FCC’s USF National Security Blacklist Rule Effective January 3, 2020

January 3, 2020 – A summary of the FCC’s Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs Report and Order has been published in the Federal Register, making it effective January 3, 2020. The Report and Order prohibits the use of universal service fund support to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of U.S. communications networks or the U.S. communications supply chain. A requirement that USF recipients certify that they are in compliance with the rule will take effect following revision of certain information collections and their approval by the Office of Management and Budget.

**********

Comments On National Security FNPRM Due February 3, 2020

January 3, 2019 – The FCC’s Wireline Competition Bureau has announced deadlines to comment in response to the FCC’s Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs Further Notice of Proposed Rulemaking. Comments are due on or before February 3, 2020, and reply comments are due no later than March 3, 2020. In the FNPRM, the FCC proposes: to require as a condition on the receipt of any USF support that providers not use or agree to not use within a designated period of time, communications equipment or services from covered companies; to require providers receiving USF support to remove and replace covered equipment and services from their network operations; to establish a reimbursement program to offset reasonable transition costs, in order to mitigate the impact on affected entities, and in particular small, rural entities; to make the requirement to remove covered equipment and services by providers contingent on the availability of a funded reimbursement program.

**********

 

Comments On FCC Designations Of Huawei & ZTE As Security Threats Due February 3, 2020

January 3, 2020 – The FCC’s Public Safety and Homeland Security Bureau has announced deadlines to comment on the FCC’s designation of Huawei Technologies Company and ZTE Corporation as “covered companies” in the Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs Report and Order. In that November 2019 Report and Order, the FCC adopted a rule that prospectively prohibits the use of universal service fund support to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of U.S. communications networks or the U.S. communications supply chain. The FCC initially designated Huawei and ZTE as covered companies and established a process for designating additional covered companies in the future. Interested parties may file comments responding to the initial designations of Huawei and ZTE as covered companies on or before February 3, 2020.

**********

 

Commerce Department Extends Deadline To Comment On Proposed Supply Chain Regulations To January 10, 2020

December 23, 2019 – The U.S. Department of Commerce has extended the deadline to comment on the proposed regulations to implement the May 2019 Executive Order on Securing the Information and Communications Technology and Services Supply Chain. Comments and information regarding the proposed regulations must be received by close of business on January 10, 2020. Comments may be submitted to the Department of Commerce by any of the following methods:

• By the Federal eRulemaking Portal: http://www.regulations.gov at docket number DOC-2019-0005.

• By email directly to: ICTsupplychain@doc.gov. Include “RIN 0605-AA51” in the subject line.

• By mail or hand delivery to: Henry Young, U.S. Department of Commerce, ATTN: RIN 0605-AA51, 1401 Constitution Avenue NW, Washington, DC 20230.

The proposed regulations would govern the process and procedures that the Secretary of Commerce will use to identify, assess, and address certain information and communications technology and services transactions that pose an undue risk to critical infrastructure or the digital economy in the United States, or an unacceptable risk to U.S. national security or the safety of United States persons. The Commerce Department has invited comment on all aspects of the proposed regulations, including among other things, the following questions: Are there instances where the Secretary should consider categorical exclusions for certain transactions? Are there classes of persons whose use of information and communications technology and services can never violate the Executive order? Are there transactions involving types or classes of information and communications technology and services where the acquisition or use in the U.S. or by U.S. parties would fall within the terms of the Executive order’s prohibited transactions because the transaction could present an undue or unacceptable risk, but that risk could be reliably and adequately mitigated to prevent the undue or unacceptable risk?

