• Elimination of expedited approval procedures reduces possible evasion of FCC's rules.
  • Adoption of new rules to revoke existing equipment certifications for covered products issued to entities on Covered List is likely.
  • Without the opportunity to obtain equipment authorizations or comply with the SDoC procedures, the "covered" manufacturers are essentially barred from all import, marketing and sales activities for "covered" equipment.

On November 25, 2022, the Federal Communications Commission released a Report and Order modifying its equipment authorization rules to prohibit the importation, marketing and sale of certain communications equipment produced by entities on its Covered List. In particular, the FCC adopted rules to prohibit the issuance of equipment authorization certifications, along with eliminating the use of the more flexible Supplier's Declaration of Conformity (SDoC) procedures, for these entities. By prohibiting the issuance of equipment certifications and use of the SDoC procedures, these companies are effectively barred from the U.S. market for their communications equipment and services.

The Covered List was established in 2019 as a result of the passage of the Secure and Trusted Communications Network Act of 2019, which focused on "covered" equipment, defined as communications equipment and services that are deemed to pose unacceptable risk to the national security of the United States, or the security and safety of United States persons. Separately, Section 889(a)(1)(B) of the John S. McCain National Defense Authorization Act required revisions to the Federal Acquisition Regulation (FAR) to prohibit the procurement of "covered telecommunications equipment or services" by federal agencies.

The initial Covered List was adopted by the FCC in March 2021. The agency identified five companies: (i) Huawei Technologies, (ii) ZTE Corp., (iii) Hytera Communications, (iv) Hangzhou Hikvision, and (v) Dahua Technology Company. Subsequently, the FCC added AO Kaspersky Lab and China Mobile International USA to the Covered List in March 2022, and it then added the following three companies in September 2022: (i) China Telecom (Americas) Corp., (ii) Pacific Networks Corp. and its subsidiary, ComNet (USA) LLC, and (iii) China Unicom (Americas) Operations Limited (collectively, the Covered Entities).

Although the Covered Entities are prohibited from providing equipment and services to U.S.-based telecommunications carriers that participate in federal grant and subsidy programs, they were permitted to participate in the FCC's equipment authorization process, either by obtaining an equipment certification from the FCC, or by demonstrating compliance with the FCC's RF emissions and conducted power limits through the SDoC compliance procedures. Compliance with the FCC's equipment authorization rules is required before communications products may be imported, marketed or sold in the United States.

The Report and Order immediately freezes any pending equipment certification applications filed by the Covered Entities and prohibits them from seeking new equipment authorization for covered equipment in the future. Moreover, the Report and Order prohibits the Covered Entities from using the SDoC procedures and eliminates any existing exemptions for covered equipment produced by the Covered Entities. Finally, the FCC will now require all applicants for equipment certification to attest under penalty of perjury that the particular equipment specified in their applications is not communications equipment that has been identified and placed on the Covered List. The FCC also adopted rules that establishes streamlined procedures to revoke existing equipment authorizations that contain false claims concerning whether the subject equipment is "covered" equipment.

The FCC sought additional comment on whether it should adopt procedures to revoke existing equipment authorizations for Covered Entities with respect to covered equipment. As part of this examination, the FCC is seeking comment on the impact that such actions would have on the supply chain and how to effectively deal with the impact on consumers. Additionally, the FCC is seeking comment on the application of the new equipment authorization rules on components and modules produced by the Covered Entities but incorporated by non-Covered Entities in final products that may not otherwise fall on the Covered List.

The deadline for filing comments will be established when the Further Notice is published in the Federal Register. As noted, the FCC imposed an immediate freeze on the processing of pending equipment authorizations as of November 25th, and it delegated authority to the Office of Engineering and Technology to extend the freeze as appropriate. Finally, the newly adopted rules will become effective on publication in the Federal Register, except for those that contain new or modified information collection requirements that require review by the Office of Management and Budget.

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