Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, 15165-15171 [2021-04692]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 86, Number 53 (Monday, March 22, 2021)]
[Proposed Rules]
[Pages 15165-15171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04692]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 54

[WC Docket No. 18-89; FCC 21-26; FRS 17535]


Protecting Against National Security Threats to the 
Communications Supply Chain Through FCC Programs

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In the document, the Commission seeks comment on several 
proposals to modify its Secure and Trusted Communications Networks 
Reimbursement Program (Reimbursement Program) rules to help protect the 
safety and security of U.S. communications networks. The proposals seek 
to modify these rules to align with the Consolidated Appropriations Act 
of 2021 (CAA), which appropriated $1.895 billion to remove, replace, 
and dispose of communications equipment and services that pose a 
national security threat. Specifically, the Commission seeks comments 
on a proposal to raise the cap on eligibility for participation in the 
Reimbursement Program to providers of advanced communications service 
with 10 million or fewer customers and modifying the scope of the 
equipment and services eligible under the Reimbursement Program to 
align with the July 30, 2020 orders designating Huawei Technologies 
Company (Huawei) and ZTE Corporation (ZTE) as national security 
threats.

DATES: Comments are due on or before April 12, 2021, and reply comments 
are due on or before April 26, 2021. If you anticipate that you will be 
submitting comments, but find it difficult to do so within the period 
of time allowed by this document, you should advise the contact listed 
in the following as soon as possible.

ADDRESSES: Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated on the first page of 
this document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing.
    Filings can be sent by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. Due to the COVID-19 
pandemic, the Commission closed its hand-delivery filing location at 
FCC Headquarters effective March 19, 2020. As a result, hand or 
messenger delivered filings in response to this Notice of Proposed 
Rulemaking will not be accepted. Parties are encouraged to take full 
advantage of the Commission's various electronic filing systems for 
filing applicable documents. Except when the filer requests that 
materials be withheld

[[Page 15166]]

from public inspection, any document may be submitted electronically 
through the Commission's ECFS. Persons that need to submit confidential 
filings to the Commission should follow the instructions provided in 
the Commission's March 31, 2020 public notice regarding the procedures 
for submission of confidential materials. All filings must be addressed 
to the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 45 L Street NE, Washington, DC 20554.
    Comments and reply comments must include a short and concise 
summary of the substantive arguments raised in the pleading. Comments 
and reply comments must also comply with Sec.  1.49 and all other 
applicable sections of the Commission's rules. The Commission directs 
all interested parties to include the name of the filing party and the 
date of the filing on each page of their comments and reply comments. 
All parties are encouraged to use a table of contents, regardless of 
the length of their submission. The Commission also strongly encourages 
parties to track the organization set forth in the Notice of Proposed 
Rulemaking in order to facilitate the Commission's internal review 
process.
    People With Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 
418-0432 (tty).

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact Brian Cruikshank, Competition Policy Division, Wireline 
Competition Bureau, at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Notice of Proposed Rulemaking (FNPRM) in WC Docket No. 18-89, adopted 
on February 17, 2021, and released on February 18, 2021. The full text 
of this document is available for public inspection on the Commission's 
website at: https://docs.fcc.gov/public/attachments/FCC-21-26A1.pdf.