**********

 

Huawei Files Legal Challenge To FCC Order Banning Use Of USF Support To Purchase Huawei Equipment

December 5, 2019 – Chinese telecom equipment manufacturer Huawei Technologies Company has filed a petition for review with the U.S. Court of Appeals for the Fifth Circuit, seeking to overturn a recent FCC decision to prohibit the use of Universal Service Fund (USF) support to purchase Huawei equipment and services. In a November Report and Order, the FCC designated Huawei and ZTE Corporation as posing a threat to the security of U.S. communications networks and the communications supply chain (covered companies) because of their “ties to the Chinese government and military apparatus.” Communications providers are prohibited from using USF support to purchase or obtain any equipment or services produced or provided by a covered company. Accordingly, providers “may not use USF funds to maintain, improve, modify, operate, manage, or otherwise support” Huawei and ZTE equipment or services in any way. Huawei’s legal challenge asks the Fifth Circuit to declare the FCC’s Order unlawful for a number of reasons, including the following arguments:

The Order exceeds the FCC’s statutory authority because the FCC does not have authority to make national security judgments or to restrict use of USF funds based on such judgments.

The Commission’s Order is arbitrary and capricious because the Commission failed to address multiple legal arguments and material facts presented in comments on the proposed rule.

The rule is unlawfully vague and inconsistent with Due Process because the Order states no standard or criteria for identifying a company as a genuine threat to the integrity of U.S. communications networks or supply chains.

**********

 

Commerce Department Proposes Rule On Securing U.S. Information And Communications Technology And Services Supply Chain

December 1, 2019 – The U.S. Department of Commerce has issued a proposed rule on Securing the Information and Communications Technology and Services Supply Chain, and has requested comments, which are due on or before December 27, 2019. The proposed rule implements Executive Order 123873, issued in May 2019, and sets out the procedures the Secretary of Commerce plans to use to identify, assess, and address technology and services transactions that pose an undue risk to the U.S., to critical infrastructure or the digital economy in the U.S., or an unacceptable risk to national security or to the security and safety of U.S. persons. The Commerce Department invites comment on all aspects of the proposed regulation, including among other things, the following questions: Are there instances where the Secretary should consider categorical exclusions for certain transactions? Are there classes of persons whose use of information and communications technology and services can never violate the Executive order? Are there transactions involving types or classes of information and communications technology and services where the acquisition or use in the U.S. or by U.S. parties would fall within the terms of the Executive order’s prohibited transactions because the transaction could present an undue or unacceptable risk, but that risk could be reliably and adequately mitigated to prevent the undue or unacceptable risk?

**********

 

FCC Approves Report And Order To Protect U.S. Communications Networks From National Security Threats, Blacklists Huawei & ZTE

November 26, 2019 – The Federal Communications Commission has approved a Report And Order, Further Notice Of Proposed Rulemaking, And Order that addresses national security threats to U.S. communications networks and the U.S. communications supply chain. In the Report and Order, the FCC adopted a rule that prospectively prohibits the use of universal service fund support to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of U.S. communications networks or the U.S. communications supply chain. The FCC initially designated Chinese companies Huawei Technologies Company and ZTE Corporation as covered companies, and established a process for designating additional covered companies in the future. In the FNPRM, the FCC proposes: to require as a condition on the receipt of any USF support that providers not use or agree to not use within a designated period of time, communications equipment or services from covered companies; to require providers receiving USF support to remove and replace covered equipment and services from their network operations; to establish a reimbursement program to offset reasonable transition costs, in order to mitigate the impact on affected entities, and in particular small, rural entities; to make the requirement to remove covered equipment and services by providers contingent on the availability of a funded reimbursement program.

**********

 

Commerce Department Extends Huawei Temporary General License

November 18, 2019 – The U.S. Department of Commerce has announced that the Bureau of Industry and Security (BIS) will extend for 90 days the Temporary General License (TGL) authorizing specific, limited engagements in transactions involving the export, reexport, and transfer of items – under the Export Administration Regulations (EAR) – to Huawei and its non-U.S. affiliates which are subject to the Entity List. In May 2019, BIS added Huawei and non-U.S. affiliates of Huawei to the Entity List, which is made up of entities reasonably believed to be involved, or to pose a significant risk of being involved, in activities contrary to the national security or foreign policy interests of the U.S. Since then, the BIS has added additional Huawei affiliates to the Entity List. BIS granted the first TGL in May 2019, and granted an extension in August 2019. This most-recent decision extends the TGL through February 16, 2020.

