Huawei v FCC
The Fifth Circuit denied Huawei’s petition for review, holding that the FCC acted within its statutory authority and did not violate the Administrative Procedure Act or the Constitution by barring universal-service funds from being used for equipment or services supplied by designated national-security risks.
What it does The opinion upholds the FCC’s Universal Service Fund rule, 47 C.F.R. § 54.9, and rejects Huawei’s challenges to the rule’s statutory basis, notice, reasoned decisionmaking, cost-benefit analysis, vagueness, due process, and other constitutional features. The court held that the Communications Act’s “public interest” and “quality services” provisions reasonably encompass a limited FCC judgment about network security, informed by Congress, the President, other executive agencies, and classified information. It dismissed challenges to Huawei’s initial designation for lack of jurisdiction because that designation was not final.
Who it affects The decision directly affects Huawei and its U.S. affiliate, as well as USF recipients and communications providers considering equipment or services from covered companies. It also addresses ZTE Corporation’s parallel initial designation and the FCC’s designation process.
Why it matters The ruling validates the FCC’s authority to protect the communications supply chain through subsidy restrictions and confirms that network security can be part of providing “quality services.” It also treats the FCC’s rule as compatible with, rather than displaced by, the later Secure and Trusted Communications Networks Act.
Key dates and numbers
- Opinion filed June 18, 2021; No. 19-60896.
- FCC Report and Order: FCC 19-121, released November 26, 2019.
- Huawei’s final designation: June 30, 2020; FCC affirmance: December 11, 2020.
- USF budget discussed: about $8 billion annually; estimated rule costs: $160 million to $960 million.