FCC to Require Foreign Adversary Ownership Certifications and Reporting

The Federal Communications Commission is imposing new certification and disclosure requirements for foreign adversary ownership or control.

The new requirements apply to a broad range of entities holding an FCC license, permit, or authorization, including commercial and private wireless licensees and lessees, telecom service providers (including some VoIP providers), eligible telecommunications carriers (ETCs), broadcasters, cable and multichannel video programming distributers, satellite networks, antenna structure registrants, frequency coordinators, submarine cable landing licensees, FCC auction applicants, and entities holding or applying for equipment certifications.

Each type of FCC authorization falls into one of three categories with varying levels of required disclosures. Entities holding an FCC license, permit, or authorization will need to review the schedules in Appendix A of the FCC’s Report and Order to determine their specific reporting requirements.

Once the FCC issues a public notice announcing the launch of a single, consolidated reporting system, designated as the Foreign Adversary Control System (FACS), most entities subject to the certification requirements will have 60 days to file with the FCC. Small business entities will have 120 days.

Definition of Foreign Adversary Control

A “foreign adversary” is defined to include the following foreign governments and foreign non-government persons: (1) the People’s Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region; (2) Republic of Cuba; (3) Islamic Republic of Iran; (4) Democratic People’s Republic of Korea; (5) Russian Federation; and (6) Venezuelan politician Nicolás Maduro.

An entity is deemed to be “owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” based on whether a foreign adversary holds a 10% or greater voting and/or equity interest in the entity, wherever organized or doing business.

Foreign ownership and control can also be determined based on individuals and entities who act under the direction or control of a foreign adversary; individuals who are citizens of a foreign adversary; entities that have a principal place of business in a foreign adversary, are headquartered or incorporated in a foreign adversary, or are organized under the laws of a foreign adversary; and other factors.

Reporting Schedules

There will be three different schedules of licenses with varying levels of required disclosures:

• • Schedule A: Entities holding authorizations listed in Schedule A will have to make a definitive attestation as to whether or not they are subject to foreign adversary control. Some examples include broadband-capable, geographic-area wireless licenses in certain services, space and earth station authorizations, certain broadcast licenses, ETC designations, and equipment certifications.

• • Schedule B: Entities that hold these authorizations will have to make a definitive attestation only if they are subject to foreign adversary control. Some examples include non-broadband-capable geographic and site-based wireless licenses in certain services, mandatorily filed antenna structure registrations, and certain broadcast licenses not included in Schedule A.

• • Schedule C: Entities that hold these authorizations will be exempt from initially attesting as to whether or not they are subject to foreign adversary control. Some examples include voluntarily filed antenna structure registrations, auction applications, Supplier’s Declaration of Conformity, and wireless licenses in certain services.

Any Schedule A, B, or C entity that attests it is owned by, controlled by, or subject to the jurisdiction of a foreign adversary must further disclose to the FCC all 5% or greater direct or indirect equity and/or voting interests held in the entity, as well as submit further disclosures. State and local government agencies, federally recognized Tribal Nations, and businesses controlled by a federally recognized Tribal Nation are exempt from the foreign adversary reporting requirements.

After the initial reporting deadline, entities may be required to submit new attestations and additional disclosures for changes in foreign adversary control and other circumstances. If entities fail to make the required disclosures, the FCC may take enforcement actions, such as issuing citations, imposing monetary penalties, or more serious actions that result in license or authorization revocations.

For more information about these new certification and disclosure requirements, contact Kevin Cookler at Lerman Senter.