New FCC Proposed Rules Would Prohibit Equipment Authorizations and Participation in License Auctions for Companies Posing National Security Risk

Pillsbury - Global Trade & Sanctions Law

As part of its continuing efforts to protect US communications networks from communications equipment and services that pose a national security risk, the Federal Communications Commission (FCC) on June 17, 2021, released a Notice of Proposed Rulemaking and Notice of Inquiry (NPRM/NOI) seeking comments on its proposal to prohibit the authorization (and revoke existing authorizations) of any communications equipment on the list of equipment and services that the Commission maintains pursuant to the Secure and Trusted Communications Networks Act of 2019 (referred to as the Covered List).  The NPRM/NOI also proposes to require entities participating in competitive bidding for FCC licenses to certify that its bids do not rely on financial support from any entity the FCC has designated as a national security threat to the integrity of communications networks or the communications supply chain.

The Covered List was published by the FCC Public Safety and Homeland Security Bureau in March 2021, and identifies certain equipment and services produced or provided by Huawei Technologies Company and ZTE Corporation, and video surveillance and telecommunications equipment and services produced or provided by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company — and their respective subsidiaries and/or affiliates.   All five companies are based in China.   The FCC has previously prohibited the use of federal universal service funds to support the purchase of covered equipment or services.  If adopted, the new rules would not only prohibit the importation or sale of covered equipment, but could also require the removal of existing installed covered equipment.

The FCC relies on its equipment authorization rules reduce the interference potential of devices that emit radiofrequency (RF) energy and that can cause harmful interference to radio communications.  The rules also promote efficient use of radio spectrum.  Under most circumstances, equipment emitting RF may not be imported into or marketed or sold in the United States without the appropriate FCC equipment authorization.  The FCC historically limited its review of new products to technical compliance with equipment authorization rules and not national security concerns.

As part of the NPRM, the FCC is proposing to revise the equipment certification application procedures to include a new provision that would require applicants to provide a written and signed attestation that, as of the date of the filing of the application, the equipment for which the applicant seeks certification is not “covered” equipment on the Covered List.

The FCC also questions whether it should revoke any existing equipment authorizations of covered communications equipment.  As such, it also seeks comment on the appropriate and reasonable transition period for removing that particular equipment, which could include a transition period for non-conforming equipment to make any necessary modifications to communications equipment or services, including removing the “covered equipment” (in whole or as a component) from that equipment or service.

Comments on the NPRM/NOI will be due 30 days after its publication in the Federal Register; replies 30 days later.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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