Texas 2023 - 88th Regular

Texas House Bill HB1412 Compare Versions

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1	1	88R3548 CXP-F
2	2	By: Schaefer H.B. No. 1412
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the resilience of the electric grid and certain
8	8	municipalities; authorizing an administrative penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. The legislature finds that:
11	11	(1) electric grid blackouts threaten the lives of the
12	12	citizens of this state and pose a disproportionately large risk to:
13	13	(A) the elderly, vulnerable, and underprivileged
14	14	within this state; and
15	15	(B) communities facing disproportionate
16	16	environmental health burdens and population vulnerabilities
17	17	relating to facilities such as chemical plants and refineries that
18	18	can become environmental disaster areas when taken off-line due to
19	19	loss of electricity;
20	20	(2) the 16 critical infrastructures identified in
21	21	President Barack Obama's Presidential Policy Directive "Critical
22	22	Infrastructure Security and Resilience" (PPD-21) including water
23	23	and wastewater systems, food and agriculture, communications
24	24	systems, the energy sector including refineries and fuel
25	25	distribution systems, chemical plants, the financial sector,
26	26	hospitals and health care facilities, law enforcement and
27	27	government facilities, nuclear reactors, and other critical
28	28	functions depend on the electric grid in this state and make the
29	29	grid's protection vital to the economy of this nation and homeland
30	30	security;
31	31	(3) the blackout that occurred in this state in
32	32	February 2021 caused:
33	33	(A) death and suffering in this state;
34	34	(B) economic loss to this state's economy;
35	35	(C) impacts to all critical infrastructures in
36	36	this state;
37	37	(D) the dispatch of generation units that likely
38	38	exceeded limits established by the Environmental Protection Agency
39	39	for sulfur dioxide, nitrogen oxide, mercury, and carbon monoxide
40	40	emissions and wastewater release limits;
41	41	(E) radically increased pricing of electricity
42	42	that resulted in making electric power bills unaffordable to many
43	43	customers across this state; and
44	44	(F) the exacerbation of the COVID-19 pandemic
45	45	risk by forcing many of the state's citizens to consolidate at
46	46	warming centers and in other small spaces where warmth for survival
47	47	superseded social distancing protocols;
48	48	(4) a previous large-scale blackout occurred in this
49	49	state in February 2011 during which 4.4 million customers were
50	50	affected;
51	51	(5) this state is uniquely positioned to prevent
52	52	blackouts because this state is a net exporter of energy and is the
53	53	only state with an electric grid almost exclusively within its
54	54	territorial boundaries;
55	55	(6) the 2011 and 2021 blackouts call into question:
56	56	(A) whether too much risk has been accepted
57	57	regarding weatherization of electric generation infrastructure;
58	58	(B) whether this state lacks the internal
59	59	distribution structure and control systems to manage rolling
60	60	blackouts; and
61	61	(C) whether sufficient resources have been
62	62	allocated toward overall grid resilience;
63	63	(7) public confidence in the resilience of the
64	64	electric grid in this state is essential to ensuring economic
65	65	prosperity, domestic tranquility, continuity of government, and
66	66	life-sustaining systems;
67	67	(8) a resilient electric grid that offers businesses
68	68	in this state continuity of operations in the event of a natural or
69	69	man-made disaster will be an unrivaled attraction for businesses to
70	70	expand or move their operations to this state and for protecting
71	71	what is important to this state, including its military
72	72	installations and its environment;
73	73	(9) current market incentives and regulations are not
74	74	sufficient for electric utilities to:
75	75	(A) prioritize grid security and resilience; and
76	76	(B) protect the grid against hazards;
77	77	(10) protection of the electric grid in this state
78	78	against hazards would assure businesses and the citizens of this
79	79	state that the "lights will be back on first in Texas" in the event
80	80	of a nationwide catastrophe affecting electric infrastructure,
81	81	sparing catastrophic societal and environmental consequences for
82	82	this state; and
83	83	(11) when this state begins implementation of the plan
84	84	for all hazards resilience described by Section 44.007, Utilities
85	85	Code, as added by this Act, to protect the electric grid in this
86	86	state, short-term and long-term economic benefit will far exceed
87	87	even the most optimistic estimates of the conventional economic
88	88	incentives provided by tax abatements to attract businesses to this
89	89	state.
