The sanctions could have a serious impact on Huawei and on companies that supply and do business with the firm. Similar sanctions temporarily imposed on ZTE, another Chinese telecommunications firm, last year were referred to as a “death penalty” ban due to the crippling impact it had on ZTE’s operations.

The new sanctions prohibit the transfer, sale, export, or reexport of physical goods, software, or “technology” to listed Huawei entities. “Technology” is a broad term, including information necessary for the development, production, use, operation, installation, maintenance, repair, overhaul, or refurbishing of physical goods or software subject to the EAR. And unlike non-U.S. export control rules, many items remain subject to the EAR after they have left the United States. The U.S. EAR apply to all items in the United States and to all items outside of the United States that were either manufactured in the United States or contain more than de minimis (25 percent) U.S.-origin content, by value. In some instances, items made outside of the United States using U.S. technology or know how can also be subject to the EAR and would be subject to the new prohibitions.

U.S. and non-U.S. companies that conduct direct or indirect business with Huawei should move quickly to review whether ongoing dealings implicate these new sanctions. A first step will be to determine whether any shipments or transfers of items for ultimate use by Huawei will need to be reviewed to determine whether U.S. rules apply. Any pending shipments should be placed on hold until that initial analysis can be completed. Companies that violate the Entity List prohibitions could be subject to significant civil fines or criminal penalties or be added to a U.S. sanctions list.

The new sanctions come days after a new Executive Order that, once implemented, is expected to prohibit U.S. telecommunications networks from using Huawei equipment.

The publication firms up the dates for the one-year transition period regarding the continued availability of the current Commission equipment authorization procedures prior to marketing or operation -- verification and Declaration of Conformity ("DoC") -- while the new Supplier's Declaration of Conformity ("SDoC") is also available for use for equipment that qualified under one or both of the two pre-existing processes. During the transition, for affected unlicensed unintentional radiators, one of these processes (or certification as an alternative in some cases) must be followed, as applicable per Section 15.101 of the FCC's rules prior to the new changes (for verification or DoC) or as revised (for SDoC). Note that there were no changes in the recent order to the categories of unintentional radiators that, as an alternative in some instances, also allow use of the certification procedures (which unlike the other processes we've mentioned require application and approval by Telecommunications Certification Bodies).

Through November 2, 2018, unlicensed devices that could have qualified for and have been subject to either the verification or DoC process under the rules in effect prior to November 2, 2017, can continue to use those processes. However, such devices may now go through the new SDoC as an alternative option.

However, responsible parties are well abused to take heed that, for any equipment that was first qualified through the verification or DoC process at any time, if there are changes after November 2, 2018, that would require the modified equipment to undergo a separate authorization process before it can be marketed and operated, those modified devices must go through the SDoC procedure (or certification if available) to cover the changes.

After November 2, 2018, all new models of unintentional radiators (unless there is an exception to the equipment authorization procedures) must go through either the SDoC "self-approval" procedure or, if applicable per Section 15.101, the certification approval process. On and after November 3, 2018, the verification and DoC procedures will no longer be available for any device types. But responsible parties, distributors, and retailers can be assured that equipment authorized under either one of those two procedures being phased out may continue to be marketed and operated indefinitely provided there are no changes requiring a new authorization.

We examine the First Report and Order and the principal changes in more detail in the referenced advisory.

Briefly, the FCC eliminated the verification and Declaration of Conformity (“DoC”) self-approval procedures from its rules, subject to a one-year transition. In their place, there will be a new procedure covering the same categories of devices now subject to one or the other of the existing procedures. The Supplier’s Declaration of Conformity (“SDoc”) process amalgamates certain pieces of the two existing procedures and implements some entirely new requirements. Among other things, testing by accredited laboratories will not be required for devices qualifying for SDoC treatment, although the Commission may ask for test records. And the FCC also makes clear that users must be apprised of the party responsible for compliance, be provided appropriate contact information, and the responsible party must have a U.S. presence. Any equipment self-approved using the verification or DoC process prior to the end of the one-year transition period will enjoy a valid authorization for marketing and operation purposes in perpetuity, provided the equipment is not modified so as to require a new authorization

In addition, the Commission codified and refined when e-labeling will be permitted to meet certain labeling and compliance statement requirement for RF devices that have integrated digital displays. This action implements certain portions of the Enhance Labeling, Accessing, and Branding of Electronic Licenses Act (“E-LABEL Act”). The FCC adopted a maximum “three step” access requirement when electronic labeling is permissible and utilized, noting that the FCC’s Office of Engineering and Technology (“OET”) will provide guidance in response to specific questions regarding compliance via the KDB inquiry process. (Electronic labeling is never mandatory.) Step one would be a user accessing the device settings menu on the digital display. As an example of one “characteristic sequence,” accessing a submenu of legal information in step two and then a further submenu of FCC compliance information in step three would qualify. However, recognizing that there may be a lack of clarity in specific situations, the FCC directed the Office of Engineering and Technology (“OET”) to continue to provide guidance in response to specific questions regarding compliance via the KDB inquiry process. The e-labeling rules address certain specific and general scenarios exceptions where e-labeling will not be permitted, caution that temporary labels must still be used where a manufacturer exercises the e-labeling option, and require that appropriate instruction be provided separately for accessing the electronic labeling and compliance information. E-labeling is never mandatory.

Further, the Commission streamlined some aspects its importation rules, including the elimination of the requirement to file FCC Form 740 customs declarations. Yet, certain obligations of the Commission’s importation rules remain, and the FCC clarified the obligations of the responsible party, for imported devices, to determine and to be able to demonstrate compliance. The FCC observed that it is not changing any regulations of Customs and Border Patrol (“CBP”) and will not be seeking any changes from CBP. The agency also modified its rules to increase the number of devices that could be imported for trade show purposes and retained (and clarified) an importation exemption that applies to unintentional radiators that operate only on low level battery power, such as greeting cards, calculators, and quartz watches.

Finally, the Commission modified its rules on measurement procedures to include more direct cross-references to guidance from the FCC Laboratory’s Knowledge Database (“KDB”) and made other rules changes to clean up and clarify rules regarding the applicability of and certain alternatives to certain measurement procedures referenced in the rules, including ANSI C63.4-2014, ANSI C63.10-2013, and ANSI C63.26-2015.