On July 28th, the Federal Communications Commission (FCC or Commission) added two new categories of equipment to the Covered List of equipment and services deemed to pose an unacceptable threat to U.S. national security: certain foreign-produced power inverters and advanced robotic devices. Similar to the previous categorical additions of foreign-produced uncrewed aircraft systems (UAS), UAS components and routers, the listings:

• Were prompted by National Security Determinations (NSDs) issued by an unidentified “Executive Branch interagency body” and appended to the FCC’s announcement.
• Were accompanied by a parallel blanket waiver allowing for certain software and firmware changes to previously authorized equipment.
• Implement a “Conditional Approval” process through which an entity can submit an application to have its equipment removed from the Covered List by proposing an onshoring plan and making related ownership and supply chain disclosures.

Unlike the previous categorical listings, the most recent listings employ a new definition of “foreign-produced” that incorporates the standard for a “domestic end product” under trade regulations.

We understand, but the FCC has yet to confirm in writing, that a device that would otherwise meet the definition of “power inverter,” discussed below, is not subject to the Covered List prohibition if the inverter only has wired connectivity capabilities, not wireless. Our intelligence suggests that the FCC may be drafting an update to its FAQ page with this clarification.

The Conditional Approval process may require suppliers of covered equipment to consider mitigation proposals relating to their corporate structure or supply chains similar to those traditionally made as part of reviews by the Committee on Foreign Investment in the United States (CFIUS) and related national security authorities. Akin has assisted several clients in obtaining Conditional Approvals for other covered equipment thanks to its cross-practice expertise in telecommunications, national security and international trade law.

Below, we provide an overview of the FCC’s Covered List prohibitions as well as a high-level summary of the impacts of this Covered List designation on foreign-produced power inverters and advanced robotic devices.

Covered List Implications

Generally, equipment that emits radiofrequency energy is required to receive an FCC equipment authorization. Inclusion on the Covered List means that covered power inverters and advanced robotic devices can no longer receive FCC authorization, which impacts new and previously authorized models in different ways. Specifically, in the absence of a Conditional Approval or compliance with the domestic end product standard:

• New models of power inverters and advanced robotic devices are ineligible for an FCC equipment authorization, and thus generally cannot be imported or sold in the U.S., absent certain exceptions.
• Previously authorized models may still be imported and sold in the United States for now. However, these models:
  • Cannot be modified or updated, except for certain “permissive” software and firmware changes allowed under a blanket waiver issued by the FCC in parallel with this listing (note: Hardware changes to previously authorized models will not be allowed unless a separate waiver is issued, similar to those granted in the context of covered routers).
  • Are at risk of the FCC invoking newly adopted procedures to limit the importation and marketing of those previously authorized models, just as the FCC has done to equipment initially listed on the Covered List, and is now proposing to do for certain categories of UAS.

Definition of Power Inverter

The FCC adopts the definition of “power inverter” provided in the relevant NSD, defining them as a bi-directional power device or system that:

1. Converts direct-current electricity to alternating current electricity, or converts alternating current electricity to direct current electricity, to include microinverters, string inverters, central inverters and hybrid (battery-based) inverters.
2. Contains components that enable remote communication, control, sensing, data collection or monitoring through Wi-Fi, cellular, Bluetooth or other similar connections.

As previewed above, a power inverter that would meet the definition above may not be subject to the Covered List prohibition if that power inverter only has wired connectivity capabilities, not wireless. We are awaiting an FCC clarification on this point in the FAQs. This would suggest that wired connections are not counted as “other similar connections” for purposes of section (2) of the definition above, which applies to enabling wireless communications. Again, we expect the FCC will make this explicit in the near future. 

