Associations Condemn DOC Supply Chain Rule as Overreach

NCTA believes Commerce’s improvements “leave largely unaddressed additional concerns raised by” the group “and other stakeholders regarding the very broad scope of transactions subject to review, ambiguous terms that remain undefined in the interim final rules, and the need for procedural safeguards to prevent parties seeking to inflict competitive or other harms on parties to an” ICTS transaction “from abusing the process.” The regulatory impact assessment “described an enormous range between hundreds of thousands or even millions of companies operating in 35 ICTS sectors that would be affected by these rules, and that the total compliance costs could reach tens of billions of dollars per year,” NCTA said. “These costs alone warrant suspension of the interim final rules pending further analysis and review.”

“Deep engagement with the private sector and coordinated activity with other government agencies … did not happen, and the opaque process resulted in a deeply flawed and incomplete” interim rule “that threatens severe damage to U.S. commercial and security interests, with very little if any clear benefits,” CTA said. “Pause the proceeding to undertake a comprehensive review of this IFR and the process that led to it before undertaking any transaction reviews or prohibitive actions.” Only implement the underlying executive order “under a new regulatory regime targeted narrowly to specific, articulable threats and vulnerabilities and developed through a thorough process of engagement with industry stakeholders,” CTA said.

Further modifications “will correct several lingering shortcomings and allow Commerce to better balance its interest in securing the ICTS supply chain without causing needless disruption to this important sector of the economy,” said the Telecommunications Industry Association. “Pause the effective date of the rules until” the department “has had the chance to create a pre-licensing regime that offers trusted ICT manufacturers and suppliers to continue the critical deployment of 5G networks in the U.S. without fear of undue regulatory costs.” Commerce should “issue guidance to industry clarifying the conduct that would subject an ICTS transaction to” jurisdiction “under these rules in order to remove the risk that everyday transactions or employment decisions could trigger a governmental review,” TIA said. “More clearly define the scope and jurisdiction of these rules so that they focus on a more narrow and critical set of ICTS transactions.”

Consider making revisions before publication or “withdrawing the proposed rule altogether to allow for further public input,” TechNet asked: The scope of the interim final rule is scope is “too broad, and the discretion given to the Secretary is so immense the business community will be left to limitless, unpredictable intervention and uncertainty.” If exercised to the fullest extent, the IFR could have implications across the entire tech sector, it said, arguing it might make U.S. companies unreliable business partners, given regulatory threats to every transaction.

The Chamber of Commerce has “deep concerns” with the IFR, it commented. The rule would provide limited protection to stop bad actors, includes unrealistic compliance programs and will impose “enormous costs” on the private sector, the chamber said. The IFR gives the secretary “significant authority to intervene in, block, and unwind essentially any ICTS transaction, with little to no accountability, transparency, or coordination with other government programs,” the chamber said.

The scope is “overly broad and leaves little certainty for industry,” the Computer & Communications Industry Association commented. It doesn’t address duplicative regulations or review processes, CCIA said: To ensure competitiveness and security, the department should “review this rule and make significant changes to the current language.”