United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 20, 2022 Decided August 15, 2023

No. 22-1054

PACIFIC NETWORKS CORP. AND COMNET (USA) LLC,

PETITIONERS

v.

FEDERAL COMMUNICATIONS COMMISSION AND UNITED 

STATES OF AMERICA,

RESPONDENTS

On Petition for Review of an Order 

of the Federal Communications Commission

Christopher J. Wright argued the cause for petitioners. 

With him on the joint briefs were Jeffrey Carlisle and Stephen 

Coran.

Scott M. Noveck, Counsel, Federal Communications 

Commission, argued the cause for respondents. With him on 

the brief were Brian M. Boynton, Principal Deputy Assistant 

Attorney General, U.S. Department of Justice, Sharon Swingle

and Casen Ross, Attorneys, and Jacob M. Lewis, Deputy 

General Counsel, Federal Communications Commission. 

Before: HENDERSON and KATSAS, Circuit Judges, and 

EDWARDS, Senior Circuit Judge.
2

Opinion for the Court filed by Circuit Judge KATSAS.

KATSAS, Circuit Judge: Pacific Networks Corp. and 

ComNet (USA) LLC, which are companies owned by the 

People’s Republic of China, held authorizations to operate 

communication lines in the United States. The Federal 

Communications Commission revoked these authorizations

based on concerns that the carriers posed national-security risks 

and had proven themselves untrustworthy. The carriers argue

that the FCC’s reasoning was substantively arbitrary and was 

rendered with inadequate process. We reject both contentions.

I

A

Section 214(a) of the Communications Act of 1934 makes

it unlawful to operate any wire communications line without

authorization from the FCC. 47 U.S.C. § 214(a). In deciding 

whether to grant such authorization, the Commission considers 

the “public convenience and necessity,” id., including whether 

authorization would imperil “the national defense,” id. § 151. 

In assessing national-security risks posed by foreign-owned 

companies, the FCC has long consulted other federal agencies 

with expertise in that area. See Rules and Policies on Foreign 

Participation in the U.S. Telecomms. Mkt., 12 FCC Rcd. 

23,891, 23,919–22 (1997). This group of agencies is known 

colloquially as Team Telecom.

A recent executive order formalized this process by 

establishing a committee “to assist the FCC in its public interest 

review of national security and law enforcement concerns that 

may be raised by foreign participation in the United States 

telecommunication services sector.” Exec. Order No. 13913, 

§ 3(a), 85 Fed. Reg. 19,643, 19,643 (Apr. 4, 2020). The
3

committee includes the Secretary of Homeland Security, the 

Attorney General, and the Secretary of Defense. Id. § 3(b), 85 

Fed. Reg. at 19,643–44.

B

In recent years, the United States has grown increasingly 

concerned about espionage and other threats from Chineseowned telecommunications companies.

In 2018, Team Telecom recommended that the FCC deny 

a section 214 authorization to one such company, China Mobile 

International (USA) Inc. Team Telecom concluded that the 

proposed authorization “would pose substantial and 

unacceptable national security and law enforcement risks”

because the company’s ownership made it “subject to 

exploitation, influence, and control by the Chinese 

government.” Redacted Exec. Branch Recommendation to the 

FCC to Deny China Mobile International (USA) Inc.’s 

Application for an Int’l Section 214 Authorization, FCC No. 

ITC-214-20110901-00289, at 7 (July 2, 2018) (China Mobile 

Recommendation). The FCC agreed and denied the requested 

authorization on that basis. China Mobile Int’l (USA) Inc., 34 

FCC Rcd. 3361, 3365–66 (2019).

Invoking the same concerns, the FCC later revoked section 

214(a) authorizations held by another Chinese-owned carrier, 

China Telecom (Americas) Corp. China Telecom (Americas) 

Corp., 36 FCC Rcd. 15,966, 15,992 (2021). We denied a 

petition for review in that case. China Telecom (Americas) 

Corp. v. FCC, 57 F.4th 256 (D.C. Cir. 2022).

C

Through a web of foreign affiliates, China also owns a 

controlling interest in Pacific Networks and its wholly owned 
4

subsidiary, ComNet. Until 2022, these companies held section 

214(a) authorizations. Pacific Networks provided business 

networking services extending internationally, while ComNet 

sold international calling cards. To obtain their authorizations, 

the carriers promised to “take all practicable measures to 

prevent unauthorized access to, or disclosure of the content of 

communications or U.S. records.” J.A. 21.

In 2020, the FCC ordered Pacific Networks and ComNet 

to show cause why their authorizations should not be revoked. 

Pac. Networks Corp., 35 FCC Rcd. 3733 (2020). Citing its 

China Mobile order, the Commission questioned whether 

Pacific Networks and ComNet, as companies indirectly owned 

by China, would be subject to its “exploitation, influence, and 

control.” Id. at 3735–36. The carriers submitted a 37-page 

response with hundreds of pages of exhibits.