90	90	SECTION 2. Subtitle B, Title 2, Utilities Code, is amended
91	91	by adding Chapter 44 to read as follows:
92	92	CHAPTER 44. GRID RESILIENCE
93	93	Sec. 44.001. DEFINITIONS. In this chapter:
94	94	(1) "All hazards" means:
95	95	(A) terrestrial weather including wind,
96	96	hurricanes, tornadoes, flooding, ice storms, extended cold weather
97	97	events, heat waves, and wildfires;
98	98	(B) seismic events including earthquakes and
99	99	tsunamis;
100	100	(C) physical threats including terrorist attacks
101	101	with direct fire, drones, explosives, and other methods of physical
102	102	sabotage;
103	103	(D) cyber attacks including malware attacks and
104	104	hacking of unprotected or compromised information technology
105	105	networks;
106	106	(E) manipulation of operational technology
107	107	devices including sensors, actuators, and drives;
108	108	(F) electromagnetic threats through man-made
109	109	radio frequency weapons, high altitude nuclear electromagnetic
110	110	pulse, and naturally occurring geomagnetic disturbances;
111	111	(G) electric generation supply chain
112	112	vulnerabilities including insecure or inadequate fuel
113	113	transportation or storage; and
114	114	(H) insider threats caused by compromised or
115	115	hostile personnel working within government or the utility
116	116	industry.
117	117	(2) "Micro-grid" means a group of interconnected loads
118	118	and distributed energy resources inside clearly defined electrical
119	119	boundaries that act as a single controllable entity with respect to
120	120	the grid.
121	121	(3) "Security commission" means the Texas Grid
122	122	Security Commission.
123	123	Sec. 44.002. TEXAS GRID SECURITY COMMISSION. (a) The Texas
124	124	Grid Security Commission is composed of the following members:
125	125	(1) a representative of the Texas Division of
126	126	Emergency Management appointed by the chief of that division;
127	127	(2) a representative of the State Office of Risk
128	128	Management appointed by the risk management board;
129	129	(3) a representative from the commission appointed by
130	130	that commission;
131	131	(4) a representative from the Railroad Commission of
132	132	Texas appointed by that commission;
133	133	(5) a representative of the independent organization
134	134	certified under Section 39.151 for the ERCOT power region appointed
135	135	by the chief executive officer of that organization;
136	136	(6) a representative of the Texas Military Department
137	137	appointed by the adjutant general of that department;
138	138	(7) a representative of the Texas Military
139	139	Preparedness Commission appointed by that commission;
140	140	(8) a representative of the Office of State-Federal
141	141	Relations appointed by the director of that office;
142	142	(9) a representative of the Department of Information
143	143	Resources appointed by the executive director of that department;
144	144	(10) a representative of power generation companies
145	145	appointed by the chief of the Texas Division of Emergency
146	146	Management;
147	147	(11) two representatives of transmission and
148	148	distribution utilities appointed by the chief of the Texas Division
149	149	of Emergency Management;
150	150	(12) three individuals with expertise in critical
151	151	infrastructure protection appointed by the chief of the Texas
152	152	Division of Emergency Management, to represent the public interest;
153	153	(13) one representative appointed by the chief of the
154	154	Texas Division of Emergency Management from each of the following
155	155	essential services sectors:
156	156	(A) law enforcement;
157	157	(B) emergency services;
158	158	(C) communications;
159	159	(D) water and sewer services;
160	160	(E) health care;
161	161	(F) financial services;
162	162	(G) food and agriculture;
163	163	(H) transportation; and
164	164	(I) energy;
165	165	(14) an expert in the field of higher education
166	166	appointed by the chief of the Texas Division of Emergency
167	167	Management; and
168	168	(15) an expert in the field of electricity markets and
169	169	regulations appointed by the chief of the Texas Division of
170	170	Emergency Management.
