88R3548 CXP-F
	By: Schaefer	H.B. No. 1412

	A BILL TO BE ENTITLED
	AN ACT
	relating to the resilience of the electric grid and certain
	municipalities; authorizing an administrative penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  The legislature finds that:
	(1)  electric grid blackouts threaten the lives of the
	citizens of this state and pose a disproportionately large risk to:
	(A)  the elderly, vulnerable, and underprivileged
	within this state; and
	(B)  communities facing disproportionate
	environmental health burdens and population vulnerabilities
	relating to facilities such as chemical plants and refineries that
	can become environmental disaster areas when taken off-line due to
	loss of electricity;
	(2)  the 16 critical infrastructures identified in
	President Barack Obama's Presidential Policy Directive "Critical
	Infrastructure Security and Resilience" (PPD-21) including water
	and wastewater systems, food and agriculture, communications
	systems, the energy sector including refineries and fuel
	distribution systems, chemical plants, the financial sector,
	hospitals and health care facilities, law enforcement and
	government facilities, nuclear reactors, and other critical
	functions depend on the electric grid in this state and make the
	grid's protection vital to the economy of this nation and homeland
	security;
	(3)  the blackout that occurred in this state in
	February 2021 caused:
	(A)  death and suffering in this state;
	(B)  economic loss to this state's economy;
	(C)  impacts to all critical infrastructures in
	this state;
	(D)  the dispatch of generation units that likely
	exceeded limits established by the Environmental Protection Agency
	for sulfur dioxide, nitrogen oxide, mercury, and carbon monoxide
	emissions and wastewater release limits;
	(E)  radically increased pricing of electricity
	that resulted in making electric power bills unaffordable to many
	customers across this state; and
	(F)  the exacerbation of the COVID-19 pandemic
	risk by forcing many of the state's citizens to consolidate at
	warming centers and in other small spaces where warmth for survival
	superseded social distancing protocols;
	(4)  a previous large-scale blackout occurred in this
	state in February 2011 during which 4.4 million customers were
	affected;
	(5)  this state is uniquely positioned to prevent
	blackouts because this state is a net exporter of energy and is the
	only state with an electric grid almost exclusively within its
	territorial boundaries;
	(6)  the 2011 and 2021 blackouts call into question:
	(A)  whether too much risk has been accepted
	regarding weatherization of electric generation infrastructure;
	(B)  whether this state lacks the internal
	distribution structure and control systems to manage rolling
	blackouts; and
	(C)  whether sufficient resources have been
	allocated toward overall grid resilience;
	(7)  public confidence in the resilience of the
	electric grid in this state is essential to ensuring economic
	prosperity, domestic tranquility, continuity of government, and
	life-sustaining systems;
	(8)  a resilient electric grid that offers businesses
	in this state continuity of operations in the event of a natural or
	man-made disaster will be an unrivaled attraction for businesses to
	expand or move their operations to this state and for protecting
	what is important to this state, including its military
	installations and its environment;
	(9)  current market incentives and regulations are not
	sufficient for electric utilities to:
	(A)  prioritize grid security and resilience; and
	(B)  protect the grid against hazards;
	(10)  protection of the electric grid in this state
	against hazards would assure businesses and the citizens of this
	state that the "lights will be back on first in Texas" in the event
	of a nationwide catastrophe affecting electric infrastructure,
	sparing catastrophic societal and environmental consequences for
	this state; and
	(11)  when this state begins implementation of the plan
	for all hazards resilience described by Section 44.007, Utilities
	Code, as added by this Act, to protect the electric grid in this
	state, short-term and long-term economic benefit will far exceed
	even the most optimistic estimates of the conventional economic
	incentives provided by tax abatements to attract businesses to this
	state.
