Selling Drones in the U.S.? New FCC Rules Create New Compliance Risks for Chinese-Affiliated Companies

For Chinese drone and technology companies doing business in the United States, Federal Communications Commission (“FCC”) regulation is becoming increasingly important. In 2026 alone, the FCC adopted new rules addressing foreign-adversary ownership and control, expanded restrictions affecting foreign-produced drones and components, and tightened the rules governing equipment authorization and online sales.

These developments affect different parts of a company's business. One set of rules looks at who owns or controls the company. Another looks at where the drone and its components are produced and who produces them. Chinese companies entering the U.S. market, and U.S. subsidiaries or affiliates of Chinese companies, should evaluate both.

1. A U.S. Subsidiary Can Still Be Considered Subject to “Foreign Adversary Control”

In January 2026, the FCC adopted FCC 26-2, creating a new reporting requirement for entities holding certain FCC licenses, equipment certifications, and other authorizations.

For purposes of these rules, the FCC uses the federal government's defined list of “foreign adversaries,” which currently includes China, including Hong Kong and Macau. The rule reaches not only companies organized in those jurisdictions, but also U.S. companies that are sufficiently owned or controlled by persons or entities falling within the definition.

Importantly, “control” does not necessarily require majority ownership. The FCC's definition includes investors owning a 10% or greater dominant minority equity or voting interest, as well as other forms of control such as board representation, contractual arrangements, proxies, special shares, or agreements to act in concert. Companies should not assume that a qualifying 10% or greater interest is excluded merely because the investment is characterized as passive.

Therefore, forming a Delaware or Massachusetts subsidiary does not by itself remove the Chinese parent company's FCC compliance concerns. A U.S. subsidiary substantially owned by a Chinese parent may still fall within the FCC's Foreign Adversary Control definition.

On the other hand, merely employing Chinese citizens does not automatically make a U.S. company subject to Foreign Adversary Control. The FCC expressly distinguishes the company's ownership and control from the citizenship of individual employees.

2. FCC 26-2 Is a Reporting Rule, Not an Automatic Ban

FCC 26-2 itself does not prohibit a company from receiving an FCC authorization merely because it has Foreign Adversary Control. Instead, it creates attestation and disclosure obligations. The FCC expressly described the framework as involving reporting requirements rather than prohibiting or limiting the granting of Covered Authorizations.

Depending on the type of FCC authorization, companies fall into different reporting categories. Schedule A generally covers FCC authorizations that the agency views as more sensitive from a national-security or communications-infrastructure perspective, including equipment certifications, certain wireless and satellite authorizations, submarine-cable and telecommunications carrier authorizations, and certain broadcast authorizations. For drone and technology companies, the most relevant category is usually FCC equipment certification, because products that rely on certification can bring the authorization holder directly within the Schedule A reporting framework. Schedule A entities must affirmatively answer “yes” or “no” regarding Foreign Adversary Control, while Schedule B generally requires an affirmative filing when such control exists. If a company reports Foreign Adversary Control, additional disclosures can include its 5% or greater direct and indirect owners, controlling interests, citizenship or place of organization, and an ownership diagram.

The rules became effective June 9, 2026, but compliance with the principal attestation and disclosure provisions is deferred until the FCC announces the applicable compliance date following the required Office of Management and Budget (OMB) review.

3. Drone Products Face a Separate, and More Immediate, Covered List Problem

The ownership-reporting rules should not be confused with the FCC's Covered List restrictions.

In December 2025, the FCC added uncrewed aircraft systems (UAS) and UAS critical components produced in foreign countries to the Covered List. Unless an applicable exemption exists, covered products generally cannot obtain new FCC equipment authorizations for entering the U.S. market. The December 2025 listing did not itself prohibit continued importation, marketing, or sale of previously authorized models. Those models nevertheless require separate review for applicable modifications, subsequent restrictions, and other legal requirements.

For a Chinese manufacturer, this means that supply-chain restructuring or U.S. assembly alone should not be undertaken without first determining whether the resulting product actually satisfies the applicable FCC exemption.

4. New Rules Address Components and Online Sales with Phased Compliance Dates

FCC 26-50 becomes effective October 13, 2026, with separate compliance dates for online FCC-ID display requirements.

Under FCC 26-50, certain devices containing “logic-bearing hardware” (e.g., semiconductors, microprocessors, and smart chips) may be denied new FCC authorization. Given that manufacturers may circumvent, by integrating essential hardware parts instead of producing finished devices themselves, previous restrictions on finished devices produced by Covered List entities, the new restriction nevertheless applies when the mere hardware is produced by them. The term can encompass digital modules, integrated circuits, and other components performing data-processing functions, while purely passive items such as housings, ordinary wiring, fasteners, and plain battery cells are excluded.

In practice, compliance should begin before filing a new FCC equipment-authorization application. For applications filed on or after October 13, 2026, companies should identify relevant logic-bearing hardware, determine the actual producers of those components, and screen those producers against the Covered List. This review should continue while the application is pending and whenever suppliers, components, or product configurations change after authorization, because later changes can affect whether the product remains covered by its existing FCC authorization.

The new rules also clarify that covered online marketplaces are subject to FCC equipment-marketing requirements. Such marketplaces must display a certified device’s FCC ID at the online point of sale. Compliance begins March 1, 2027, for marketplaces selling their own devices or having physical access to or taking title to third-party devices, and June 1, 2027, for marketplaces relying on third-party seller certifications.

The FCC is separately considering restrictions on continued importation and marketing of certain previously authorized foreign-produced drones. This part targets “military-grade” devices, including some with swarming, thermal imaging, LiDAR, aerosol dispensing, docking stations, and 55-pound-or-heavier UAS. That proposal should be distinguished from rules that are already final.

5. What Should Chinese-Affiliated Companies Do First?

Companies selling or planning to sell drones or related technology in the United States should consider several immediate steps:

• Map the corporate ownership structure, including indirect owners, voting rights, board rights, and other control arrangements.

• Identify every FCC authorization held by the U.S. company and determine which Foreign Adversary Control reporting category applies.

• Maintain an internal inventory of products, components, and suppliers, so that the company can identify where important hardware is sourced and quickly assess the impact of supplier or design changes.

• Check the FCC Covered List before product launches, redesigns, or supplier changes, rather than assuming an existing authorization will continue to cover a modified product.

• Assign internal responsibility for monitoring FCC developments and maintaining supporting records, so that ownership, product, and supply-chain information can be updated when needed.

Bottom Line

For Chinese drone and technology companies, FCC compliance is no longer simply a question of whether a radio-frequency device has the correct FCC label. Companies increasingly need to examine who owns the U.S. business, who controls it, where the product is manufactured, who produces its critical components, how the supply chain may change, and how the product is ultimately marketed in the United States.

If your company is planning to sell drones or related technology in the United States or has questions about how FCC requirements may affect its ownership structure, products, or supply chain, please contact Lion’s Law to discuss your legal needs. We can help assess the requirements relevant to your business and identify next practical steps tailored to your circumstances.

Disclaimer: This article is provided for informational and general education purposes only and does not constitute legal advice. If you need assistance from an attorney, please contact Attorney Ren at 617-682-7111 or pusheng@lionslawgroup.com.