171	171	(b) The chief of the Texas Division of Emergency Management
172	172	may invite members or former members of the United States Air
173	173	Force's Electromagnetic Defense Task Force to the membership of the
174	174	security commission.
175	175	(c) The Texas Division of Emergency Management shall
176	176	designate a member of the security commission to serve as presiding
177	177	officer.
178	178	(d) The presiding officer may invite to the membership of
179	179	the security commission any person whose expertise the security
180	180	commission considers necessary to carry out the purposes of this
181	181	chapter.
182	182	(e) The security commission shall convene at the call of the
183	183	presiding officer.
184	184	(f) The security commission shall report to the chief of the
185	185	Texas Division of Emergency Management.
186	186	(g) A vacancy on the security commission is filled by
187	187	appointment for the unexpired term in the same manner as the
188	188	original appointment.
189	189	(h) To the extent possible, individuals appointed to the
190	190	security commission must be residents of this state.
191	191	(i) The presiding officer of the security commission or the
192	192	chief of the Texas Division of Emergency Management may invite
193	193	subject matter experts to advise the security commission, including
194	194	individuals recognized as experts in the fields of electricity
195	195	markets, cybersecurity of grid control systems, electromagnetic
196	196	pulse mitigation, terrestrial and solar weather, and micro-grids.
197	197	The presiding officer may invite an individual for this purpose
198	198	regardless of whether the individual is a resident of this state.
199	199	Sec. 44.003. EXECUTIVE COMMITTEE. (a) The security
200	200	commission executive committee is composed of the following
201	201	security commission members selected by the presiding officer:
202	202	(1) a representative of the Texas Division of
203	203	Emergency Management;
204	204	(2) a representative of the Railroad Commission of
205	205	Texas;
206	206	(3) a representative of the commission;
207	207	(4) a representative of the independent organization
208	208	certified under Section 39.151 for the ERCOT power region;
209	209	(5) two representatives of transmission and
210	210	distribution utilities; and
211	211	(6) a representative of power generation companies or
212	212	another member of the security commission with expertise in power
213	213	generation.
214	214	(b) If two or more members or former members of the United
215	215	States Air Force's Electromagnetic Defense Task Force join the
216	216	security commission after being invited under Section 44.002(b),
217	217	the presiding officer shall select two of those members to serve on
218	218	the executive committee.
219	219	(c) The security commission may not adopt a resilience
220	220	standard under Section 44.006 unless the executive committee
221	221	approves the standard.
222	222	Sec. 44.004. GRID RESILIENCE INFORMATION. (a) Each of the
223	223	following members of the security commission shall apply for a
224	224	secret security clearance or an interim secret security clearance
225	225	to be granted by the federal government:
226	226	(1) the representative of the independent
227	227	organization certified under Section 39.151 for the ERCOT region;
228	228	(2) the representative of the Texas Division of
229	229	Emergency Management; and
230	230	(3) the representative of the State Office of Risk
231	231	Management.
232	232	(b) A member of the security commission listed under
233	233	Subsection (a) who is granted an applicable security clearance
234	234	under that subsection is a member of the information security
235	235	working group.
236	236	(c) The information security working group shall determine:
237	237	(1) which information received by the security
238	238	commission that is used in determining the vulnerabilities of the
239	239	electric grid or that is related to measures to be taken to protect
240	240	the grid is confidential and not subject to Chapter 552, Government
241	241	Code;
242	242	(2) which members of the security commission may
243	243	access which types of information received by the security
244	244	commission; and
245	245	(3) which members, other than members of the working
246	246	group, should apply for a secret security clearance or interim
247	247	clearance granted by the federal government.