I. Introduction

    1. In this proceeding, the Commission takes steps to advance 
Congressional and Commission objectives to secure the nation's 
communications networks. Through the CAA, Congress appropriated $1.9 
billion to the Commission to implement the Secure and Trusted 
Communications Networks Act of 2019 (Secure Networks Act), of which 
$1.895 billion must be used to remove and replace communications 
equipment and services that pose a national security risk and reimburse 
eligible providers for the cost of doing so. The FNPRM proposes to 
modify the Commission's rules consistent with the CAA to expedite 
removal of harmful equipment and services from our nation's 
communications networks.
    2. In particular, the Commission proposes to raise the cap on 
eligibility for participation in the Reimbursement Program consistent 
with the requirements of the CAA. The Commission also proposes to 
modify the acceptable use of reimbursement funds and to amend its rules 
to allow recipients to use reimbursement funds to remove, replace, or 
dispose of equipment or services that were purchased, rented, leased, 
or otherwise obtained on or before June 30, 2020. The Commission 
proposes to replace the prioritization scheme adopted in the 
Commission's Supply Chain Second Report and Order, 86 FR 2904, January 
13, 2021, with the prioritization categories set forth in the CAA. 
Finally, the Commission takes this opportunity to align the definition 
of ``provider of advanced communications service'' in its rules with 
the broader definition set forth in the CAA.
    3. Now more than ever, the stability of the U.S. economy depends on 
the reliability, security, and integrity of the nation's networks. The 
COVID-19 pandemic has increased our nation's reliance on the internet, 
and the rapid shift to online work, school, and health care has 
elevated the risk of cyber threats to our country. Moreover, the damage 
from recent and highly sophisticated supply chain attacks, such as the 
SolarWinds software breach, has further emphasized the need for a 
multifaceted and strategic approach to protecting our networks from all 
threats. The targeted actions the Commission takes in this document are 
consistent with congressional efforts in the CAA to hasten the removal 
of insecure equipment and services from our networks, which is an 
important element of secure communications.

II. Third Further Notice of Proposed Rulemaking

    4. The Commission seeks comment on how to incorporate the 
provisions of the CAA into the Commission's rules. Specifically, the 
Commission seeks comment on changes to its rules regarding eligibility 
for participation in the Reimbursement Program, acceptable uses of 
Reimbursement Program disbursements, the eligibility of certain 
equipment and services for the Reimbursement Program, and a 
prioritization paradigm in the event applications for the Reimbursement 
Program exceed the $1.895 billion appropriated by Congress.
    5. The Commission proposes to raise the cap on eligibility for 
participation in the Reimbursement Program to providers of advanced 
communications services with 10 million or fewer customers and seek 
comment on this proposal. Prior to enactment of the CAA, section 
4(b)(1) of the Secure Networks Act restricted eligibility under the 
Reimbursement Program to providers of advanced communication service 
with two million or fewer customers, and in the Supply Chain Second 
Report and Order, the Commission so restricted the program. In the CAA, 
however, Congress amended section 4(b)(1) of the Secure Networks Act to 
increase the eligibility criteria to those providers with 10 million or 
fewer customers. The Commission proposes to change its rules and allow 
providers with 10 million or fewer customers to participate in the 
Reimbursement Program. The Commission seeks comment on the proposal and 
any implications that it may have for participation in the 
Reimbursement Program.
    6. The Commission next proposes to modify the acceptable use of 
Reimbursement Program funds to include only the removal, replacement, 
and disposal of equipment and services subject to the final 
designations of Huawei and ZTE (collectively, the Designation Orders), 
consistent with the CAA.
    7. Before it was amended by the CAA, section 4(c) of the Secure 
Networks Act specified that a participant in the Reimbursement Program 
may only use Reimbursement Program funding to remove, replace, and 
dispose of ``covered communications equipment or services'' published 
on the list of covered communications equipment and services (Covered 
List). In the Supply Chain Second Report and Order, the Commission 
adopted a rule prohibiting Reimbursement Program funding recipients 
from ``using reimbursement funds to remove, replace, or dispose of 
covered communications equipment or service purchased, rented, leased, 
or otherwise obtained after these statutory cutoff

[[Page 15167]]

dates.'' The Supply Chain Second Report and Order, consistent with the 
Secure Networks Act before amendment, defined covered communications 
equipment or services as those published on the Covered List. To be 
published on the Covered List, equipment and services must fulfill 
three requirements. First, they must be communications equipment, which 
the Commission defined in the Supply Chain Second Report and Order as 
all equipment and services used in fixed and mobile broadband networks, 
provided they include or use electronic components. Second, the 
equipment and services must be identified as posing ``an unacceptable 
risk to the national security of the United States or the security and 
safety of United States persons'' to by specifically enumerated sources 
listed in section 2(c) of the Secure Networks Act. Finally, the 
equipment and services must be capable of the criteria in section 
2(b)(2)(A)-(C) of the Secure Networks Act. On the other hand, the 
Designation Orders encompassed all equipment and services produced or 
provided by Huawei and ZTE. In the Supply Chain Second Report and 
Order, the Commission acknowledged that some equipment and services 
covered by the Designation Orders would not be eligible for 
reimbursement, even though they were subject to the Universal Service 
Fund (USF) prohibition in Sec.  54.9 of the Commission's rules.
    8. In section 901 of the CAA, however, Congress amended section 
4(c) of the Secure Networks Act to limit the use of reimbursement 
funds:

