Appeals Court Upholds Rights of Hikvision and Dahua

Last Tuesday, on April 2nd, the US Federal Court of Appeals upheld the right of the Federal Communications Commission (FCC) to ban technologies from Chinese telecommunication companies, with some minor reservations. The court’s decision confirmed that the FCC acted within its authority in prohibiting the products related to video surveillance manufactured by companies Hikvision and Dahua. This action was based on the 2021 Secure Equipment Act (SEA), which aims to mitigate the national security risks posed by telecommunications equipment accessible to the Chinese government.

According to the SEA, the FCC was directed to cease the marketing and sales coordination of telecommunication products deemed threatening to national security. This led to the specific ban on video surveillance equipment from Hikvision and Dahua out of concerns that it could be utilized by China to compromise critical US infrastructure.

However, the court sided with the argument made by the affected companies that the FCC had overly broadened the definition of critical infrastructure when imposing the ban. As per the FCC’s Order, the ban extended to equipment used for public safety, security of government institutions, physical security of critical infrastructure, and other national security objectives.

The court deemed this interpretation of critical infrastructure as “unjustifiably broad and, therefore, arbitrary and capricious.” Consequently, the court ruled that the FCC had overstepped its authority, including terms from a broader presidential policy directive and provisions of the Cybersecurity and Infrastructure Security Agency (CISA).

The court urged the FCC to reassess the definition of critical infrastructure, aligning it with the language outlined in the 2019 National Defense Authorization Act, which prohibited federal agencies from using or procuring “covered” technologies made by Chinese companies, such as Hikvision and Dahua.

While Chinese companies will remain restricted from US critical infrastructure, they may still operate in other sectors not involving heightened security measures. However, given the prolonged debate over potential Chinese surveillance, American companies are unlikely to take the risk of investing in equipment that could later be required for removal.

/Reports, release notes, official announcements.