The Department of Commerce (Department) has proposed regulations that would apply broadly to an expansive range of “transactions” involving information and communications technology and services (ICTS) – including radio and television broadcasting equipment – with foreign entities designated as “foreign adversaries.” These proposed rules would apply not only to traditional “transactions” such as mergers and acquisitions but also to the “acquisition, . . . installation, dealing in, or use” of covered ICTS equipment. If interpreted expansively, the proposed rules could apply to any such actions that originate from a foreign source after May 15, 2019. The rules would grant the Department the authority to identify, assess, and address situations that the Department determines pose an undue risk to U.S. critical infrastructure or the digital economy in the United States, or an unacceptable risk to U.S. national security or the safety of U.S. persons.
Chinese equipment manufacturers such as Huawei and ZTE are the most obvious targets of adverse Department attention. However, the proposed rules are exceedingly broad on their face and create substantial risk of uncertainty for broadcast and other media companies that have or have plans to have dealings with any foreign equipment manufacturer. This is of particular concern given the ongoing process of repacking television broadcasters and related impacts on radio and low power television broadcasters, which could involve substantial actions related to foreign-manufactured equipment.
The deadline for comments is short – December 27, 2019 absent an extension – and we recommend that interested parties consider how this new regime could impact their business operations and investments. We look forward to the opportunity to leverage our deep expertise in dealing with the Commerce Department and national security agencies to help you assess the possible effects of the proposed rules on your business and to influence the regulatory process.
You can read more on our website here.