D.C. Circuit Ends Chinese Telecom Americas’ Appeal of FCC Ban

On Tuesday, the D.C. Circuit Court of Appeals ruled on China Telecom (Americas) Corporation’s appeal challenging part of the Federal Communications Commission’s (FCC) decision to revoke its operating licenses. The opinion instructed the district court to dismiss the case, thereby ending China Telecom’s appeal, save a petition to the Supreme Court.

The controversy centers on the FCC’s November 2022 revocation order eliminating Chinese Telecom’s domestic and international common-carrier authorizations. Its decision to blacklist the company stemmed from national security and surveillance concerns over the provider’s ties to the Chinese government. Alongside China Telecom, China Unicom was among others to be ousted from operation in the United States, while Huawei and other hardware providers received national security threat designations.

The proceedings before the D.C. Circuit began in February when China Telecom filed its opening brief, arguing that the FCC’s vote to revoke its operating licenses departed from FCC rules, the Administrative Procedure Act, and the telecom’s due process rights.

In response, the United  States sought to admit classified evidence relating to electronic surveillance it had conducted against China Telecom under the Foreign Intelligence Surveillance Act (FISA). After the government provided notice of its intent to use FISA evidence, China Telecom requested disclosure of the evidence on grounds that it was necessary to assist the court  in  determining the lawfulness of the government’s surveillance, and that due process required it.

The district court granted the government’s petition and denied China Telecom’s request. Then, the FCC revoked China Telecom’s license in the underlying action. 

In December, the appellate court denied China Telecom’s petition for review of the FCC’s revocation order, importantly, without relying on or otherwise considering the classified evidence.

China Telecom appealed the district court’s FISA disclosure decision, which is the subject of this week’s opinion. The order found that because the D.C. Circuit previously “upheld the FCC’s underlying revocation decision without relying on or otherwise considering the classified evidence, China Telecom’s request for disclosure of the classified evidence is now moot.”

The nine-page opinion said there was no live controversy to adjudicate and as such, remanded to the district court with instructions to dismiss the case. 

In a statement, FCC Chairwoman Jessica Rosenworcel commended the decision, stating in part, “I am pleased with today’s ruling, which upholds our decision last year to revoke and terminate China Telecom’s authority to provide communications service in the United States. This action was based on the recommendation of national security agencies that found that China Telecom’s operations in the U.S. provided opportunities for increased Chinese state sponsored cyber activities, including economic espionage and the disruption and misrouting of U.S. communications traffic. There is no higher FCC responsibility than safeguarding our networks, and today’s ruling is a strong affirmation of our authority to do so.”

China Telecom is represented by Morgan Lewis.