Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 46995 

not significantly or uniquely affect small 

governments. The action imposes no 

enforceable duty on any state, local, or 

tribal governments or the private sector. 

E. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the states, on the 

relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications as specified in Executive 

Order 13175. It will not have substantial 

direct effects on tribal governments, on 

the relationship between the federal 

government and Indian tribes, or on the 

distribution of power and 

responsibilities between the federal 

government and Indian tribes, as 

specified in Executive Order 13175. 

Thus, Executive Order 13175 does not 

apply to this action. EPA periodically 

updates tribal officials on air regulations 

through the monthly meetings of the 

National Tribal Air Association and will 

share information on this rulemaking 

through this and other fora. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

This action is not subject to Executive 

Order 13045 because it is not 

economically significant as defined in 

Executive Order 12866, and because 

EPA does not believe the environmental 

health or safety risks addressed by this 

action present a disproportionate risk to 

children. Depletion of stratospheric 

ozone results in greater transmission of 

the sun’s ultraviolet (UV) radiation to 

the earth’s surface. The following 

studies describe the effects of excessive 

exposure to UV radiation on children: 

(1) Westerdahl J, Olsson H, Ingvar C. 

‘‘At what age do sunburn episodes play 

a crucial role for the development of 

malignant melanoma,’’ Eur J Cancer 

1994; 30A:1647–54; (2) Elwood JM, 

Japson J. ‘‘Melanoma and sun exposure: 

An overview of published studies,’’ Int 

J Cancer 1997; 73:198–203; (3) 

Armstrong BK. ‘‘Melanoma: Childhood 

or lifelong sun exposure,’’ In: Grobb JJ, 

Stern RS, Mackie RM, Weinstock WA, 

eds. Epidemiology, causes and 

prevention of skin diseases (pp 63–66), 

London: Blackwell Science, 1997; (4) 

Whiteman D, Green A. ‘‘Melanoma and 

Sunburn,’’ Cancer Causes Control, 1994; 

5:564–72; (5) Heenan, PJ. ‘‘Does 

intermittent sun exposure cause basal 

cell carcinoma? A case control study in 

Western Australia,’’ Int J Cancer 1995; 

60:489–94; (6) Gallagher RP, Hill GB, 

Bajdik CD, et al. ‘‘Sunlight exposure, 

pigmentary factors, and risk of 

nonmelanocytic skin cancer I, Basal cell 

carcinoma,’’ Arch Dermatol 1995; 

131:157–63; (7) Armstrong, BK. ‘‘How 

sun exposure causes skin cancer: An 

epidemiological perspective,’’ In: Hill D, 

Elwood JM, English DR (eds.) 

Prevention of Skin Cancer. Cancer 

Prevention—Cancer Causes, vol. 3 (pp 

89–116). Dordrecht: Springer, 2004. 

However, as described in the section 

above titled ‘‘What Action is EPA 

Taking?’’, the environmental impacts 

are expected to be negligible. 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not subject to Executive 

Order 13211, because it is not a 

significant regulatory action under 

Executive Order 12866. 

I. National Technology Transfer and 

Advancement Act (NTTAA) 

This rulemaking does not involve 

technical standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

The environmental impacts of this 

regulation are expected to be negligible 

given the low level of ODS produced 

and imported for the L&A exemption. 

As such, there are no disproportionately 

high and adverse human health or 

environmental effects from this action 

on minority populations, low-income 

populations, and/or indigenous peoples, 

as specified in Executive Order 12898 

(59 FR 7629, February 16, 1994). 

K. Congressional Review Act 

This action is subject to the 

Congressional Review Act, and EPA will 

submit a rule report to each House of 

the Congress and to the Comptroller 

General of the United States. This action 

is not a ‘‘major rule’’ as defined by 5 

U.S.C. 804(2). 

List of Subjects in 40 CFR Part 82 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Chemicals, 

Chlorofluorocarbons, Imports, Methyl 

chloroform, Ozone, Reporting and 

recordkeeping requirements. 

Michael S. Regan, 

Administrator. 

