Huawei Challenges FCC Security Risk Label at Fifth Circuit

NEW ORLEANS (CN) — An attorney for Chinese telecommunications giant Huawei told a Fifth Circuit panel Wednesday that the Federal Communications Commission was wrong to label the company as a national security threat because it has no standards to make such a determination.

“What’s the standard for being a national security threat?” Jones Day attorney Michael Carvin, arguing on behalf of Huawei’s U.S. subsidiary, told the three-judge panel. “It’s a phrase, not a standard.”

He said the FCC has not yet developed specific criteria for how to identify and weed out security threats, and instead simply identified specific aspects of Huawei’s business and then deemed those things threatening.

All terms the FCC said are representative of security threats “were Huawei specific,” Carvin told the judges. There are not “neutral standards” for the FCC’s determination of security risks, but “no standards,” he added.

Carvin suggested during the hearing that FCC Chairman Ajit Pai, who was appointed by President Donald Trump, simply decided that Huawei is a national security threat and challenged any subordinate commission members who disagreed with that designation.

“The commission said that Huawei was a security threat,” the attorney said. “And they told their subordinates: You have to agree with us, or you’re fired.”

“Is this in the record?” U.S. Circuit Judge Jennifer Walker Elrod, an appointee of George W. Bush, asked. Carvin did not directly answer. 

Last year, the FCC banned the use of government subsidies from the $8.5 billion Universal Service Fund to purchase equipment and services from two companies that it said pose a national security threat to the U.S. – Huawei and its Chinese rival ZTE Corp.

Huawei sued, claiming the determination was not based on evidence and that the agency exceeded its authority by making judgments about national security.

In a brief filed with the Fifth Circuit in June, the FCC said it developed a process for determining which companies could be excluded from the subsidy program. The agency said it determined that Huawei and ZTE posed “a threat to the security of communications networks and the communications supply chain because of their size, their close ties to the Chinese government…and the unique end-to-end nature of Huawei’s service agreements that allow it key access to exploit for malicious purposes.”

The FCC also argued that Huawei’s case is premature because the company has not yet been injured by the agency’s order and said its claims are “meritless.” Arguing for the agency Wednesday, attorney Thomas Johnson told the Fifth Circuit judges the commission thinks “dismissal is the right course.”

U.S. Circuit Judges Stuart Kyle Duncan and Cory T. Wilson, both appointees of President Trump, joined Elrod on the panel. The judges did not indicate when or how they will rule on the matter.

Huawei’s problems with the Trump administration are part of an ongoing trade war between Washington and Beijing.

Huawei CFO Meng Wanzhou was arrested at the Vancouver airport nearly two years ago on a U.S. extradition warrant, based on claims that she defrauded HSBC. She is currently fighting extradition to the U.S. in Canadian court proceedings that are expected to continue well into 2021. 

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