The Federal Communications Commission disclosed that it will conduct a vote to determine if companies using federal budgets to acquire equipment or products from Huawei and ZTE are violating any federal law.
For policymakers on Capitol Hill, the bill aims to scrutinize American entities in China, such as Activision Blizzard and even the National Basketball Association.
If given authority, all telecom networks that currently use Universal Service Fund subsidies to purchase infrastructure would not be allowed to use such funding to acquire another company that poses a "threat to national security."
The department is also studying the effects of forcing firms to pull out their current equipment from the two most prominent Chinese network providers.
The government is looking for comments on how if they have to do that, it can help companies financially.
Bills in Congress agreed to set aside $700 million to $1 billion to upgrade existing networks for telecommunications companies.
A trade group of small rural wireless carriers has said that upgrading their Huawei and ZTE systems will cost up to $1 billion for their twelve firms.
Huawei is said to have 40 customers in the US (Huawei is also a member of the Rural Wireless Association trade group).
The US government has said that Huawei poses a threat of espionage, but has not provided evidence of the Chinese government's use of its equipment for spying. In 2012, a congressional study classified both Chinese companies as security risks.
According to FCC Chairman Ajit Pai, the fear is that hostile foreign entities might use the networks' "secret backdoors" for spying and stealing that can "damage us with malware and viruses, or otherwise abuse our networks."
Pai added that there are plenty of reasons to believe that "Huawei and ZTE pose an unacceptable risk to US national security."
The US government has also forced partners to bar Huawei from their networks, restricting US software sales to the company.
Pai's bill would also force the government to investigate whether the withdrawal or installation of Chinese telecommunications equipment already installed in USF-funded networks, which is a costly process that the Verge previously reported, might harm rural providers.
In another notification of proposed rules, the FCC plan invites investors to a vote on how the commission could provide financial assistance.
Huawei is the world's largest telecom equipment provider as well as a leading manufacturer of cell phones.
ZTE Corporation is a multinational telecommunications equipment and systems company based in Shenzhen, Guangdong, China. It is among the leading telecom equipment manufacturers in the country.
