Washington energy policy experts is that China is the only “adversarial” country that supplies the appropriate equipment to US utilities. One central question surrounding this order is why now. Another big question: What vulnerabilities are adversaries creating and exploiting in the bulk power grid?

Some experts think that the administration is just now getting around to applying the same kind of bans to the bulk power grid that the government applied to Chinese telecom suppliers last year. “The executive order has some very similar language to another executive order last May in the communications area. We think the approach that was taken in the communications area was simply essentially replicated with respect to security issues [regarding] the bulk power system,” Schwartz says.

Shuli Goodman, executive director of LF Energy, an electricity and power initiative housed within the Linux Foundation, agrees with Schwartz that one impetus, although likely not the sole reason, behind the EO, is the effort to recreate what the administration has done in the telecom arena. “This is aligned with what happened in the telecommunications sector. This is just a kind of continuation of that,” she tells CSO.

Like many other technology experts, however, Goodman agrees that “it’s going to be very difficult if not impossible to eviscerate China from the supply chain.” Excluding China could be particularly problematic given that a critical focus of the order appears to be high-voltage transformers, which are made of industrial-quality steel that the US is no longer capable of manufacturing.

Did China create backdoors to disrupt the US energy grid?

One electric utility security expert, Joe Weiss, believes that the prime motivator for the executive order is a real cyberattack on the US bulk power system. This attack took the form of a “hardware backdoor” that was discovered when a Chinese transformer was delivered to a US utility. Although Weiss is almost completely mum on the details of this situation, the backdoor is capable of causing a highly damaging event, he tells CSO.

Weiss contends that the utility found the backdoor when it was installing the transformer and was “finding things that should not have been in there.” He also believes there are multiple such transformers with hardware backdoors installed throughout the bulk power grid.

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