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On January 3, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a proposed rule regarding the security of the Information and Communications Technology and Services (ICTS) supply chain for Unmanned Aircraft Systems (UAS). ICTS refers to technologies that facilitate the processing, transmission, and storage of data, including hardware and software used in communication networks, computing infrastructure, and digital services. UAS, commonly known as drones, include both the aircraft itself and any associated control systems, communication links, and data processing technologies. This proposed rule seeks to address national security concerns by evaluating and potentially restricting certain transactions involving ICTS integral to UAS that are connected to foreign adversaries.
This action follows Executive Order 13873, which grants the Secretary of Commerce the authority to address foreign threats to U.S. national security, foreign policy, and economic stability. BIS is soliciting public comments to assess the risks posed by foreign-controlled ICTS components in UAS and to determine the appropriate regulatory framework to mitigate these risks.
Key Considerations in the Proposed Rule
The proposed rule identifies several areas of concern regarding the influence of foreign adversaries, including China, Cuba, Iran, North Korea, Russia, and Venezuelan politician Nicolás Maduro (Maduro Regime). Of particular concern are China and Russia, both of which have extensive government involvement in their domestic UAS industries. Chinese-developed UAS currently comprise at least 75% of the U.S. consumer drone market, while Russia is actively working to expand its domestic UAS capabilities to reduce reliance on foreign manufacturers.
To ensure comprehensive analysis, BIS is seeking public input on various aspects of the proposed rule, including:
Definitions pertinent to ICTS transactions involving UAS.
National security risks associated with foreign adversary ICTS in UAS.
The evolving technological functionalities of UAS and their integration with U.S. critical infrastructure.
The role of foreign-controlled entities in the U.S. ICTS supply chain for UAS components.
UAS data collection capabilities, including machine learning and AI applications.
Specific ICTS components that enable UAS connectivity.
The extent to which UAS manufacturers influence drone functionality through their ICTS components.
Potential risk mitigation measures that could allow for certain ICTS transactions to proceed under regulatory oversight.
The Importance of Public Comment
BIS is considering whether a framework should be established to allow for specific authorizations of ICTS transactions that would otherwise be prohibited, provided that sufficient risk mitigation measures are in place. To inform this decision, BIS is requesting detailed feedback from industry stakeholders, security experts, and the public. Comments must be submitted on or before March 4, 2025.
Navigating Compliance Challenges
The evolving regulatory landscape for ICTS and UAS presents significant compliance challenges for businesses engaged in international trade, technology, and national security-sensitive industries. Companies that manufacture, sell, or use drones with foreign-made ICTS components may face new restrictions or regulatory requirements, making compliance a critical concern. As concerns over foreign influence and cybersecurity risks grow, companies operating in this space must remain proactive in understanding and adapting to new regulatory requirements.
Our firm closely monitors developments in BIS regulations and assists clients in assessing their exposure to ICTS-related compliance risks. We provide strategic guidance to help businesses navigate these regulatory complexities and ensure compliance with evolving security mandates. For more information on how we can help your business manage risks related to BIS regulations, contact our team today at (917) 546-6997. Give our office a call today at (917) 546-6997 or schedule an introductory call, we would be happy to speak with you.
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