For the reasons set out in the 

preamble, 40 CFR part 82 is amended as 

follows: 

PART 82—PROTECTION OF 

STRATOSPHERIC OZONE 

■ 1. The authority citation for part 82 

continues to read as follows: 

Authority: 42 U.S.C. 7414, 7601, 7671– 

7671q. 

■ 2. Section 82.8 is amended by revising 

paragraph (b) to read as follows: 

§ 82.8 Grant of essential use allowances 

and critical use allowances. 

* * * * * 

(b) There is a global exemption for the 

production and import of class I 

controlled substances for essential 

laboratory and analytical uses, subject to 

the restrictions in appendix G of this 

subpart, and subject to the 

recordkeeping and reporting 

requirements at § 82.13(u) through (x). 

There is no amount specified for this 

exemption. 

* * * * * 

[FR Doc. 2021–17745 Filed 8–20–21; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 1 and 54 

[WC Docket No. 18–89; FCC 21–86; FR ID 

41783] 

Protecting Against National Security 

Threats to the Communications Supply 

Chain Through FCC Programs 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission) adopts rules to modify 

the Secure and Trusted 

Communications Networks 

Reimbursement Program 

(Reimbursement Program) consistent 

with the Secure and Trusted 

Communications Networks Act of 2019, 

as modified by the Congressional 

Appropriations Act, 2021. 

DATES: Effective October 22, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Brian Cruikshank, Wireline Competition 

Bureau, brian.cruikshank@fcc.gov, 202– 

418–3623 or TTY: 202–418–0484. 


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46996 Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Third 

Report and Order in WC Docket No. 18– 

89; FCC 21–86, adopted July 13, 2021 

and released July 14, 2021. Due to the 

COVID–19 pandemic, the Commission’s 

headquarters will be closed to the 

general public until further notice. The 

full text of this document is available at 

the following internet address: https://

www.fcc.gov/document/fcc-acts-protectnational-security-communicationssupply-chain-0. 

I. Introduction 

1. The Federal Communications 

Commission (Commission) continues to 

play a leading role protecting the 

security of its communications networks 

and communications supply chain. 

Securing its nation’s networks from 

those who would harm the United 

States and its people is more important 

than ever due to the outsized impact 

that the internet has on its work, 

education, health care, and personal 

connections. Recognizing this reality, 

and the damage that attacks on these 

networks can and do cause, today the 

Commission modifies its rules to 

incorporate the Consolidated 

Appropriations Act, 2021 (CAA) 

amendments to the Secure and Trusted 

Communications Networks Act of 2019 

(Secure Networks Act). 

2. Specifically, in response to several 

sections of the CAA that provide 

additional guidance for and direct 

changes to the Commission’s Secure and 

Trusted Communications Networks 

Reimbursement Program 

(Reimbursement Program), the 

Commission adopts several changes to 

the program rules. The Commission first 

increases the customer eligibility cap for 

participation in the Reimbursement 

Program. The Commission also modifies 

the type of equipment and services 

eligible for reimbursement and adjust 

the date by which equipment or services 

must have been obtained to be eligible 

for Reimbursement Program funds. The 

Commission further adopts the 

prioritization scheme created in the 

CAA and clarify the definition of 

‘‘provider of advanced communications 

service’’ for purposes of the 

Reimbursement Program. Finally, the 

Commission clarifies portions of the 

Reimbursement Program to assist 

eligible providers as they prepare to 

seek reimbursement. 

II. Report and Order 

3. After reviewing the record, the 

Commission implements several of the 

Commission’s proposals to incorporate 

the CAA’s amendments to the Secure 

Networks Act into its rules. Specifically, 

the Commission revises the eligibility to 

participate in the Reimbursement 

Program to providers of advanced 

communications service with 10 million 

or fewer customers; amend the scope of 

equipment and services that 

Reimbursement Program participants 

may use funding to remove, replace, or 

dispose; adjust the cutoff date for 

equipment and services eligible for 

reimbursement; adopt the CAA’s 

prioritization scheme for distributing 

reimbursement funding; clarify the 

definition of ‘‘provider of advanced 

communications service’’; and clarify 

various aspects of the Reimbursement 

Program. 

