88R3548 CXP-F
 
  By: Hall, et al. S.B. No. 330
 
 
 
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  superseded social distancing protocols;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.