Definition of Advanced Robotic Devices

Also relying on the relevant NSD, the FCC defines an “advanced robotic device” as a mechanical mobile device, including autonomous mobile robots, humanoid robots and quadrupeds, that:

1. Is capable of locomotion, obstacle avoidance, navigation or movement on the ground.
2. Operates at a distance from a human operator or supervisor based on commands or in response to sensor data or any combination thereof.
3. Has a combined weight of the device and, if applicable, ground station or docking station is over 4.4 pounds (lbs).
4. Contains a component falling within each of the below subparagraphs:

• • A sensor capable of perceiving its environment.
  • A component that is capable of providing network connectivity (wired or wireless, including Bluetooth/WiFi, cellular or satellite) with connection speeds of at least 200 kilobits per second (kbps) in either direction.
  • Software running either locally or remotely, including firmware and artificial intelligence (AI) or machine-learning model weights, that controls the robot’s autonomous navigation or movement perception, data collection or remote command-and-control.

The definition also explicitly excludes:

• A “connected vehicle” as defined in 15 CFR 791.301, but including a connected vehicle of any gross weight.
• A vehicle operated only on a rail line.
• An “uncrewed aircraft” or “uncrewed aircraft system,” as defined in 47 CFR § 788.5.
• An unmanned underwater vehicle that is able to operate without a human occupant.
• Items that are classified as devices under section 513 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. §360c), including surgical instruments, medical and surgical robotic systems, external limb prostheses and their components and ambulatory and mobility assistive devices (such as canes, crutches, walkers and wheelchairs), whether or not powered, and whether the item was cleared under section 510(k), approved under section 515, classified under section 513(f)(2) or exempt from premarket notification.
• A fixed, stationary, non-mobile robot, including articulating, parallel/delta, Cartesian/gantry or Selective Compliance Assembly, or Articulated, Robot Arm (SCARA) robots intended for industrial or medical use.

Definition of Foreign-Produced

The national security determinations define “foreign-produced” as any article that does not qualify as a “domestic end product” as defined in 48 CFR § 25.101(a). For purposes of understanding whether a power inverter or advanced robotic device can qualify as “domestic end products,” Section 25.101(a) requires:

1. That the end product is manufactured in the United States.
2. That the cost of the domestic components exceeds 65% of the total cost of the finished product.

Conditional Approval Process

Just as was the case in the foreign-produced UAS, UAS components and router contexts, entities can request “Conditional Approvals” for specific models of foreign-produced power inverters and advanced robotic devices. A Conditional Approval exempts those models from the Covered List for a certain period of time.

The FCC appended to its Public Notice two guidance documents providing the submission criteria for Conditional Approvals. As in the router and UAS contexts, applicants are required to make disclosures regarding corporate structure and foreign ownership, make disclosures regarding manufacturing and supply chain, and propose a U.S. manufacturing and onshoring plan. Both the Department of War (DoW) and the Department of Homeland Security (DHS) may grant Conditional Approvals for power inverters; however, only DoW may grant Conditional Approvals for advanced robotic devices. Applications are not public, but approvals are announced by the FCC and can be found here.

The DoW and DHS offices responsible for reviewing Conditional Approval applications also participate in CFIUS and related national security reviews, such as supply chain investigations under the Department of Commerce’s Information and Communications Technology and Services (ICTS) authorities. Under these regimes, ownership and supply chain nexuses with foreign adversary countries (including China) may be assessed as significant risks, and may require mitigation measures that include substantial ownership and corporate governance changes. Companies seeking Conditional Approval should be prepared for these risk assessment and mitigation approaches to inform the U.S. government’s review of their applications.

Waiver Allowing for Permissive Software and Firmware Changes

In parallel with these additions to the Covered List, the FCC granted a waiver of its rules governing permissive changes to previously authorized equipment on the Covered List. The waiver allows for certain Class I and Class II permissive changes to firmware and software on previously authorized power inverters and advanced robotic devices. The permitted changes include “software and firmware updates to ensure the continued functionality of the devices, such as those that patch vulnerabilities and facilitate compatibility with different operating systems.” Absent a waiver, the FCC’s rules would prohibit these types of changes to equipment on the Covered List. The waiver will be in place “at least until January 1, 2029.”

Please do not hesitate to reach out if you have questions relating to whether and how your product or device is potentially impacted by the FCC’s Covered List prohibitions on foreign-produced power inverters and advanced robotic devices.