A. Eligibility for Participation in the 

Reimbursement Program 

4. The Commission first amends its 

rules to allow providers of advanced 

communications service with 10 million 

or fewer customers to participate in the 

Reimbursement Program, consistent 

with the Secure Networks Act, as 

amended by the CAA. Prior to 

enactment of the CAA, its rules limited 

Reimbursement Program eligibility to 

providers of advanced communications 

service with two million or fewer 

customers, in line with the participation 

restriction in section 4(b)(1) of the 

Secure Networks Act. In the CAA, 

however, Congress amended the Secure 

Networks Act to expand eligibility to 

providers of advanced communications 

service with 10 million or fewer 

customers. The rule revisions the 

Commission adopts today align 

eligibility for participation in the 

Reimbursement Program with the 

congressional directives in the CAA. 

This approach is also supported by 

comments in the record. 

5. In the 2020 Supply Chain Order, 86 

FR 2904 (January 13, 2021), the 

Commission defined ‘‘customer’’ of a 

provider of advanced communications 

service as the customer of such provider 

as well as the customer of any affiliate 

of such provider. The Commission 

further defined ‘‘affiliate’’ as ‘‘a person 

that (directly or indirectly) owns or 

controls, is owned or controlled by, or 

is under common ownership or control 

with, another person.’’ The Commission 

maintains the definition of ‘‘customer’’ 

as interpreted in the 2020 Supply Chain 

Order as those taking advanced 

communications service from the 

provider and/or its affiliate. As such, 

eligibility in the Reimbursement 

Program shall continue to be 

determined based on the number of 

customers to the specific advanced 

communications service offered by the 

provider and/or its affiliate, as set forth 

in the 2020 Supply Chain Order. 

6. Increasing the number of providers 

of advanced communications service 

eligible for the Reimbursement Program 

has important benefits. First, it will 

advance the Commission’s goals of 

removing vulnerable equipment and 

services from its nation’s 

communications networks by 

eliminating covered equipment and 

services from the networks of more 

providers. LATAM 

Telecommunications, LLC (LATAM) 

agrees, arguing that by expanding 

eligibility, in conjunction with the 

CAA’s reimbursement prioritization 

scheme, ‘‘Congress has given the 

Commission flexibility’’ to secure a 

greater number of networks throughout 

the communications ecosystem. While 

the vast majority of providers of 

advanced communications service 

participating in the Reimbursement 

Program are expected to have fewer than 

two million customers, increasing the 

number of providers eligible for 

reimbursement will ensure the removal 

of covered equipment and services from 

a broader swath of its nation’s 

communications networks. 

Furthermore, eligibility expansion will 

also reduce the likelihood that insecure 

equipment and services will remain in 

domestic communications networks. 

7. The Commission rejects the 

argument that raising the cap would 

extend reimbursement eligibility to 

larger companies that ‘‘do not need 

government assistance,’’ and the 

Commission declines to use a different 

metric, such as revenue or net income, 

to determine eligibility for participation 

in the Reimbursement Program. From an 

administrative standpoint, utilizing 

customer count as the sole eligibility 

metric allows prospective participants 

and the Commission to easily determine 

participants’ eligibility in the 

Reimbursement Program. The 

Commission also notes that a variety of 

entities have identified Huawei and ZTE 

equipment and services in their 

networks, indicating that until such 

equipment and services are removed, 

those networks are at risk, regardless of 

size. Furthermore, the Commission 

finds that its decision to expand 

eligibility for the Reimbursement 

Program is consistent not only with the 

statutory directive but also with the 

Commission’s stated goals of the 

Reimbursement Program. Although the 

Commission anticipates that expanding 

participant eligibility will increase 

Reimbursement Program applications 

and demand, doing so does not frustrate 

its ability to administer a program that 

effectively and efficiently distributes 

funds in accordance with congressional 


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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 46997 

directives. By allowing more providers 

to participate in the Reimbursement 

Program, the Commission will further 

its goal of ensuring that insecure 

equipment and services are promptly 

removed from provider networks, thus 

improving the security and reliability of 

its nation’s communications systems. 