	SECTION 2.  Subtitle B, Title 2, Utilities Code, is amended
	by adding Chapter 44 to read as follows:
	CHAPTER 44. GRID RESILIENCE
	Sec. 44.001.  DEFINITIONS. In this chapter:
	(1)  "All hazards" means:
	(A)  terrestrial weather including wind,
	hurricanes, tornadoes, flooding, ice storms, extended cold weather
	events, heat waves, and wildfires;
	(B)  seismic events including earthquakes and
	tsunamis;
	(C)  physical threats including terrorist attacks
	with direct fire, drones, explosives, and other methods of physical
	sabotage;
	(D)  cyber attacks including malware attacks and
	hacking of unprotected or compromised information technology
	networks;
	(E)  manipulation of operational technology
	devices including sensors, actuators, and drives;
	(F)  electromagnetic threats through man-made
	radio frequency weapons, high altitude nuclear electromagnetic
	pulse, and naturally occurring geomagnetic disturbances;
	(G)  electric generation supply chain
	vulnerabilities including insecure or inadequate fuel
	transportation or storage; and
	(H)  insider threats caused by compromised or
	hostile personnel working within government or the utility
	industry.
	(2)  "Micro-grid" means a group of interconnected loads
	and distributed energy resources inside clearly defined electrical
	boundaries that act as a single controllable entity with respect to
	the grid.
	(3)  "Security commission" means the Texas Grid
	Security Commission.
	Sec. 44.002.  TEXAS GRID SECURITY COMMISSION. (a) The Texas
	Grid Security Commission is composed of the following members:
	(1)  a representative of the Texas Division of
	Emergency Management appointed by the chief of that division;
	(2)  a representative of the State Office of Risk
	Management appointed by the risk management board;
	(3)  a representative from the commission appointed by
	that commission;
	(4)  a representative from the Railroad Commission of
	Texas appointed by that commission;
	(5)  a representative of the independent organization
	certified under Section 39.151 for the ERCOT power region appointed
	by the chief executive officer of that organization;
	(6)  a representative of the Texas Military Department
	appointed by the adjutant general of that department;
	(7)  a representative of the Texas Military
	Preparedness Commission appointed by that commission;
	(8)  a representative of the Office of State-Federal
	Relations appointed by the director of that office;
	(9)  a representative of the Department of Information
	Resources appointed by the executive director of that department;
	(10)  a representative of power generation companies
	appointed by the chief of the Texas Division of Emergency
	Management;
	(11)  two representatives of transmission and
	distribution utilities appointed by the chief of the Texas Division
	of Emergency Management;
	(12)  three individuals with expertise in critical
	infrastructure protection appointed by the chief of the Texas
	Division of Emergency Management, to represent the public interest;
	(13)  one representative appointed by the chief of the
	Texas Division of Emergency Management from each of the following
	essential services sectors:
	(A)  law enforcement;
	(B)  emergency services;
	(C)  communications;
	(D)  water and sewer services;
	(E)  health care;
	(F)  financial services;
	(G)  food and agriculture;
	(H)  transportation; and
	(I)  energy;
	(14)  an expert in the field of higher education
	appointed by the chief of the Texas Division of Emergency
	Management; and
	(15)  an expert in the field of electricity markets and
	regulations appointed by the chief of the Texas Division of
	Emergency Management.
	(b)  The chief of the Texas Division of Emergency Management
	may invite members or former members of the United States Air
	Force's Electromagnetic Defense Task Force to the membership of the
	security commission.
	(c)  The Texas Division of Emergency Management shall
	designate a member of the security commission to serve as presiding
	officer.
	(d)  The presiding officer may invite to the membership of
	the security commission any person whose expertise the security
	commission considers necessary to carry out the purposes of this
	chapter.
	(e)  The security commission shall convene at the call of the
	presiding officer.
	(f)  The security commission shall report to the chief of the
	Texas Division of Emergency Management.
	(g)  A vacancy on the security commission is filled by
	appointment for the unexpired term in the same manner as the
	original appointment.
	(h)  To the extent possible, individuals appointed to the
	security commission must be residents of this state.
	(i)  The presiding officer of the security commission or the
	chief of the Texas Division of Emergency Management may invite
	subject matter experts to advise the security commission, including
	individuals recognized as experts in the fields of electricity
	markets, cybersecurity of grid control systems, electromagnetic
	pulse mitigation, terrestrial and solar weather, and micro-grids.