Solely for the purposes of permanently removing covered 
communications equipment or services purchased, rented, leased or 
otherwise obtained as defined in the Report and Order of the 
Commission in the matter of Protecting Against National Security 
Threats to the Communications Supply Chain Through FCC Programs (FCC 
19-121; WC Docket No. 18-89; adopted November 22, 2019) . . . or as 
determined to be covered by both the process of the [Supply Chain] 
First Report and Order and the Designations Orders of the Commission 
on June 30, 2020 (DA 20-690; PS Docket No. 19-351; adopted June 30, 
2020) (DA 20-691; PS Docket No. 19-352; adopted June 30, 2020).

    9. The Commission believes this amendment demonstrates 
Congressional intent to change the scope of equipment and services 
eligible for reimbursement from the equipment and services on the 
Covered List to the equipment and services subject to the Designation 
Orders. The Commission seeks comment on this interpretation. Do the 
amendments revise the eligibility criteria for reimbursement such that 
all equipment and services produced or provided by Huawei and ZTE are 
now eligible for reimbursement, consistent with the scope of Sec.  54.9 
of the Commission's rules? Would limiting the use of Reimbursement 
Program funds solely for the purposes of removing, replacing, or 
disposing of communications equipment or services produced or provided 
by Huawei or ZTE or their subsidiaries, parents, and affiliates align 
with the language of the CAA? Consistent with the Commission's 
reasoning in the Supply Chain First Report and Order 85 FR 230, January 
3, 2020, would reimbursement for all Huawei and ZTE equipment better 
ensure the security of U.S. communications networks than a narrower 
scope of reimbursement? After the amendments, are equipment or services 
published on the Covered List pursuant to section 2 of the Secure 
Networks Act but manufactured by companies not subject to the 
Designation Orders eligible for reimbursement? If other companies are 
designated as posing a national security threat to the integrity of 
communications networks or the communications supply chain between now 
and the conclusion of the Reimbursement Program, would those companies' 
equipment and services be eligible under the Reimbursement Program?
    10. The Commission seeks comment on alternative interpretations. 
Did Congress intend to limit the use of Reimbursement Program funds to 
removal, replacement, and disposal of equipment and services subject to 
both the Designation Orders and the Covered List, rather than including 
all equipment and services subject to the Designation Orders? Are there 
other potential interpretations of the statutory language?
    11. Remove-and-Replace Rule. The Commission also proposes to modify 
the remove-and-replace rule adopted by the Commission in the Supply 
Chain Second Report and Order to change the scope of the equipment and 
services covered from those on the Covered List to those subject to the 
Designation Orders. The Commission seeks comment on the proposal.
    12. In adopting the remove-and-replace rule in the Supply Chain 
Second Report and Order, the Commission explained that it intended to 
align the scope of equipment and services subject to the remove-and-
replace rule contained in Sec.  54.11 of the Commission's rules with 
the scope of equipment and services eligible for reimbursement under 
the Reimbursement Program. As the CAA appears to modify the equipment 
and services eligible for reimbursement from those on the Covered List 
to those subject to the Designation Orders, the Commission proposes to 
accordingly revise the equipment and services subject to removal to 
encompass all equipment and services produced or provided by Huawei and 
ZTE. To do so would be consistent with the Commission's findings in the 
Supply Chain First Report and Order about the potential vulnerabilities 
of all types of equipment. Are there other aspects of the remove-and-
replace rule that should be modified in light of the CAA or other 
considerations?
    13. The Commission proposes to amend its rules to allow 
Reimbursement Program recipients to use such funds to remove, replace, 
or dispose of any equipment or services that was purchased, rented, 
leased, or otherwise obtained on or before June 30, 2020. The 
Commission seeks comment on the proposal.
    14. Section 4(c)(2)(A) of the Secure Networks Act prohibited 
Reimbursement Program recipients from using such funds to ``remove, 
replace, or dispose of any covered communications equipment or service 
purchased, rented, leased, or otherwise obtained on or after, in the 
case of covered any communications equipment or service that is on the 
initial list published under section 2(a), August 14, 2018, or in the 
case of any covered communications equipment that is not on the initial 
list published under section 2(a), the date that is 60 days after the 
date on which the Commission places such equipment or service on the 
list . . . .'' In the Supply Chain Second Report and Order, the 
Commission adopted a rule prohibiting Reimbursement Program funding 
recipients from ``using reimbursement funds to remove, replace, or 
dispose of covered communications equipment or service purchased, 
rented, leased, or otherwise obtained after these statutory cutoff 
dates.''
    15. In the CAA, Congress amended section 4(c)(2)(A) of the Secure 
Networks Act to prohibit Reimbursement Fund recipients from using such 
funds to ``remove, replace, or dispose of any covered communications 
equipment or service purchased, rented, leased, or otherwise obtained 
on or after publication of the [Supply Chain First Report and Order]; 
or in the case of any covered communications equipment that only became 
covered pursuant to the Designations Orders, June 30, 2020 . . . .'' 
Consistent with the statutory language and the statutory language 
discussed in this document that appears

