Top of page

Article United States: Appeals Court Rules on Chinese Manufacturers' Challenge to FCC Order Implementing Secure Equipment Act

On April 2, 2024, the United States Court of Appeals for the District of Columbia upheld a portion of a Federal Communications Commission (FCC) order that placed the petitioners’ equipment on a covered list of products that could not be purchased with federal subsidies administered by the FCC. However, the court vacated portions of the order that defined “critical infrastructure,” holding that the definition was overly broad. (Hikvision USA, Inc. v. Federal Communications Commission, No. 23-1032 (DC Cir. 2024).)

Background to the Case

Congress prohibited federal agencies from using or procuring technology sold by Chinese companies in the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA). The NDAA defined “covered telecommunications equipment” to include products produced by the petitioners, Hikvision and Dahua, two Chinese manufacturers of video equipment. The NDAA banned the use of the petitioners’ products “[f]or the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes.” In March 2020, Congress passed the Secure and Trusted Communications Networks Act (SNA), which required the FCC to create a list of covered communications equipment or services that pose “an unacceptable risk to the national security of the United States or the security and safety of United States persons” and publish the list on its website. In response, the FCC issued the Supply Chain Second Order, which established procedures for compiling the covered list. The order designated the NDAA as a mandatory source for determining whether equipment posed a national security risk. On March 12, 2021, the FCC published the covered list, which included technology produced by the petitioners. (Hikvision USA, Inc. at 3–6.)

The Communications Act authorizes the FCC “to regulate devices that emit radiofrequency energy that could interfere with radio communications.” The FCC uses an equipment authorization program to ensure that products comply with FCC requirements before they are marketed or imported into the United States. In June 2021, the FCC issued a Notice of Proposed Rulemaking (NPRM) that proposed a revision of the equipment authorization rules to prohibit authorization of technology included on the covered list. In November 2021, Congress passed the Secure Equipment Act (SEA), which directed the FCC to adopt the rules in the NPRM. In November 2022, the FCC issued an order banning authorization of equipment on the covered list for use for public safety, national security, and surveillance of critical infrastructure. The FCC defined “critical infrastructure” as “any system or assets, physical or virtual, connected to the sixteen critical infrastructure sectors identified in PPD-21 or the 55 [National Critical Functions] identified in [the] CISA/NRMC [risk management guide].” The petitioners filed petitions for review of the November 2022 order. (Hikvision USA, Inc. at 6–10.)

Inclusion on the Covered List

The petitioners argued that the FCC exceeded the scope of its authority by including their products on the covered list. (Hikvision USA, Inc. at 10.) However, the court ruled that Congress “intended to require the FCC to prohibit the marketing and sale of Petitioners’ products for listed purposes within the United States” when it passed the SEA. (Hikvision USA, Inc. at 13.) The court concluded that Congress had ratified the contents of the covered list in the SEA; Congress had already prohibited federal agencies from using or procuring the petitioners’ products in the NDAA; Congress required the FCC to create the covered list using the NDAA as a source for selecting covered products; and the SEA specifically referred to the FCC’s NPRM, which proposed banning the petitioners’ products included in the covered list. (Hikvision USA, Inc. at 14–15.) Congress’ ratification of the covered list precluded the petitioners from disputing their inclusion on the list. (Hikvision USA, Inc. at 17.)

The court also noted that it gives deference to the decision of the executive branch on matters of national security. Congress’ repeated acts identifying the petitioners as posing a national security risk further supported judicial deference. (Hikvision USA, Inc. at 18.)

Definition of “Critical Infrastructure”

The petitioners also argued that the definition of “critical infrastructure” introduced in the FCC’s order was too broad because it included anything connected to “the sixteen critical infrastructure sectors identified in PPD-21 or the 55 [National Critical Functions] identified in [the] CISA/NRMC [risk management guide].” (Hikvision USA, Inc. at 19.) The court agreed that the use of the words “connected to” made the definition overly broad because it would label every system or asset related to the sixteen sectors and fifty-five functions as “critical,” yet the FCC did not provide clear guidance about what would fall under the definition. (Hikvision USA, Inc. at 21–22.)

The court concluded that it would uphold the prohibition on the authorization of sale of the petitioners’ products for use in surveillance of critical infrastructure, but it vacated the portions of the order defining “critical infrastructure” and remanded “to the Commission to comport its definition and justification for it with the statutory text of the NDAA.” (Hikvision USA, Inc. at 23.)

Sarah Friedman, Law Library of Congress
April 17, 2024

Read more Global Legal Monitor articles.

About this Item

Title

  • United States: Appeals Court Rules on Chinese Manufacturers' Challenge to FCC Order Implementing Secure Equipment Act

Online Format

  • web page

Rights & Access

Publications of the Library of Congress are works of the United States Government as defined in the United States Code 17 U.S.C. §105 and therefore are not subject to copyright and are free to use and reuse.  The Library of Congress has no objection to the international use and reuse of Library U.S. Government works on loc.gov. These works are also available for worldwide use and reuse under CC0 1.0 Universal. 

More about Copyright and other Restrictions.

For guidance about compiling full citations consult Citing Primary Sources.

Credit Line: Law Library of Congress

Cite This Item

Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

Friedman, Sarah. United States: Appeals Court Rules on Chinese Manufacturers' Challenge to FCC Order Implementing Secure Equipment Act. 2024. Web Page. https://www.loc.gov/item/global-legal-monitor/2024-04-16/united-states-appeals-court-rules-on-chinese-manufacturers-challenge-to-fcc-order-implementing-secure-equipment-act/.

APA citation style:

Friedman, S. (2024) United States: Appeals Court Rules on Chinese Manufacturers' Challenge to FCC Order Implementing Secure Equipment Act. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2024-04-16/united-states-appeals-court-rules-on-chinese-manufacturers-challenge-to-fcc-order-implementing-secure-equipment-act/.

MLA citation style:

Friedman, Sarah. United States: Appeals Court Rules on Chinese Manufacturers' Challenge to FCC Order Implementing Secure Equipment Act. 2024. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2024-04-16/united-states-appeals-court-rules-on-chinese-manufacturers-challenge-to-fcc-order-implementing-secure-equipment-act/>.