	The presiding officer may invite an individual for this purpose
	regardless of whether the individual is a resident of this state.
	Sec. 44.003.  EXECUTIVE COMMITTEE. (a) The security
	commission executive committee is composed of the following
	security commission members selected by the presiding officer:
	(1)  a representative of the Texas Division of
	Emergency Management;
	(2)  a representative of the Railroad Commission of
	Texas;
	(3)  a representative of the commission;
	(4)  a representative of the independent organization
	certified under Section 39.151 for the ERCOT power region;
	(5)  two representatives of transmission and
	distribution utilities; and
	(6)  a representative of power generation companies or
	another member of the security commission with expertise in power
	generation.
	(b)  If two or more members or former members of the United
	States Air Force's Electromagnetic Defense Task Force join the
	security commission after being invited under Section 44.002(b),
	the presiding officer shall select two of those members to serve on
	the executive committee.
	(c)  The security commission may not adopt a resilience
	standard under Section 44.006 unless the executive committee
	approves the standard.
	Sec. 44.004.  GRID RESILIENCE INFORMATION. (a)  Each of the
	following members of the security commission shall apply for a
	secret security clearance or an interim secret security clearance
	to be granted by the federal government:
	(1)  the representative of the independent
	organization certified under Section 39.151 for the ERCOT region;
	(2)  the representative of the Texas Division of
	Emergency Management; and
	(3)  the representative of the State Office of Risk
	Management.
	(b)  A member of the security commission listed under
	Subsection (a) who is granted an applicable security clearance
	under that subsection is a member of the information security
	working group.
	(c)  The information security working group shall determine:
	(1)  which information received by the security
	commission that is used in determining the vulnerabilities of the
	electric grid or that is related to measures to be taken to protect
	the grid is confidential and not subject to Chapter 552, Government
	Code;
	(2)  which members of the security commission may
	access which types of information received by the security
	commission; and
	(3)  which members, other than members of the working
	group, should apply for a secret security clearance or interim
	clearance granted by the federal government.
	(d)  Information that the information security working group
	determines is confidential under Subsection (c) shall be stored and
	maintained by the independent organization certified under Section
	39.151 for the ERCOT power region.
	(e)  The security commission must maintain a reasonable
	balance between public transparency and security for information
	determined to be confidential under Subsection (c).
	(f)  Nothing in this section abrogates any rights or remedies
	under Chapter 552, Government Code.
	Sec. 44.005.  GRID RESILIENCE EVALUATION. (a)  The security
	commission shall evaluate, using available information on past
	blackouts in ERCOT, all hazards to the ERCOT electric grid,
	including threats that can cause future blackouts.  The security
	commission shall evaluate the resilience of municipalities in this
	state in the following essential areas:
	(1)  emergency services;
	(2)  communications systems;
	(3)  clean water and sewer services;
	(4)  health care systems;
	(5)  financial services;
	(6)  energy systems, including an evaluation of whether
	energy, electric power, and fuel supplies are protected and
	available for recovery in the event of a catastrophic power outage;
	and
	(7)  transportation systems.
	(b)  The security commission may create groups or teams to
	address each hazard as necessary. The security commission must
	assess each hazard both on the likelihood of occurrence of the
	hazard and the potential consequences of the hazard.
	(c)  The security commission shall identify methods by which
	this state can support an overall national deterrence policy as
	proposed by the Cyberspace Solarium Commission, including by:
	(1)  identifying means to ensure that all hazards
	resilience for electric utilities supports critical national
	security functions in this state; and
	(2)  engaging the Texas National Guard to be trained as
	first responders to cybersecurity threats to the ERCOT electric
	grid and other critical infrastructure.
	(d)  The security commission shall evaluate nuclear
	generation sites in this state, the resilience of each nuclear
	reactor to all hazards, and the resilience to all hazards of
	off-site power for critical safety systems that support the reactor
	and spent fuel. The security commission may communicate with the
	Nuclear Regulatory Commission to accomplish the evaluation.