Team Telecom then weighed in. It concluded that China’s 

ownership raised “significant concerns” that the carriers would 

be “forced to comply with Chinese government requests, 

including requests for communications intercepts.” J.A. 114. 

Likewise, the carriers could be “exploit[ed] by the Chinese 

government ... to conduct or to increase economic espionage 

and collect intelligence against the United States.” Id. at 116. 

In 2021, the FCC instituted a full proceeding to consider

revoking the authorizations. Pac. Networks Corp., 36 FCC 

Rcd. 6368 (2021). It identified various open issues. This time 

around, the carriers submitted an 84-page response with 

hundreds of pages of exhibits.

The FCC revoked the authorizations. It concluded that 

“ownership and control by the Chinese government raise 

significant national security and law enforcement risks by 

providing opportunities for the [carriers], their parent entities 

and affiliates, and the Chinese government to access, monitor, 
5

store, and in some cases disrupt [or] misroute U.S. 

communications, which in turn allow them to engage in 

espionage and other harmful activities against the United 

States.” Pac. Networks Corp., FCC 22-22, 2022 WL 905270, 

at *1 (FCC Mar. 23, 2022) (Revocation Order). The 

Commission further concluded that the carriers had shown a

lack of candor and trustworthiness. And for both reasons, it 

concluded that nothing short of revocation would ameliorate

the national-security risks.

The carriers petitioned this Court for review. We have

jurisdiction under 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a).

II

Under the Administrative Procedure Act, we must 

consider whether the Revocation Order was arbitrary or 

capricious. 5 U.S.C. § 706(2)(A). This “deferential” standard

requires only “that agency action be reasonable and reasonably 

explained.” FCC v. Prometheus Radio Project, 141 S. Ct. 

1150, 1158 (2021). Pacific Networks and ComNet assert that 

the FCC arbitrarily assessed national security, candor, and 

mitigation. We address each consideration in turn.

A

The carriers contend that the FCC unreasonably found a 

threat to national security. But the Commission meticulously 

explained—over the span of 62 pages—how the carriers’

domestic operations threaten national security. First, the 

agency described how China holds a majority interest in Pacific 

Networks and ComNet through various affiliated Chinese 

companies, which exercise significant control over the carriers’ 

day-to-day operations. Revocation Order at *18–20, *24–25. 

Next, it detailed how China can access the carriers’ records

through those affiliates, id. at *24, including by invoking a 
6

Chinese law requiring all Chinese corporations to “support, 

assist, and cooperate with national intelligence efforts,” id. at 

*30 (quotation omitted). Finally, it explained the breadth and 

sensitivity of the carrier records: ComNet has amassed detailed 

call records of its United States customers, including numbers 

called as well as the frequency, duration, and timing of the 

calls. Id. at *38. Furthermore, it can monitor the calls 

themselves. Id. Pacific Networks likewise can “access, 

monitor, store, [or] disrupt” communications sent over its 

networks, and it has access to customers’ personally 

identifiable information. Id. at *40.

We cannot second-guess the FCC’s judgment that 

allowing China to access this information poses a threat to 

national security. In making it a crime to obtain call records 

without authorization, Congress found that “call logs may 

include a wealth of personal data” about a person’s business, 

medical records, private relationships, and more. Telephone 

Records and Privacy Protection Act of 2006, Pub. L. No. 109-

476, § 2, 120 Stat. 3568, 3568; see 18 U.S.C. § 1039(a). Courts 

likewise have observed that call records often contain a 

“startling amount of detailed information,” such as whether an 

individual is “a victim of domestic violence or rape; a veteran; 

suffering from an addiction of one type or another; 

contemplating suicide; or reporting a crime.” ACLU v. 

Clapper, 785 F.3d 787, 794 (2d Cir. 2015). China has 

exploited such information—like the fact that a former United 

States intelligence officer was having financial difficulties—to 

recruit spies. See United States v. Mallory, 40 F.4th 166, 169–

71 (4th Cir. 2022). More generally, Team Telecom has warned 

that China uses information obtained from telecommunications 

carriers—including but not limited to call records—“to 

conduct or to increase economic espionage and collect 

intelligence against the United States.” J.A. 116.
7

The carriers do not seriously contest any of this. Instead, 

they fault the FCC for even considering whether their 

operations could facilitate Chinese espionage. According to 

the carriers, the Commission should have focused solely on 

whether they posed a threat to domestic telecommunications 

infrastructure. As the carriers note, Team Telecom often has 

focused on that specific threat. But it also considers more 

generally whether carriers engage in “activities with potential 

national security implications.” China Mobile 

Recommendation, FCC No. ITC-214-20110901-00289, at 6–7. 

In any event, the licensing decision is vested in the FCC, which 

must consider both “the national defense,” 47 U.S.C. § 151, 

and the “public convenience and necessity,” id. § 214(a). 

These factors plainly encompass the question whether 

authorizations would facilitate espionage.

