Overview
On August 20, 2026, the Federal Communications Commission (FCC) significantly revised its recently adopted Covered List restrictions for foreign-produced power inverters. The update substantially narrows the universe of inverters subject to the restrictions, while also tightening the rules for the inverters that do remain covered.
Background: the original power inverter restriction
On July 28, 2026, the FCC added "foreign-produced power inverters" to its Covered List pursuant to a National Security Determination (NSD). Equipment on the Covered List generally cannot receive a new FCC equipment authorization.
The original NSD broadly defined a power inverter as a bi-directional power device or system that converts DC electricity to AC electricity (or visa-versa) and that "contains components that enable remote communication, control, sensing, data-collection, or monitoring through Wi-Fi, cellular, Bluetooth, or other similar connections."
Revised definition of covered power inverters
The August 20 Public Notice narrowed the definition of power inverters to only include devices that are "intended for use in parallel with an electric utility to supply common loads and sometimes deliver power to the utility." More specifically, only a power inverter that is "a utility-interactive inverter" as defined in Underwriter Laboratories Standard 1741 sections 2.1.23 and 2.1.52 are now included in the covered list.
The NSD made this change because "power inverters that are incapable of connection to the utility grid (i.e., non-utility-interactive inverters) generally do not pose risk to the public utility grid."
This is a significant narrowing of the earlier power inverter definition. Equipment that performs DC-to-AC or AC-to-DC conversion but is not intended to operate in parallel with an electric utility would now fall outside the power inverter Covered List category altogether.
However, for the devices that do remain on the list, the FCC updated the connectivity prong of the definition, which now states (with new language in italics): "Contains, or is designed, equipped, or configured to accept, a component that enables remote communication, control, sensing, data-collection, or monitoring through Ethernet, WiFi, cellular, Bluetooth, or other similar connections, whether wired or wireless." This language makes two important clarifications. First, a "remote connection" includes wired (including Ethernet) in addition to wireless connections. Second, the FCC clarified that a covered device is not limited to equipment in which a communications component is actually installed. The phrase "designed, equipped, or configured to accept" indicates that an inverter may satisfy the connectivity element if its architecture provides for the addition of such a component. Therefore, removing or separately packaging a connectivity component may not place the inverter outside the revised definition.
Finally, in its associated FAQ, the FCC has clarified that the definition of power inverters does not include rectifiers, which only change AC power to DC power.
Advanced Manufacturing Tax Credit
The FCC, per the NSD, created a new exclusion tied to the federal "Advanced Manufacturing Production Credit" of The One Big Beautiful Bill Act, codified at 26 U.S.C. § 45X.
The NSD determined that power inverters eligible for the Section 45X credit for domestic production should not be treated as "foreign-produced" for purposes of the Covered List.
Domestic Content Threshold
The prior definition incorporated the FAR "domestic end product" definition by reference (48 CFR § 25.101(a)) which caused some confusion when applied in the context of the Covered List. The FCC has now clarified that "foreign-produced" devices are not "a domestic end product as defined in 48 CFR § 25.101(a) because they are manufactured in the United States and the
cost of domestic components exceeds 65% of the total component cost for items delivered in calendar years 2024 through 2028 or 75% for items delivered starting in calendar year 2029."
Note that the revised definition does not include a so-called COTS (commercially available, off the shelf) exception. The FCC states: "All components, including COTS components, must be considered when determining whether article qualifies as a "domestic end product" under 48 § 25.101(a)."
Companies that previously were considering reliance on the commercially available off-the-shelf provisions of the FAR should therefore reassess that position.
Conditional Approval Remains Available
An inverter that satisfies the revised definition and remains on the Covered List can still seek a determination from the DoW that the device does not pose an unacceptable risk to national security.
The Conditional Approval guidance has not changed, and requires disclosures concerning corporate ownership, bill of materials and supply chain, software and firmware origins, and plans for US onshoring.
Next Steps
Steptoe's Telecom and International Trade attorneys can advise companies with potentially covered devices about the quickly-changing Covered List regulations. For more information, please contact one of the authors.