	(e)  The security commission shall evaluate current Critical
	Infrastructure Protection standards established by the North
	American Electric Reliability Corporation and standards set by the
	National Institute of Standards and Technology to determine the
	most appropriate standards for protecting grid infrastructure in
	this state.
	(f)  The security commission shall investigate the steps
	that local communities and other states have taken to address grid
	resilience. The security commission may request funding to conduct
	site visits to these locations as required.
	(g)  The security commission shall identify universities
	based in this state that have expertise in cybersecurity and other
	matters that can contribute to the security commission's goal of
	mitigating all hazards to the grid in this state.
	(h)  In carrying out the security commission's duties under
	this section, the security commission may solicit information from:
	(1)  defense contractors with experience protecting
	defense systems from electromagnetic pulse;
	(2)  electric utilities that have developed
	electromagnetic pulse protections for the utilities' grid assets;
	(3)  the United States Department of Homeland Security;
	and
	(4)  the Commission to Assess the Threat to the United
	States from Electromagnetic Pulse (EMP) Attack.
	Sec. 44.006.  RESILIENCE STANDARDS.  (a)  Based on the
	findings of the evaluations and investigations conducted under
	Section 44.005, the security commission shall develop and adopt
	resilience standards for municipalities and critical components of
	the ERCOT electric grid.
	(b)  Standards developed and adopted for energy systems of
	municipalities must include provisions to ensure that energy,
	electric power, and fuel supplies are protected and available for
	recovery in the event of a catastrophic power outage.
	Sec. 44.007.  CONTRACTOR SUPPORT FOR CRITICAL SYSTEM AND
	COMPONENT RESILIENCE. (a) The State Office of Risk Management,
	with assistance from the security commission, shall select
	contractors with proven expertise to identify critical systems and
	components of the ERCOT electric grid vulnerable to hazards
	described by Section 44.005(a) with a specific emphasis on the most
	dangerous cyber and electromagnetic threats.
	(b)  A contractor selected under Subsection (a) must
	identify the critical components, including industrial control
	systems, not later than six months after the date the contractor is
	engaged.
	(c)  Not later than January 1, 2025, an entity that owns or
	operates a component identified by a contractor under Subsection
	(a) as critical shall upgrade the component as necessary for the
	component to meet the applicable standards set by the security
	commission under Section 44.006.
	(d)  The State Office of Risk Management shall select
	contractors with demonstrated expertise to verify whether an entity
	with a component identified as critical under Subsection (a) has
	upgraded components as required by Subsection (c).
	Sec. 44.008.  PLAN FOR ALL HAZARDS RESILIENCE. (a) Not
	later than January 1, 2024, the security commission shall prepare
	and deliver to the legislature a plan for protecting the ERCOT
	electric grid from all hazards, including a catastrophic loss of
	power in the state.
	(b)  The plan must include:
	(1)  weatherizing requirements to prevent blackouts
	from extreme cold weather events, an analysis of whether these
	requirements would induce cyber vulnerabilities, and an analysis of
	the associated costs for these requirements;
	(2)  provisions for installing, replacing, or
	upgrading industrial control systems and associated networks, or
	the use of compensating controls or procedures, in critical
	facilities to address cyber vulnerabilities;
	(3)  provisions for installing, replacing, or
	upgrading extra high-voltage power transformers and supervisory
	control and data acquisition systems to withstand 100
	kilovolts/meter E1 electromagnetic pulses and 85 volts/kilometer
	E3 electromagnetic pulses;
	(4)  a timeline for making improvements to remaining
	infrastructure to meet resilience standards adopted by the security
	commission under Section 44.006;
	(5)  long-term resilience provisions for supporting
	industries including:
	(A)  nuclear reactors, materials, and waste;
	(B)  fuel supply;
	(C)  health care;
	(D)  communications;
	(E)  water and sewer services;
	(F)  food supply; and
	(G)  transportation; and
	(6)  any additional provisions considered necessary by
	the security commission.