[[Page 15168]]

to make all equipment and services subject to the Designation Orders 
eligible for reimbursement, the Commission proposes to amend its rules 
to make all equipment and services obtained on or before June 30, 2020 
to be eligible for reimbursement. Are there are other potential 
interpretations of this language.
    16. The Commission proposes to replace the prioritization scheme 
adopted in the Supply Chain Second Report and Order with the 
prioritization categories adopted in the CAA. The Commission seeks 
comment on that proposal. Additionally, the Commission seeks comment on 
whether it can further prioritize reimbursement within the 
prioritization subcategories.
    17. Before enactment of the CAA, the Secure Networks Act was silent 
on whether or how reimbursement funds should be prioritized in the 
event requests for reimbursement funding exceeded the appropriated 
money available for such reimbursement. In the Supply Chain Second 
Report and Order, the Commission established a ``prioritization 
paradigm in the event the estimated costs for replacement submitted by 
the providers during the initial or any subsequent filing window in the 
aggregate exceed the total amount of funding available as appropriated 
by Congress for reimbursement requests.'' The Commission adopted a 
scheme that first allocates funding to eligible providers that are ETCs 
subject to a remove-and-replace requirement under the Commission's 
rules and, if funding is insufficient to meet the total demand from 
that group of ETCs, the program will prioritize funding for 
transitioning the core networks of these eligible providers before 
allocating funds to non-core network related expenses. If, however, 
funding is still available after all demand from ETCs in the first 
category is satisfied, the Commission's rules allocate funding to non-
(eligible telecommunications carriers) ETCs eligible providers, 
prioritizing those non-ETCs that provided cost estimate data in 
response to the Commission's Supply Chain Security Information 
Collection over other non-ETCs. Finally, the Commission's rules further 
prioritize funding for core network transition costs over non-core 
network transition costs within each non-ETC category.
    18. The CAA, however, established a prioritization paradigm for the 
Reimbursement Program that differs from the model the Commission 
adopted in the Supply Chain Second Report and Order. Under the CAA, 
``the Commission shall allocate sufficient reimbursement funds first, 
to approved applications that have 2,000,000 or fewer customers . . . , 
[then] to approved applicants that are accredited public or private 
non-commercial educational institutions providing their own facilities-
based educational broadband services . . . , [then] to any remaining 
applicants determined to be eligible for reimbursement under the 
[Reimbursement] Program.''
    19. The Commission proposes to adopt the CAA's prioritization 
scheme as an overarching replacement to the prioritization scheme 
adopted in the Supply Chain Second Report and Order. Thus, the 
Commission proposes to first allocate funds to approved applications 
with 2 million or fewer customers. Once applications meeting that 
requirement are funded, the Commission proposes to allocate funds to 
approved applicants that are accredited public or private non-
commercial educational institutions providing their own facilities-
based educational broadband services. After those applicants are fully 
funded, the Commission proposes to allocate funds to any remaining 
applicants determined to be eligible for reimbursement under the 
Reimbursement Program. The Commission seeks comment on this proposal.
    20. While the Commission proposes to change the three reimbursement 
prioritization categories consistent with the CAA, the CAA is silent on 
how the Commission should further prioritize funding within the three 
main categories. If funding within a particular category is 
insufficient to meet demand, how should the Commission allocate funding 
within that particular category? Can the Commission still prioritize 
certain equipment or providers within an individual category if funding 
is insufficient to fund all applications within that prioritization 
category? When the Commission adopted the prioritization scheme in the 
Supply Chain Second Report and Order, the Commission found that 
replacing the core network is the logical first step in a network 
transition and may have the greatest impact on eliminating a national 
security risk from the network. This is unlikely to have changed since 
the Commission adopted the Supply Chain Second Report and Order on 
December 10, 2020. The Commission seeks comment on whether the language 
of the CAA allow the Commission to maintain a prioritization for core 
network transition costs over non-core network transitions costs the 
categories established by the CAA? The Commission also seeks comment on 
reducing funding on a pro rata basis for all recipients within a 
prioritization category as defined by the CAA. Are there any other 
methods of allocating funding equitably across a specific category if 
remaining funding is insufficient to fund all of the remaining 
requests?
    21. Similarly, the Commission seeks comment on other potential sub-
prioritization categories. Recognizing the national security threats to 
communications networks or the communications supply chain that remain 
even while the Commission works to remove covered equipment and 
services, the Commission seeks comment on prioritizing, within each 
category, the removal and reimbursement of certain equipment or 
services at particular locations identified as posing an elevated 
national security risk by the Commission or other federal agencies or 
interagency bodies as defined in section 2(c) of the Secure Networks 
Act. The Commission believes prioritizing equipment and services at 
particular locations with an elevated national security risk is 
consistent with the CAA, because the Commission would only prioritize 
equipment and services within the same prioritization category. 
Building on this idea, can the Commission prioritize equipment and 
services at locations that pose a heightened national security risk in 
a lower priority category ahead of any equipment and services in a 
higher prioritization category? Are there other methods for 
prioritizing any other equipment or services within a reimbursement 
prioritization category? The Commission seeks comment on any other 
methods consistent with the CAA prioritization structure.
    22. In the Secure Networks Act, Congress defined ``provider of 
advanced communications service'' as ``a person who provides advanced 
communications service to United States customers.'' Congress amended 
this definition in the CAA to ``include[ ] . . . accredited public or 
private non-commercial educational institutions providing their own 
facilities-based educational broadband service as defined in Sec.  27.4 
of the Commission's rules,'' and ``health care providers and libraries 
providing advanced communications service.'' In the Supply Chain Second 
Report and Order, the Commission explained that ``for purposes of the 
Reimbursement Program, a school, library, or health care provider, or 
consortium thereof, may also qualify as a provider of advanced 
communications service, and therefore be eligible to participate in the 
Reimbursement Program . . .''
    23. Consistent with the CAA, the Commission proposes to change the