248	248	(d) Information that the information security working group
249	249	determines is confidential under Subsection (c) shall be stored and
250	250	maintained by the independent organization certified under Section
251	251	39.151 for the ERCOT power region.
252	252	(e) The security commission must maintain a reasonable
253	253	balance between public transparency and security for information
254	254	determined to be confidential under Subsection (c).
255	255	(f) Nothing in this section abrogates any rights or remedies
256	256	under Chapter 552, Government Code.
257	257	Sec. 44.005. GRID RESILIENCE EVALUATION. (a) The security
258	258	commission shall evaluate, using available information on past
259	259	blackouts in ERCOT, all hazards to the ERCOT electric grid,
260	260	including threats that can cause future blackouts. The security
261	261	commission shall evaluate the resilience of municipalities in this
262	262	state in the following essential areas:
263	263	(1) emergency services;
264	264	(2) communications systems;
265	265	(3) clean water and sewer services;
266	266	(4) health care systems;
267	267	(5) financial services;
268	268	(6) energy systems, including an evaluation of whether
269	269	energy, electric power, and fuel supplies are protected and
270	270	available for recovery in the event of a catastrophic power outage;
271	271	and
272	272	(7) transportation systems.
273	273	(b) The security commission may create groups or teams to
274	274	address each hazard as necessary. The security commission must
275	275	assess each hazard both on the likelihood of occurrence of the
276	276	hazard and the potential consequences of the hazard.
277	277	(c) The security commission shall identify methods by which
278	278	this state can support an overall national deterrence policy as
279	279	proposed by the Cyberspace Solarium Commission, including by:
280	280	(1) identifying means to ensure that all hazards
281	281	resilience for electric utilities supports critical national
282	282	security functions in this state; and
283	283	(2) engaging the Texas National Guard to be trained as
284	284	first responders to cybersecurity threats to the ERCOT electric
285	285	grid and other critical infrastructure.
286	286	(d) The security commission shall evaluate nuclear
287	287	generation sites in this state, the resilience of each nuclear
288	288	reactor to all hazards, and the resilience to all hazards of
289	289	off-site power for critical safety systems that support the reactor
290	290	and spent fuel. The security commission may communicate with the
291	291	Nuclear Regulatory Commission to accomplish the evaluation.
292	292	(e) The security commission shall evaluate current Critical
293	293	Infrastructure Protection standards established by the North
294	294	American Electric Reliability Corporation and standards set by the
295	295	National Institute of Standards and Technology to determine the
296	296	most appropriate standards for protecting grid infrastructure in
297	297	this state.
298	298	(f) The security commission shall investigate the steps
299	299	that local communities and other states have taken to address grid
300	300	resilience. The security commission may request funding to conduct
301	301	site visits to these locations as required.
302	302	(g) The security commission shall identify universities
303	303	based in this state that have expertise in cybersecurity and other
304	304	matters that can contribute to the security commission's goal of
305	305	mitigating all hazards to the grid in this state.
306	306	(h) In carrying out the security commission's duties under
307	307	this section, the security commission may solicit information from:
308	308	(1) defense contractors with experience protecting
309	309	defense systems from electromagnetic pulse;
310	310	(2) electric utilities that have developed
311	311	electromagnetic pulse protections for the utilities' grid assets;
312	312	(3) the United States Department of Homeland Security;
313	313	and
314	314	(4) the Commission to Assess the Threat to the United
315	315	States from Electromagnetic Pulse (EMP) Attack.
316	316	Sec. 44.006. RESILIENCE STANDARDS. (a) Based on the
317	317	findings of the evaluations and investigations conducted under
318	318	Section 44.005, the security commission shall develop and adopt
319	319	resilience standards for municipalities and critical components of
320	320	the ERCOT electric grid.
