Costs of 'Bad Labs' Rules Should Be Minimal, FCC Says
The FCC’s “bad labs” order and Further NPRM, approved by commissioners 4-0 last week and posted this week, contains a lengthy cost-of-benefit analysis weighing the costs and risks of not moving forward with the rules. FCC officials noted last week that this was the only major change from the draft (see 2505220056), though the agency also added a paragraph on DOJ's concerns. Other changes were mostly cosmetic, based on a side-by-side comparison.
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“We recognize that the benefits of protecting U.S. national security, law enforcement, foreign policy, and trade policy interests are difficult to quantify in monetary terms,” the order now says. “The difficulty in quantifying these benefits does not, however, diminish their importance.”
The national GDP was more than $29 trillion in 2024, and “the digital economy accounted for approximately 16% of our economy,” while “the volume of international trade for the United States (exports and imports) was $7.3 trillion,” the order says. “Even a temporary disruption in communications could cause billions of dollars in economic losses.”
The aggregate recurring annual costs of the attestation and reporting requirements shouldn’t exceed $800,000, the order says. “Specifically, we estimate that each of the 706 FCC-recognized TCBs [telecommunications certification bodies], test labs, and laboratory accreditation bodies will require approximately two hours of outside legal counsel time at a rate of $300 per hour and eight hours of administrative staff time at a rate of $57 per hour.” The cost will be about twice that for the 11 entities on the “covered list,” the order estimates. “We find that the requirements adopted in this Report and Order are highly unlikely to impose substantial harms on U.S. consumers, equipment manufacturers, or other stakeholders.”
The FCC clarifies in a footnote that the estimated rates for attorneys and in-house staff “are based on the Commission’s estimates of labor costs as represented in a 2024 Paperwork Reduction Act analysis.”
The final order also cites a filing by the Foreign Investment Review Section of DOJ’s National Security Division as added evidence of the risks involved. FIRS points out that “the privileged access by TCBs and test labs to highly sensitive intellectual property and emerging technologies could lead to systematic collection of information that represents a significant counterintelligence concern" and "aid foreign adversaries in developing counterstrategies or identifying asymmetric advantages,” the order says.