[[Page 15169]]

definition of provider of advanced communications service to 
incorporate the new, broader definition. The Commission seeks comment 
on this proposal. While the Commission believes its interpretation in 
the Supply Chain Second Report and Order is consistent with the 
amendments to the Secure Networks Act, the Commission proposes to 
update its rules to follow Congress' direction in the CAA. The 
Commission also seeks comment on whether the term ``educational 
broadband service as defined under Part 27 of the Commission's rules'' 
is intended to solely reference licensees in the Commission's Education 
Broadband Service, or whether this term has a different meaning. 
Consistent with the Supply Chain Second Report and Order, the 
Commission proposes to modify the definition of ``provider of advanced 
communications service'' only for purposes of the Reimbursement Program 
and not for any other provision of the Secure Networks Act or the 
Commission's rules. The Commission seeks comment on this proposal.
    24. Finally, the Commission seeks comment on whether the amendments 
to the Secure Networks Act enacted by Congress in the CAA require 
revision to any other provisions or rules adopted by the Commission in 
the Supply Chain Second Report and Order. Are other changes to the 
Commission's rules mandated or necessary as a result of the CAA?
    25. The FNPRM seeks comment on proposals to implement the 
requirements of the CAA, and the Commission has no discretion to ignore 
such congressional direction. In addition, the CAA provides funding to 
reimburse eligible providers for their costs to remove and replace 
harmful equipment and services from their networks. Moreover, the 
Commission already completed an Information Collection to determine the 
costs to ETCs to remove and replace Huawei and ZTE equipment and 
services from their networks. Accordingly, the Commission tentatively 
concludes that its proposals in the FNPRM will impose no additional 
costs to those who are required to participate in the reimbursement 
program. The Commission seeks comment on this tentative conclusion.