B. Equipment and Services Eligible for 

Reimbursement 

8. Consistent with the CAA, the 

Commission modifies its rules to limit 

the equipment and services for which 

recipients may use Reimbursement 

Program funding to the removal, 

replacement, or disposal of 

communications equipment and 

services produced or provided by 

Huawei or ZTE that are on the Covered 

List. Because the Covered List includes 

all communications equipment and 

services produced or provided by 

Huawei or ZTE, all such equipment and 

services are eligible for reimbursement. 

9. The CAA’s amendments to the 

Secure Networks Act changed the scope 

of equipment and services eligible for 

reimbursement from the Reimbursement 

Program. Specifically, the CAA’s 

amendments to the Secure Networks 

Act make ‘‘covered communications 

equipment and services,’’ as further 

specified by the 2019 Supply Chain 

Order, 85 FR 48134 (August 10, 2020) or 

Designation Orders, eligible for 

reimbursement. The Commission is 

bound by the statutory language, and 

find that the Secure Networks Act, as 

amended, requires the Commission to 

limit the acceptable use of 

Reimbursement Program funds to the 

removal, replacement, and disposal of 

eligible equipment and services that are 

both: (1) On the Covered List published 

pursuant to section 2(a) of the Secure 

Networks Act; and (2) as captured by 

the definition of equipment or services 

established in the 2019 Supply Chain 

Order, or as determined by the process 

set forth in section 54.9 of the 

Commission’s rules and in the 

Designation Orders. In practice, as the 

Commission explains below, that means 

that all communications equipment or 

services produced or provided by 

Huawei and ZTE, the companies that 

are both included on the Covered List 

and subject to the Designation Orders, 

are eligible for reimbursement. The 

Commission also revises the scope of its 

section 54.11 remove-and-replace rule 

to require ETCs receiving USF support 

and recipients of Reimbursement 

Program funding to remove all Huawei 

and ZTE communications equipment 

and services from their networks, 

consistent with the scope of equipment 

and services eligible for reimbursement. 

10. Covered List. The rules adopted in 

the 2020 Supply Chain Order limit the 

use of Reimbursement Program funding 

to the removal, replacement, and 

disposal of covered communications 

equipment or services as published on 

the Covered List, consistent with section 

4(c) of the Secure Networks Act before 

it was amended by the CAA. To be 

included on the Covered List, 

equipment and services must meet three 

requirements. First, they must be 

communications equipment, which the 

Commission defined in the 2020 Supply 

Chain Order to include ‘‘all equipment 

or 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’’ by sources enumerated in 

section 2(c) of the Secure Networks Act. 

Third, the equipment and services must 

be capable of satisfying the criteria in 

section 2(b)(2)(A)–(C) of the Secure 

Networks Act. As discussed in more 

detail below, all communications 

equipment and services produced or 

provided by Huawei and ZTE are 

included on the Covered List. 

11. Designation Orders. The 

Designation Orders prohibit the use of 

USF support for all equipment and 

services produced or provided by 

Huawei and ZTE because of their 

designations as covered companies 

under section 54.9 of the Commission’s 

rules. As a result, some equipment and 

services identified pursuant to those 

section 54.9 designations may not be 

eligible for reimbursement under the 

rules of the Reimbursement Program if 

they do not meet the three requirements 

and therefore are not ‘‘covered 

communications equipment and 

services,’’ even though they are subject 

to the USF prohibition in section 54.9. 

12. Effect of CAA Amendments. The 

Commission finds that further analysis 

of the effect of the CAA’s amendments 

on section 4 of the Secure Networks Act 

compels it to slightly diverge from its 

original proposal in the 2021 Supply 

Chain Further Notice, 86 FR 15165 

(March 22, 2021). In that Notice, the 

Commission proposed to modify the 

scope of communications equipment 

and services eligible for reimbursement 

to those equipment and services 

produced or provided by covered 

companies subject to the Designation 

Orders. While there is record support 

for its original proposal, it overlooked 

the requirement in section 4(c) of the 

Secure Networks Act, as amended, to 

limit equipment and services eligible for 

reimbursement to those that are 

‘‘covered communications equipment 

and services,’’ defined as 

communications equipment and 

services found on the Covered List. The 

Commission accordingly finds, based on 

a further review of the Secure Networks 

Act, as amended by the CAA, that 

Congress intended to limit the scope of 

equipment and services eligible for 

Reimbursement Program funding to a 

subset of equipment and services 

identified on the Covered List and that 

are either defined in the 2019 Supply 

Chain Order or designated in the 

Designation Orders. As such, the 

Commission amends its rules consistent 

with the CAA. 

