If signed into law, measures would grant the DOE authority to order utilities to implement emergency protective actions.

Early yesterday morning, H.R. 22 (the Highway Bill) was amended on a voice vote to include an amendment (House Amendment 828) addressing critical energy security issues. Developed by Representative Fred Upton (R-MI) and sponsored by Representative Markwayne Mullin (R-OK), the amendment aims to strengthen the federal government’s authority over electric grid emergency response, facilitate coordination among federal agencies on reliability issues, and enhance the protocols for the protection and sharing of Critical Energy Infrastructure Information (CEII).

The amendment would authorize the Department of Energy (DOE) to order utilities, the North American Electric Reliability Corporation (NERC), or NERC Regional Entities to implement emergency security measures for up to 15 days at a time. Such orders would issue upon a written determination from the President identifying a grid security emergency, which could include malicious electronic or physical attacks or natural events (e.g., geomagnetic storm events) that could disrupt critical electronic devices or communications networks. The amendment provides for the DOE to reissue emergency orders for consecutive 15-day periods if each time the President finds that the emergency is continuing.

To streamline emergency response actions, the amendment would exempt utilities from penalties for violations of Federal Energy Regulatory Commission (FERC or Commission) orders and NERC Reliability Standards due to implementation of emergency security measures directed by the DOE. The amendment acknowledges that utilities may incur substantial costs while implementing emergency orders that may not otherwise be recoverable through existing regulated or market rates. To address this gap, the amendment’s cost-recovery provisions would direct the Commission to establish a separate mechanism that permits recovery of those emergency-related costs, subject to public notice and comment procedures.

If enacted, the bill would also amend section 202(c) of the Federal Power Act, 16 U.S.C. § 824a(c), to provide utilities with protection from environmental penalties while operating under an emergency order issued by the Commission. This would most likely apply in circumstances where FERC directs a generator to operate to ensure system reliability but that generator is required to reduce operations due to environmental limitations. Under existing law, the generator would be required to run but would simultaneously incur penalties for operating in violation of the environmental laws.  

The amendment also aims to strengthen existing CEII protections. Mandatory disclosures of CEII information under the Freedom of Information Act or other federal and state mandatory disclosure requirements would be prohibited. Additionally, the amendment requires the Commission to segregate CEII and non-CEII within the agency and to require sanctions for knowing and willful disclosure of CEII by Commissioners, officers, employees, or agents of FERC.

Not all of the amendment’s provisions seek to unconditionally limit access to information. For example, federal agencies would be allowed to provide temporary access to classified information to entities subject to emergency grid security measures. The amendment also encourages the voluntary sharing of CEII (e.g., between federal and state authorities or between the Commission and cross-border authorities). Additionally, CEII designations by the Commission would last no longer than five years (unless redesignated) and would also be subject to judicial review.

Last, the amendment addresses the reliability risks posed by the unexpected loss of large power transformers. The amendment would require the DOE, FERC, NERC, and electrical infrastructure operators to develop a plan for storing spare large power transformers and emergency mobile substations that can be quickly deployed to temporarily replace damaged large power transformers and substations that serve grid-critical functions. The plan would need to determine, among other things, the number of spare transformers and mobile substations necessary to restore grid resiliency following an outage, the optimal locations of storage facilities, the relative ease and speed of deploying spare transformers and mobile substations, and the cost of implementing such a plan.