Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs
| Published date | 22 March 2021 |
| Citation | 86 FR 15165 |
| Record Number | 2021-04692 |
| Section | Proposed rules |
| Court | Federal Communications Commission |
Federal Register, Volume 86 Issue 53 (Monday, March 22, 2021)
[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 220701.
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 http://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