13. Congress, in amending section 4(c) 

of the Secure Networks Act, modified 

the scope of equipment and services 

eligible for reimbursement but did not 

revise the definition of ‘‘covered 

communications equipment or service’’ 

found in section 9 of the Secure 

Networks Act, which defines ‘‘covered 

communications equipment and 

services’’ as equipment and services 

found on the Covered List. As a result, 

the Secure Networks Act, as amended, 

allows reimbursement for equipment 

and services from the companies 

designated as national security threats 

pursuant to section 54.9 of the 

Commission’s rules that are also 

included on the Covered List. The 

Commission interprets the CAA’s 

amendment as maintaining the Covered 

List as the baseline source for eligibility 

for the Reimbursement Program, but 

altering the scope of covered 

communications equipment and 

services to those equipment and 

services on the Covered List that are 

either defined in the 2019 Supply Chain 

Order or designated in the Designation 

Orders and through the designation 

process in section 54.9 of the 

Commission’s rules. To align its 

Reimbursement Program rules with the 

modified scope of eligible covered 

communications equipment and 

services, the Commission therefore 

revises its eligibility rules to specify that 

the equipment and services eligible for 

reimbursement are limited to 

communications equipment and 

services produced or provided by 

Huawei and ZTE, as they are covered 

companies designated in the 

Designation Orders under section 54.9 

of the Commission’s rules whose 

communications equipment is also on 

the Covered List. 

14. The record generally supports its 

interpretation of the CAA amendments 

to section 4(c) of the Secure Networks 

Act. As the Rural Wireless Association, 

Inc. (RWA) states, the CAA’s 


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46998 Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 

amendment to section 4(c) of the Secure 

Networks Act makes clear Congress’s 

intent ‘‘that it did not mean to cover all 

equipment and services later placed on 

the Covered List,’’ instead choosing to 

limit reimbursement funding to Huawei 

and ZTE communications equipment 

and services. Both RWA and Mediacom 

argue that the Commission’s proposals 

are supported by provisions in the CAA 

that further align the scope of 

reimbursement with the equipment and 

services identified by the 2019 

Information Collection Order, 85 FR 230 

(January 3, 2020), which sought data on 

Huawei and ZTE equipment and 

services contained in ETCs’, and their 

subsidiaries and affiliates, networks. 

The Commission concurs that this 

alignment supports its interpretation 

that Congress intended to narrow the 

scope of eligible equipment and services 

to Huawei and ZTE communications 

equipment and services, as covered 

companies established in the 

Designation Orders. Furthermore, the 

CAA’s revision to set the cutoff date for 

equipment and services eligible for 

reimbursement as the effective date of 

the Designation Orders, June 30, 2020, 

likewise indicates Congress’s intent to 

synchronize the Reimbursement 

Program eligibility with the scope of 

equipment and services designated 

pursuant to section 54.9 of the 

Commission’s rules. 

15. The Competitive Carriers 

Association (CCA), NTCA—The Rural 

Broadband Association (NTCA), and the 

Secure Networks Coalition offer slightly 

varied interpretations of the CAA’s 

amendment to section 4(c) of the Secure 

Networks Act. CCA argues that the 

CAA’s amendment demonstrates 

Congress’s ‘‘intent to allow the use of 

Reimbursement Program funds to 

remove, replace, and dispose of 

equipment and services subject either to 

the Covered List or the Designation 

Orders, rather than including only 

equipment and services subject both to 

the Covered List and the Designation 

Orders.’’ NTCA mischaracterizes the 

Commission’s proposal, instead 

supporting revising the equipment and 

services subject to removal and 

reimbursement ‘‘to encompass all 

equipment and services produced or 

provided by entities identified on the 

Commission’s Covered List.’’ The 

Secure Networks Coalition’s similarly 

misconstrues the section 4(c) 