	(c)  The security commission may consult with the Private
	Sector Advisory Council in developing the plan.
	(d)  The Texas Division of Emergency Management shall
	incorporate the plan into the state emergency management plan and
	update the state emergency management plan as necessary to
	incorporate progressive resilience improvements.
	Sec. 44.009.  GRID RESILIENCE REPORT. (a) Not later than
	January 1 of each year, the security commission shall prepare and
	deliver a nonclassified report to the legislature, the governor,
	and the commission assessing natural and man-made threats to the
	electric grid and efforts to mitigate the threats.
	(b)  The security commission shall make the report available
	to the public.
	(c)  In preparing the report, the security commission may
	hold confidential or classified briefings with federal, state, and
	local officials as necessary.
	Sec. 44.010.  RESILIENCE COST RECOVERY. A regulatory
	authority shall include in establishing the rates of an electric
	utility consideration of the costs incurred to install, replace, or
	upgrade facilities or equipment to meet a resilience standard
	established under this chapter. A regulatory authority shall
	presume that costs incurred to meet a resilience standard under
	this chapter are reasonable and necessary expenses.
	Sec. 44.011.  MICRO-GRIDS. (a) The security commission
	shall establish resilience standards for micro-grids and certify a
	micro-grid that meets the standards. The standards must be
	developed for both alternating current and direct current
	micro-grids.
	(b)  Except as provided by Subsection (c), a municipality or
	other political subdivision may not enact or enforce an ordinance
	or other measure that bans, limits, or otherwise regulates inside
	the boundaries or extraterritorial jurisdiction of the
	municipality or political subdivision a micro-grid that is
	certified by the security commission under this section.
	(c)  The owner or operator of a micro-grid certified by the
	security commission is a power generation company and is required
	to register under Section 39.351(a). The owner or operator of the
	micro-grid is entitled to:
	(1)  interconnect the micro-grid;
	(2)  obtain transmission service for the micro-grid;
	and
	(3)  use the micro-grid to sell electricity and
	ancillary services at wholesale in a manner consistent with the
	provisions of this title and commission rules applicable to a power
	generation company or an exempt wholesale generator.
	Sec. 44.012.  COMPLIANCE AND ENFORCEMENT. (a) The
	commission by rule shall require entities that the commission
	determines operate critical components of the ERCOT electric grid
	to comply with resilience standards adopted by the security
	commission under this chapter. This subsection applies only to an
	entity that is subject to the jurisdiction of the commission under
	another provision of this subtitle. The commission may impose an
	administrative penalty, in the manner provided by Chapter 15, on an
	entity that is subject to the jurisdiction of the commission under
	another provision of this subtitle for a violation of a resilience
	standard or of Subsection (b).
	(b)  The commission by rule shall require each entity
	described by Subsection (a) to make publicly available on an
	Internet website the entity's compliance status with the resilience
	standards.
	(c)  The Railroad Commission of Texas by rule shall require
	entities that the Railroad Commission of Texas determines operate
	critical components of the ERCOT electric grid to comply with
	resilience standards adopted by the security commission under this
	chapter. This subsection applies only to an entity that is subject
	to the jurisdiction of the Railroad Commission of Texas under
	Section 81.051, Natural Resources Code. The Railroad Commission of
	Texas may impose an administrative penalty, in the manner provided
	by Chapter 81, Natural Resources Code, on an entity that is subject
	to the jurisdiction of the Railroad Commission of Texas under
	Section 81.051, Natural Resources Code, for a violation of a
	resilience standard or of Subsection (d).
	(d)  The Railroad Commission of Texas by rule shall require
	each entity described by Subsection (c) to make publicly available
	on an Internet website the entity's compliance status with the
	resilience standards.
	SECTION 3.  Not later than January 1, 2025, the Texas Grid
	Security Commission shall prepare and deliver a report to the
	legislature on the progress of implementing resilience standards
	adopted and implemented under Sections 44.006 and 44.007, Utilities
	Code, as added by this Act.
	SECTION 4.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2023.