Court Affirms Texas Grid Foreign Ownership Restrictions

The 5th Circuit Court upheld a Texas law limiting foreign-owned companies from connecting projects to the state electric grid.

Updated on Oct. 29, 2026 in Utilities

Isometric editorial illustration of a steel electrical transmission tower standing in an open field, representing state grid infrastructure regulations. — The U.S. 5th Circuit Court of Appeals upheld a Texas law restricting foreign-owned companies from connecting projects to the state's electric grid. AI Illustration. Upload story photo >

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The U.S. Court of Appeals for the 5th Circuit affirmed the dismissal of a lawsuit filed by GH America Energy against Texas grid interconnection restrictions. The ruling supports the state's authority to enforce the Texas Lone Star Infrastructure Protection Act of 2021.

Why it matters

The decision affirms that states may enact regulations protecting their electric grids from foreign interference, such as data theft and computer viruses. This ruling establishes a legal precedent for how states can manage foreign-entity access to critical infrastructure.

The ruling resolves a 2024 legal challenge regarding compliance with the Texas Lone Star Infrastructure Protection Act of 2021. The court rejected the argument that federal law regarding foreign investment screening holds exclusive authority over state grid protections.

The players

GH America Energy

A Texas LLC and subsidiary of a Chinese company that sought to connect its Blue Star Solar Project to the state electric grid.

U.S. Court of Appeals for the 5th Circuit

The federal court that issued the ruling affirming the state's ability to restrict foreign-owned entities from accessing the grid.

Electric Reliability Council of Texas

The organization managing the state's electric power flow that was named in the initial lawsuit by the energy company.

The details

GH America Energy, a subsidiary of a Chinese company, saw its Blue Star Solar Project application cancelled due to the state's security mandate. The court ruled that states can treat grid security requirements similarly to environmental or safety standards to mitigate risks of computer viruses and data theft.

Texas enacted the Lone Star Infrastructure Protection Act in 2021.
GH America Energy filed its lawsuit against state officials in 2024.
The 5th Circuit Court issued its ruling on October 16, 2026.

Market Landscape

This decision solidifies a trend where states are increasingly asserting regulatory power over infrastructure security independently of federal oversight. By upholding the Texas Lone Star Infrastructure Protection Act of 2021, the court signals that similar state-level barriers against foreign-owned entities in the utility sector are legally defensible.

The ruling provides greater certainty for how the state manages and protects its electric grid from potential digital threats. Residents may see more consistent application of security standards as the state continues to enforce its infrastructure protection laws.

The takeaway

This ruling highlights the growing intersection between national security and state-level control over critical energy infrastructure. Stakeholders in the energy sector should expect continued scrutiny and rigorous compliance requirements regarding foreign ownership and project connectivity.