321	321	(b) Standards developed and adopted for energy systems of
322	322	municipalities must include provisions to ensure that energy,
323	323	electric power, and fuel supplies are protected and available for
324	324	recovery in the event of a catastrophic power outage.
325	325	Sec. 44.007. CONTRACTOR SUPPORT FOR CRITICAL SYSTEM AND
326	326	COMPONENT RESILIENCE. (a) The State Office of Risk Management,
327	327	with assistance from the security commission, shall select
328	328	contractors with proven expertise to identify critical systems and
329	329	components of the ERCOT electric grid vulnerable to hazards
330	330	described by Section 44.005(a) with a specific emphasis on the most
331	331	dangerous cyber and electromagnetic threats.
332	332	(b) A contractor selected under Subsection (a) must
333	333	identify the critical components, including industrial control
334	334	systems, not later than six months after the date the contractor is
335	335	engaged.
336	336	(c) Not later than January 1, 2025, an entity that owns or
337	337	operates a component identified by a contractor under Subsection
338	338	(a) as critical shall upgrade the component as necessary for the
339	339	component to meet the applicable standards set by the security
340	340	commission under Section 44.006.
341	341	(d) The State Office of Risk Management shall select
342	342	contractors with demonstrated expertise to verify whether an entity
343	343	with a component identified as critical under Subsection (a) has
344	344	upgraded components as required by Subsection (c).
345	345	Sec. 44.008. PLAN FOR ALL HAZARDS RESILIENCE. (a) Not
346	346	later than January 1, 2024, the security commission shall prepare
347	347	and deliver to the legislature a plan for protecting the ERCOT
348	348	electric grid from all hazards, including a catastrophic loss of
349	349	power in the state.
350	350	(b) The plan must include:
351	351	(1) weatherizing requirements to prevent blackouts
352	352	from extreme cold weather events, an analysis of whether these
353	353	requirements would induce cyber vulnerabilities, and an analysis of
354	354	the associated costs for these requirements;
355	355	(2) provisions for installing, replacing, or
356	356	upgrading industrial control systems and associated networks, or
357	357	the use of compensating controls or procedures, in critical
358	358	facilities to address cyber vulnerabilities;
359	359	(3) provisions for installing, replacing, or
360	360	upgrading extra high-voltage power transformers and supervisory
361	361	control and data acquisition systems to withstand 100
362	362	kilovolts/meter E1 electromagnetic pulses and 85 volts/kilometer
363	363	E3 electromagnetic pulses;
364	364	(4) a timeline for making improvements to remaining
365	365	infrastructure to meet resilience standards adopted by the security
366	366	commission under Section 44.006;
367	367	(5) long-term resilience provisions for supporting
368	368	industries including:
369	369	(A) nuclear reactors, materials, and waste;
370	370	(B) fuel supply;
371	371	(C) health care;
372	372	(D) communications;
373	373	(E) water and sewer services;
374	374	(F) food supply; and
375	375	(G) transportation; and
376	376	(6) any additional provisions considered necessary by
377	377	the security commission.
378	378	(c) The security commission may consult with the Private
379	379	Sector Advisory Council in developing the plan.
380	380	(d) The Texas Division of Emergency Management shall
381	381	incorporate the plan into the state emergency management plan and
382	382	update the state emergency management plan as necessary to
383	383	incorporate progressive resilience improvements.
384	384	Sec. 44.009. GRID RESILIENCE REPORT. (a) Not later than
385	385	January 1 of each year, the security commission shall prepare and
386	386	deliver a nonclassified report to the legislature, the governor,
387	387	and the commission assessing natural and man-made threats to the
388	388	electric grid and efforts to mitigate the threats.
389	389	(b) The security commission shall make the report available
390	390	to the public.
391	391	(c) In preparing the report, the security commission may
392	392	hold confidential or classified briefings with federal, state, and
393	393	local officials as necessary.
