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    Locke Lord QuickStudy: Executive Order Provides Structure to Team Telecom’s Review of FCC Applications and Licenses

    Locke Lord Publications

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    On April 4, 2020, President Trump signed Executive Order 13913 (the “Order”), providing a formal structure to the controversial “Team Telecom,” and clarifying matters related to foreign investment in the telecommunications industry. The Order establishes the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the “Committee”), which will review foreign investment in the sector for national security threats. The Committee replaces the previously informal organizational structure of Team Telecom, which was supposed to perform a similar function, but without any official rules, timelines or public leadership. In their absence, critics charged that Team Telecom worked inefficiently and took inordinate time to review proposals, thereby unnecessarily impeding foreign investment.

    The Committee is designed to address these shortcomings. Comprised of the Attorney General, Secretaries of Defense and Homeland Security, and the head of any executive department or agency or any assistant to the President that the President considers appropriate, the Committee will review an application or license request (such as a broadcast television or radio operator’s license) by a foreign investor upon a referral from the Federal Communications Commission (“FCC”). At the conclusion of its review, the Committee will counsel the FCC as to whether it should dismiss or deny a license application, grant an application after compliance with a mitigation agreement, modify a license, revoke a license, or take no action.

    “Committee Advisors” will assist the Committee in its review. Committee Advisors include the Secretaries of State, Treasury and Commerce, the Director of the Office of Management and Budget, the US Trade Representative, the Director of National Intelligence, the Administrator of General Services, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, the Director of the Office of Science and Technology Policy, the Chair of the Council of Economic Advisors, and any other assistant to the President that the President deems appropriate.

    Upon referral of an application by the FCC to the Committee for review, the Committee must conduct an initial review within 120 calendar days from the date the Attorney General, in his capacity as Committee Chair (the “Chair”), determines that all materials and any answers to its questions are full and complete. During this initial review, the Committee may seek further information from the parties, whether through written questions or document requests. Following the initial review, the Committee may decide that further review of the application is necessary. If the Committee makes this decision, it will proceed to conduct a secondary assessment, which cannot last beyond 90 calendar days. Notably, for every license or application reviewed by the Committee, the Director of National Intelligence is required to produce a written assessment of threats to national security. This assessment is to be provided to the Committee within 30 calendar days of the date on which the Chair determines that any responses to its questions and requests for information are complete, or 30 calendar days from the date on which the Chair requests such an assessment, whichever is earlier.

    As stated above, at the end of the review, the Committee must make its recommendation to the FCC. If the Committee is unable to achieve consensus on its recommendation, the Committee will determine the outcome by a majority vote, with the Chair breaking any tie. If the Committee attempts to deny an application, grant an application contingent on non-standard mitigation measures, modify a license to make it conditional on compliance with non-standard mitigation measures, or revoke a license, the Chair must notify the Committee Advisors, who then have 21 calendar days to respond to the Chair with any opposition to the recommendation.

    If just one of the Committee Advisors opposes the recommendation, senior executives designated by the Committee and the Committee Advisors must strive to reach a consensus. If the senior executives reach a consensus, the Committee will provide the recommendation to the FCC. If even the senior executives do not agree, the Chair will present the issue to the rest of the Committee and the Committee Advisors to resolve any objections. The Committee and the Committee Advisors are instructed to resolve the objections within 30 calendar days of the notification by the Chair of a recommendation to deny or grant an application contingent on compliance with non-standard mitigation measures, or within 60 calendar days in the event of a recommendation to modify a license to condition it on compliance with non-standard mitigation measures or to revoke a license.

    If the Committee and the Committee Advisors still cannot reach agreement, they will take a vote, with the majority position prevailing. Once again, the Chair will resolve any tie. In addition to the FCC, the Chair must notify the President of the Committee’s recommendation, together with any opposition to it, within 7 calendar days of a majority or tie vote that leads to the denial of an application, mitigation measures, modification or revocation.

    To implement the foregoing procedures, the Order instructs the Committee to enter into a “Memorandum of Understanding” among its members and the Director of National Intelligence within 90 calendar days of the date of the Order.

    Finally, it is worth noting that the Committee is not the only interagency body responsible for analyzing the national security implications of foreign investments. The aptly named Committee on Foreign Investment in the United States, or CFIUS, retains the power to assess the potential national security risks of foreign investments, both controlling and non-controlling, in certain US businesses, including businesses in the telecommunications sector. Because of the scope of CFIUS’s review powers, it is certainly possible that a foreign investment in the telecommunications sector could simultaneously trigger the jurisdiction of the Committee and CFIUS. In that instance, the parties to the investment transaction would need to consider filing with CFIUS at the same time that the Committee initiates its review of the FCC application or license. This regulatory overlap raises questions of potential inconsistent decisions and extended time for these regulatory reviews.

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