III. Procedural Matters

    26. This document contains proposed new and modified information 
collection requirements. The Commission, as part of its continuing 
effort to reduce paperwork burdens, will invite the general public and 
the Office of Management and Budget to comment on the information 
collection requirements contained in this document, as required by the 
Paperwork Reduction Act of 1995, Public Law 104-13. In addition, 
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 
107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific 
comment on how it might further reduce the information collection 
burden for small business concerns with fewer than 25 employees.
    27. Initial Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act of 1980, as amended (RFA), which has been 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA), the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in the FNPRM. Written comments are requested on this IRFA. 
Comments must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the FNPRM provided on the first page 
of the item. The Commission will send a copy of the FNPRM, including 
this IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). In addition, the FNPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.
    28. Consistent with the Commission's obligation to be responsible 
stewards of the public funds used in the USF programs and increasing 
concern about ensuring communications supply chain integrity, the FNPRM 
proposes and seeks comment on rules to implement Division N, Title IX, 
section 901 of the CAA and their applicability to the Commission's 
ongoing efforts to secure the communications supply chain.
    29. Specifically, the Commission proposes to amend the rules 
regarding provider eligibility for participation in the Reimbursement 
Program, the equipment and services eligible for Reimbursement Program 
disbursements, and the prioritization of Reimbursement Program Funds.
    30. The proposed action is authorized under sections 4(i), 201(b), 
214, 254, 303(r), 403, and 503 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 201(b), 214, 254, 303(r), 403 and 503, 
Division N, Title IX, section 901 of the CAA, 47 U.S.C. 1603 and 1608.
    31. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. Pursuant to the RFA, the statutory definition of a small business 
applies ``unless an agency, after consultation with the Office of 
Advocacy of the SBA and after opportunity for public comment, 
establishes one or more definitions of such term which are appropriate 
to the activities of the agency and publishes such definition(s) in the 
Federal Register.'' A small business concern is one that: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA).
    32. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes here, at the outset, three broad groups of small 
entities that could be directly affected herein. First, while there are 
industry specific size standards for small businesses that are used in 
the regulatory flexibility analysis, according to data from the SBA's 
Office of Advocacy, in general a small business is an independent 
business having fewer than 500 employees. These types of small 
businesses represent 99.9% of all businesses in the United States which 
translates to 28.8 million businesses.
    33. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of Aug 2016, there were approximately 356,494 small 
organizations based on registration and tax data filed by nonprofits 
with the Internal Revenue Service (IRS). Data from the Urban Institute, 
National Center for Charitable Statistics (NCCS) reporting on nonprofit 
organizations registered with the IRS was used to estimate the number 
of small organizations. Reports generated using the NCCS online 
database indicated that as of August 2016 there were 356,494 registered 
nonprofits with total revenues of less than $100,000. Of this number, 
326,897 entities filed tax returns with 65,113 registered nonprofits 
reporting total revenues of $50,000 or less on the IRS Form 990-N for 
Small Exempt Organizations and 261,784 nonprofits reporting total 
revenues of $100,000 or less on some other version of the IRS Form 990 
within 24 months of the

[[Page 15170]]