The carriers further note that Team Telecom declined to 

recommend revocation in this case. But that was because the 

FCC asked it to answer discrete questions within a “limited 

time” of one month. J.A. 109. Moreover, Team Telecom did 

not recommend against revocation, and it did note that the 

operations of Pacific Networks and ComNet posed similar 

national-security risks to the ones detailed more fully in its 

China Mobile Recommendation. J.A. 116. Finally, when the 

FCC received Team Telecom’s input in this case, it did not 

reflexively revoke, but instead set the matter for full written 

submissions. None of this was arbitrary.

In sum, the FCC reasonably concluded that the domestic 

operations of ComNet and Pacific Networks threatened

national security by making vast amounts of sensitive 

information easily available to China.
8

B

The carriers also challenge the FCC’s determination that 

they lacked candor and trustworthiness. But the agency amply 

justified its concern. Revocation Order, 2022 WL 905270, at 

*49–60. To begin with, the FCC explained how the carriers 

gave misleading and incomplete responses to the show-cause 

order. Despite being asked to identify the senior management 

of every entity that held a 10% or greater direct or indirect 

interest in Pacific Networks, the carriers provided information 

only for the direct parent company of Pacific Networks. 

Response to Order to Show Cause, FCC No. ITC-214-

20090105-00006, at 11–12 & Ex. A-1 (filed June 1, 2020). 

And they submitted an ownership chart not disclosing the 

Chinese government at all. Revocation Order, 2022 WL 

905270, at *52.

The FCC also explained how the carriers downplayed 

China’s control over their operations. For example, while the 

carriers represented that they operated “independently” of their 

foreign affiliates, the Commission’s investigation showed that

one affiliate played “an integrated role” in their operations, 

including by managing access to their United States customer

records. Revocation Order, 2022 WL 905270, at *53, *55.

And during a Senate investigation into how Chinese-owned 

carriers threaten national security, ComNet stated that “its data 

center and all backed-up information are located in the United 

States and that it controls access to all U.S. records and data 

systems.” Staff of Permanent Subcomm. on Investigations of 

the S. Comm. on Homeland Sec. & Governmental Affs., 116th 

Cong., Threats to U.S. Networks: Oversight of Chinese 

Government-Owned Carriers 96 (2020). But evidence before 

the FCC showed that China can access both ComNet’s records 

and data that passes through its facilities. Revocation Order, 

2022 WL 905270, at *43.
9

Again, the carriers do not seriously contest the FCC’s 

factual determinations. Instead, they object that the 

Commission had never revoked a section 214 authorization 

based solely on misrepresentations. The carriers cite past cases 

where concerns about candor or trustworthiness produced only 

a fine. See, e.g., Omniat Int’l Telecom, LLC, 24 FCC Rcd. 4254 

(2009); Skyport Glob. Commc’ns, Inc., 24 FCC Rcd. 3714 

(2009). But those cases did not involve national-security risks, 

which plainly heighten any trustworthiness concerns.

C

Finally, Pacific Networks and ComNet claim that the FCC 

arbitrarily rejected the possibility of mitigating measures short 

of revocation. But the Commission explained its view that the 

carriers’ untrustworthiness would make any mitigation 

agreement too risky: Such agreements are not self-enforcing,

and the agency cannot comprehensively monitor compliance. 

Revocation Order, 2022 WL 905270, at *66. Furthermore, 

oversight cannot reliably detect surreptitious, state-sponsored 

efforts at evasion. Id. In short, the FCC reasonably explained 

why no realistic agreement could have worked given the 

carriers’ proven lack of trustworthiness.

III

Pacific Networks and ComNet also challenge the process 

underlying the FCC’s decision. The carriers primarily contend

that the Due Process Clause and the APA require the agency, 

before it may revoke a section 214(a) authorization, to hold a

live evidentiary hearing before a neutral adjudicator with an 

opportunity for discovery and cross-examination. We rejected 

that argument in China Telecom. See 57 F.4th at 268–71.

The carriers conclude with a hodgepodge of further 

procedural objections. They say that the FCC imposed the 
10

burden of proof on them, failed to acknowledge disputed 

material facts, proceeded without a formal recommendation 

from Team Telecom, and proceeded by adjudication rather 

than by rulemaking. None of these further claims has merit. 

As detailed above, the FCC amply proved facts establishing 

both a national-security risk and a lack of trustworthiness. 

Nothing in the Due Process Clause, the APA, or the 

Communications Act requires the Commission to consult with 

other agencies, which it did in any event. And nothing in these 

laws required it to proceed by rulemaking in assessing the 

specific risks posed by these individual carriers. See NLRB v. 

Bell Aerospace Co., 416 U.S. 267, 294 (1974).

IV

The FCC adequately explained its decision to revoke 

Pacific Networks’ and ComNet’s authorizations, and it 

afforded adequate process to the carriers. We therefore deny 

the petition for review.

So ordered.