**********

 

FCC Circulates Order Blacklisting Huawei & ZTE Equipment, Will Vote November 19th

October 28, 2019 – Federal Communications Commission Chairman Ajit Pai has announced he has circulated a draft Report and Order containing provisions designed to protect U.S. communications networks from national security threats. The Commission will vote on the item at its November 19th open meeting. If adopted, the Report and Order would prohibit companies from using Universal Service Fund (USF) money to purchase equipment or services from any company that poses a national security threat. The draft Report and Order initially blacklists two Chinese companies – Huawei and ZTE Corporation – as posing a national security risk. The draft Report and Order would also establish a process for adding additional companies to the blacklist in the future.

The prohibition on Huawei and ZTE equipment and services is prospective, and would not itself prohibit the use of existing equipment or services already deployed in networks. This means USF recipients may continue to use equipment or services produced or provided by covered companies obtained prior to the issuance of the rule. However, they may not use USF funds to maintain, improve, modify, or otherwise support such equipment or services in any way.

Accompanying the Report and Order is a draft Further Notice of Proposed Rulemaking and draft Information Collection Order that proposes to remove and replace equipment produced by blacklisted companies from USF-funded communications networks. It seeks comment on how to provide financial assistance to carriers to help them transition to more trusted suppliers. The Information Collection is intended to help assess the extent to which USF recipients have deployed Huawei and ZTE equipment in their networks, as well as the costs to remove and replace it.

The FCC initially released a Notice of Proposed Rulemaking in April 2018 proposing to prohibit the use of USF support to purchase equipment or services from any communications equipment or service providers identified as posing a national security risk to U.S. communications networks or the communications supply chain.

**********

 

Secure and Trusted Communications Networks Act Would Ban Huawei & ZTE Equipment, Fund Removal

September 24, 2019 – A bipartisan group of members of the U.S. House of Representatives have introduced the Secure and Trusted Communications Networks Act of 2019. The bill, H.R. 4459, would prohibit Federal funds from being used to purchase communications equipment or services posing national security risks. Such equipment or services would be those produced or provided by Huawei Technologies Co. Limited, Zhongxing Telecommunications Equipment Corporation (ZTE), any subsidiary or affiliate of Huawei or ZTE, and any other entity determined to pose a risk. The bill would also establish a Secure and Trusted Communications Networks Reimbursement Program, administered by the Federal Communications Commission, to fund the replacement of communications equipment or services posing national security risks. It would reimburse providers of advanced communications services that have 2,000,000 or fewer customers and meet certain certification requirements. The bill would appropriate $1 billion for fiscal year 2020 to carry out the program, with the funding to remain available through fiscal year 2029. The Secure and Trusted Communications Networks Act of 2019 is sponsored by Energy and Commerce Chairman Frank Pallone Jr. (D-NJ) and Ranking Member Greg Walden (R-OR), along with Representatives Doris Matsui (D-CA) and Brett Guthrie (R-KY). It has been referred to the House Committee on Energy and Commerce.

**********

 

Commerce Department Adds 46 Huawei Affiliates To Entity List; Extends Huawei Temporary General License By 90 Days

August 19, 2019 – The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has placed 46 additional Huawei Technologies Co., Ltd. affiliates on the Entity List – the list of entities reasonably believed to be involved, or to pose a significant risk of being involved, in activities contrary to the national security or foreign policy interests of the U.S. A total of 19 of the 46 affiliated entities are being added to the existing entry for Huawei, while the other 27 entities are being added under new, separate entries, effective August 19, 2019. In May 2019, the BIS added Huawei and 68 non-U.S. affiliates of Huawei to the Entity List. The BIS decision prohibits, without a license, the export, reexport, or transfer (in-country) of items to any of the listed Huawei entities. Applications for such licenses are subject to a review policy with a presumption of denial. Additionally, however, BIS announced “it will extend the Temporary General License (TGL) authorizing specific, limited engagements in transactions involving the export, reexport, and transfer of items – under the Export Administration Regulations (EAR) – to Huawei and its non-U.S. affiliates which are subject to the Entity List.” Continuation of the TGL is intended to allow consumers “the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat.” The license will be effective on August 19, 2019 and last an additional 90 days.