August 2016 data release date. You can access https://nccsweb.urban.org/tablewiz/bmf.php where the report showing this data can be generated by 
selecting the following data fields: Show: ``Registered Nonprofit 
Organizations''; By: ``Total Revenue Level (years 1995, Aug to 2016, 
Aug)''; and For: ``2016, Aug'' then selecting ``Show Results.''
    34. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2017 Census of Governments indicate that there 
were 90,075 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. The Census of Governments survey is conducted every five (5) 
years compiling data for years ending with ``2'' and ``7''. Of this 
number there were 36,931 general purpose governments (county, municipal 
and town or township) with populations of less than 50,000 and 12,040 
special purpose governments--independent school districts with 
enrollment populations of less than 50,000. Accordingly, based on the 
2017 U.S. Census of Governments data, the Commission estimates that at 
least 48,971 entities fall into the category of ``small governmental 
jurisdictions.'' Local governmental jurisdictions are made up of 
general purpose governments (county, municipal and town or township) 
and special purpose governments (special districts and independent 
school districts). There were 2,105 county governments with populations 
less than 50,000. This category does not include subcounty (municipal 
and township) governments. There were 18,729 municipal and 16,097 town 
and township governments with populations less than 50,000. There were 
12,040 independent school districts with enrollment populations less 
than 50,000. While the special purpose governments category also 
includes local special district governments, the 2017 Census of 
Governments data does not provide data aggregated based on population 
size for the special purpose governments category. Therefore, only data 
from independent school districts is included in the special purpose 
governments category. This total is derived from the sum of the number 
of general purpose governments (county, municipal and town or township) 
with populations of less than 50,000 (36,931) and the number of special 
purpose governments--independent school districts with enrollment 
populations of less than 50,000 (12,040), from the 2017 Census of 
Governments--Organizations Tables 5, 6, and 10.
    35. Small entities potentially affected by the proposals herein 
include eligible schools and libraries, eligible rural non-profit and 
public health care providers, and the eligible service providers 
offering them services, including telecommunications service providers, 
internet Service Providers (ISPs), and vendors of the services and 
equipment used for telecommunications and broadband networks.
    36. The FNPRM proposes rules that: Raise the eligibility threshold 
in the Reimbursement Program for providers of advanced communications 
service from two million to ten million customers, restrict the use of 
Reimbursement Program funds to equipment or services produced or 
provided by any company deemed to pose a national security threat to 
the integrity of communications networks or the communications supply 
chain, make equipment and services obtained on or before June 30, 2020 
eligible for reimbursement, and revise a prioritization scheme to award 
Reimbursement Program funding. The Commission seeks comment on these 
proposals, and their likely costs and benefits, as well as on 
alternative approaches and any other steps it should consider taking.
    37. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) the establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    38. In compliance with the CAA, the FNPRM proposes to increase the 
pool of eligible participants in the Reimbursement Program to all 
providers of advanced communications services with ten million or fewer 
customers, limit the use of Reimbursement Program funding to remove, 
replace, and dispose of to allow Reimbursement Program allocations to 
be used to remove, replace, and dispose of equipment or services 
produced or provided by any company deemed to pose a national security 
threat to the integrity of communications networks or the 
communications supply chain, make equipment and services obtained on or 
before June 30, 2020 eligible for reimbursement, and revise the 
prioritization scheme to prioritize advanced communications service 
providers with two million or fewer customers, then public or private 
non-commercial educational institutions providing their own facilities-
based educational broadband services, and then to any remaining 
eligible applicants.
    39. The Commission expects to take into account the economic impact 
on small entities, as identified in comments filed in response to the 
FNPRM and this IRFA, in reaching the Commission's final conclusions and 
promulgating rules in this proceeding. The FNPRM generally seeks 
comment on how to adopt enacted legislation that mandates action by the 
Commission and seeks specific comment on how to mitigate the impact on 
small entities.
    40. Ex Parte Presentations. This proceeding is a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making ex parte presentations must file a copy of any 
written presentation or a memorandum summarizing any oral presentation 
within two business days after the presentation (unless a different 
deadline applicable to the Sunshine period applies). Persons making 
oral ex parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda, or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda

[[Page 15171]]

summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

IV. Ordering Clauses

    41. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 4(i), 201(b), 214, 254, 303(r), 403, and 503 of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 201(b), 
214, 254, 303(r), 403 and 503, sections 2, 3, 4, and 9 of the Secure 
Networks Act, 47 U.S.C. 1601, 1602, 1603, and 1608, Division N, Title 
IX, sections 901 and 906 of the CAA, and Sec. Sec.  1.1 and 1.412 of 
the Commission's rules, 47 CFR 1.1 and 1.412, the FNPRM is adopted.