394	394	Sec. 44.010. RESILIENCE COST RECOVERY. A regulatory
395	395	authority shall include in establishing the rates of an electric
396	396	utility consideration of the costs incurred to install, replace, or
397	397	upgrade facilities or equipment to meet a resilience standard
398	398	established under this chapter. A regulatory authority shall
399	399	presume that costs incurred to meet a resilience standard under
400	400	this chapter are reasonable and necessary expenses.
401	401	Sec. 44.011. MICRO-GRIDS. (a) The security commission
402	402	shall establish resilience standards for micro-grids and certify a
403	403	micro-grid that meets the standards. The standards must be
404	404	developed for both alternating current and direct current
405	405	micro-grids.
406	406	(b) Except as provided by Subsection (c), a municipality or
407	407	other political subdivision may not enact or enforce an ordinance
408	408	or other measure that bans, limits, or otherwise regulates inside
409	409	the boundaries or extraterritorial jurisdiction of the
410	410	municipality or political subdivision a micro-grid that is
411	411	certified by the security commission under this section.
412	412	(c) The owner or operator of a micro-grid certified by the
413	413	security commission is a power generation company and is required
414	414	to register under Section 39.351(a). The owner or operator of the
415	415	micro-grid is entitled to:
416	416	(1) interconnect the micro-grid;
417	417	(2) obtain transmission service for the micro-grid;
418	418	and
419	419	(3) use the micro-grid to sell electricity and
420	420	ancillary services at wholesale in a manner consistent with the
421	421	provisions of this title and commission rules applicable to a power
422	422	generation company or an exempt wholesale generator.
423	423	Sec. 44.012. COMPLIANCE AND ENFORCEMENT. (a) The
424	424	commission by rule shall require entities that the commission
425	425	determines operate critical components of the ERCOT electric grid
426	426	to comply with resilience standards adopted by the security
427	427	commission under this chapter. This subsection applies only to an
428	428	entity that is subject to the jurisdiction of the commission under
429	429	another provision of this subtitle. The commission may impose an
430	430	administrative penalty, in the manner provided by Chapter 15, on an
431	431	entity that is subject to the jurisdiction of the commission under
432	432	another provision of this subtitle for a violation of a resilience
433	433	standard or of Subsection (b).
434	434	(b) The commission by rule shall require each entity
435	435	described by Subsection (a) to make publicly available on an
436	436	Internet website the entity's compliance status with the resilience
437	437	standards.
438	438	(c) The Railroad Commission of Texas by rule shall require
439	439	entities that the Railroad Commission of Texas determines operate
440	440	critical components of the ERCOT electric grid to comply with
441	441	resilience standards adopted by the security commission under this
442	442	chapter. This subsection applies only to an entity that is subject
443	443	to the jurisdiction of the Railroad Commission of Texas under
444	444	Section 81.051, Natural Resources Code. The Railroad Commission of
445	445	Texas may impose an administrative penalty, in the manner provided
446	446	by Chapter 81, Natural Resources Code, on an entity that is subject
447	447	to the jurisdiction of the Railroad Commission of Texas under
448	448	Section 81.051, Natural Resources Code, for a violation of a
449	449	resilience standard or of Subsection (d).
450	450	(d) The Railroad Commission of Texas by rule shall require
451	451	each entity described by Subsection (c) to make publicly available
452	452	on an Internet website the entity's compliance status with the
453	453	resilience standards.
454	454	SECTION 3. Not later than January 1, 2025, the Texas Grid
455	455	Security Commission shall prepare and deliver a report to the
456	456	legislature on the progress of implementing resilience standards
457	457	adopted and implemented under Sections 44.006 and 44.007, Utilities
458	458	Code, as added by this Act.
459	459	SECTION 4. This Act takes effect immediately if it receives
460	460	a vote of two-thirds of all the members elected to each house, as
461	461	provided by Section 39, Article III, Texas Constitution. If this
462	462	Act does not receive the vote necessary for immediate effect, this
463	463	Act takes effect September 1, 2023.