**********

 

FCC Commissioner To Hold Meeting On Funding Replacement Of Huawei Equipment

June 19, 2019 – FCC Commissioner Geoffrey Starks has announced he will convene a group of stakeholders—including carriers, manufacturers, academics, and trade associations – to start crafting and developing a plan to identify and replace telecommunications equipment manufactured by companies that pose a threat to U.S. national security. The purpose of the stakeholder meeting, in the words of Commissioner Starks, is find it, fix it, and fund it. Commissioner Starks wants the stakeholder group to determine what it will take to find insecure equipment, fix the problem, and help fund the process. A recent Executive Order bars U.S. companies from buying foreign-made telecommunications equipment and technology considered to be a national security risk, while the FCC has a pending proposal to prohibit the use of universal service funds to purchase or support blacklisted equipment. Both are primarily aimed at equipment manufactured by Chinese companies Huawei and ZTE. Equipment manufactured by Huawei and ZTE account for a small percentage of total U.S. communications network infrastructure, most of it is used in networks that serve rural America. Some have estimated it may cost upwards of $1 billion to replace Huawei and ZTE equipment that is currently in use today.

**********

 

5G Leadership Act Would Reimburse Carriers That Replace Huawei, ZTE Equipment

May 22, 2019 – A bipartisan group of Senators have introduced S.1625, the “United States 5G Leadership Act of 2019,” which creates a national plan for the deployment and security of 5G networks. The bill, if enacted, would prohibit communications networks from containing any equipment or software made by Huawei, ZTE, other China-based companies, and any other entity that poses a national security risk to the U.S. It also would prohibit the use of universal service fund support to purchase communications network equipment and services from such companies. The legislation would create a $700 million Supply Chain Security Trust Fund to provide equipment replacement grants to service providers that replace communications equipment and services purchased from Huawei, ZTE, and any other blacklisted companies prior to August 14, 2018. Communications providers with not more than 6,000,000 customers would be eligible to receive a grant. The bill is sponsored by Senator Roger Wicker (R-MS), and cosponsored by Senators Tom Cotton (R-AR), Mark Warner (D-VA), and Edward Markey (D-MA), and has been referred to the Senate Committee on Commerce, Science, and Transportation.

**********

 

Commerce Department’s BIS Grants 90-Day License For Huawei Products

May 20, 2019 – The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has issued a Temporary General License (TGL) amending the Export Administration Regulations (EAR) to authorize specific, limited engagement in transactions involving the export, reexport, and transfer of items to Huawei Technologies Co. Ltd. and its sixty-eight non-U.S. affiliates. On May 16, 2019, the BIS added Huawei and its 68 non-U.S. affiliates the list of entities reasonably believed to be involved, or to pose a significant risk of being involved, in activities contrary to the national security or foreign policy interests of the U.S. The TGL is effective May 20, 2019 and lasts 90 days. In the official announcement, Secretary of Commerce Wilbur Ross stated, “The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services.” The TGL “will allow operations to continue for existing Huawei mobile phone users and rural broadband networks.”

**********

 

Commerce Department’s BIS Adds Huawei To List Of Entities That Pose Threat To U.S.

May 16, 2019 – The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has added Huawei and 68 non-U.S. affiliates of Huawei to the list of entities reasonably believed to be involved, or to pose a significant risk of being involved, in activities contrary to the national security or foreign policy interests of the U.S. Huawei was added to the Entity List based on, among other things, its indictment in the U.S. District Court for the Eastern District of New York for violating U.S. law by exporting goods, technology, and services from the U.S. to Iran and the government of Iran. The BIS decision prohibits exports, reexports, or transfers (in-country) of Huawei equipment, software, and technology without a license. Applications for such licenses are subject to a review policy with a presumption of denial. The full Entity List is available online from the Department of Commerce.

**********