List of Subjects

47 CFR Part 1

    Administrative practice and procedure, Civil rights, Claims, 
Communications, Communications common carriers, Communications 
equipment, Cuba, Drug abuse, Environmental impact statements, Equal 
access to justice, Equal employment opportunity, Federal buildings and 
facilities, Government employees, Historic preservation, Income taxes, 
Indemnity payments, Individuals with disabilities, internet, 
Investigations, Lawyers, Metric system, Penalties, Radio, Reporting and 
recordkeeping requirements, Security measures, Satellites, 
Telecommunications, Telephone, Television, Wages.

47 CFR Part 54

    Communications common carriers, Health facilities, Infants and 
children, internet, Libraries, Puerto Rico, Reporting and recordkeeping 
requirements, Schools, Telecommunications, Telephone, Virgin Islands.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communication Commission proposes to amend 47 parts 1 and 54 as 
follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority:  47 U.S.C. chs. 2, 5, 9, 13; 28 U.S.C. 2461, unless 
otherwise noted.

0
2. Amend Sec.  1.50004 by revising paragraphs (a) introductory text, 
(a)(1) and (2), (f), and paragraphs (i)(1)(i) and (ii) and adding (q) 
to read as follows:


Sec.  1.50004  Secure and Trusted Communications Networks Reimbursement 
Program.

    (a) Eligibility. Providers of advanced communications service with 
ten million or fewer customers are eligible to participate in the 
Reimbursement Program to reimburse such providers solely for costs 
reasonably incurred for the permanent replacement, removal, and 
disposal of covered communications equipment or services:
    (1) As defined in the Report and Order of the Commission in the 
matter of Protecting Against National Security Threats to the 
Communications Supply Chain Through FCC Programs (FCC 19-121; WC Docket 
No. 18-89; adopted November 22, 2019 (in this section referred to as 
the `Report and Order'); or
    (2) As determined to be covered by both the process of the Report 
and Order and the Designation Orders of the Commission on June 30, 2020 
(DA 20-690; PS Docket No. 19-351; adopted June 30, 2020) (DA 20-691; PS 
Docket No. 19-352; adopted June 30, 2020) (in this section collectively 
referred to as the `Designation Orders');
* * * * *
    (f) Prioritization of support. The Wireline Competition Bureau 
shall issue funding allocations in accordance with this section after 
the close of a filing window. After a filing window closes, the 
Wireline Competition Bureau shall calculate the total demand for 
Reimbursement Program support submitted by all eligible providers 
during the filing window period. If the total demand received during 
the filing window exceeds the total funds available, then the Wireline 
Competition Bureau shall allocate the available funds consistent with 
the following priority schedule:

Priority 1

    Advanced communication service providers with 2 million or fewer 
customers.

Priority 2

    Advanced communications service providers that are accredited 
public or private non-commercial educational institutions providing 
their own facilities-based educational broadband service, as defined in 
47 CFR 27.4.

Priority 3

    Any remaining approved applicants determined to be eligible for 
reimbursement under the Program.
* * * * *
    (i) * * *
    (1) * * *
    (i) On or after publication of the Report and Order; or
    (ii) In the case of any covered communications equipment that only 
became covered pursuant to the Designation Orders, June 30, 2020; or
* * * * *
    (q) Provider of advanced communications services. For purposes of 
the Secure and Trusted Communications Networks Reimbursement Program, 
provider of advanced communications services is defined as:
    (1) A person who provides advanced communications service to United 
States customers; and includes:
    (i) Accredited public or private non-commercial educational 
institutions, providing their own facilities-based educational 
broadband service, as defined in 47 CFR 27.4; and
    (ii) Health care providers and libraries providing advanced 
communications service.
    (2) [RESERVED]

PART 54--UNIVERSAL SERVICE

0
3. The authority citation for part 54 continues to read as follows:

    Authority:  47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
229, 254, 303(r), 403, 1004, and 1302, unless otherwise noted.

0
4. Amend Sec.  54.11 by revising paragraph (b) to read as follows:


Sec.  54.11   Requirement to remove and replace.

* * * * *
    (b) For purposes of paragraph (a) of this section, covered 
communications equipment or services means any communications equipment 
or service produced or provided by a covered company posing a national 
security threat to the integrity of communications networks or the 
communications supply chain.
* * * * *
[FR Doc. 2021-04692 Filed 3-19-21; 8:45 am]
BILLING CODE 6712-01-P