amendments. The Secure Networks 

Coalition argues that the CAA requires 

the Reimbursement Program to fund the 

replacement of all equipment, software, 

and services included on the Covered 

List. The Secure Networks Coalition 

claims that because Congress allocated 

funding to remove network equipment 

posing a national security risk to the 

nation’s communications networks, the 

Commission must allow for the removal 

and replacement of any hardware or 

software from companies on the 

Covered List in order to meet Congress’s 

mandate to mitigate risks to national 

security. 

16. While the Commission agrees with 

commenters’ conclusions that Congress 

intended to include Huawei and ZTE 

communications equipment and 

services in the scope of products eligible 

for reimbursement, the Commission 

rejects CCA, NTCA, and the Secure 

Network Coalition’s interpretations of 

the CAA. Section 901 of the CAA 

amends section 4(c) of the Secure 

Networks Act by replacing the entire 

text of sections 4(c)(1)(A)(i) & (ii) to 

revise the scope of equipment and 

services eligible for reimbursement from 

those that are either published on the 

initial Covered List or subsequently 

placed on the Covered List, to those that 

are defined by the 2019 Supply Chain 

Order or as determined by the 

designation process in section 54.9 of 

the Commission’s rules and the 

Designation Orders designating Huawei 

and ZTE as covered companies. Section 

901 does not, however, amend section 

4(c)(1)(A), which limits reimbursement 

funding to the permanent removal of 

covered communications equipment or 

services, nor does it amend the 

definition of ‘‘covered communications 

equipment or service’’ in section 9(5) of 

the Secure Networks Act, which means 

any communications equipment or 

service on the Covered List. 

17. The Commission concludes that 

had Congress intended to continue 

using the Covered List as the sole means 

to identify equipment and services 

eligible for reimbursement, it would 

have left the original provisions in the 

Secure Networks Act intact, rather than 

replacing them with different 

parameters. At the same time, Congress 

preserved the definition of ‘‘covered 

communications equipment or service’’ 

to include such items on the Covered 

List. This indicates Congress’s intent to 

maintain the Covered List as a baseline 

source for eligible equipment and 

services. The amendments in section 

901 of the CAA suggest that Congress 

meant to further limit reimbursement 

eligibility from the Covered List to the 

subset of those equipment and services 

defined in the 2019 Supply Chain Order 

or subject to the designation process in 

section 54.9 of the Commission’s rules. 

Specifically, Congress replaced language 

that formerly listed the Covered List as 

the sole source of equipment and 

service eligible for reimbursement with 

language identifying Huawei and ZTE 

equipment and services subject to the 

Designation Orders when setting the 

bounds of equipment and services 

eligible for reimbursement through the 

Reimbursement Program. 

18. Therefore, CCA’s interpretation, 

that Congress intended to allow 

reimbursement funds to be used for 

eligible equipment and services on 

either the Covered List or produced or 

provided by designated companies in 

the Designation Orders, does not 

comport with the structure of the 

amended section 4 of the Secure 

Networks Act. The amended section 4 

still preserves the Covered List as the 

baseline source for eligible equipment 

and services but then limits eligibility to 

those such equipment and services as 

defined by the 2019 Supply Chain Order 

or as determined by the designation 

process in section 54.9 of the 

Commission’s rules and the Designation 

Orders designating Huawei and ZTE as 

covered companies. Nor do NTCA and 

the Secure Networks Coalition’s 

interpretations supporting eligibility for 

all equipment and services on the 

Covered List reconcile with the CAA’s 

amendments to section 4(c)(1) of the 

Secure Networks Act. Congress 

intended to limit eligibility to a subset 

of equipment and services on the 

Covered List by amending sections 

4(c)(1)(A)(i) & (ii) to replace the original 

text, which referenced the Covered List, 

with a reference the 2019 Supply Chain 

Order, the Designation Orders, and the 

Commission’s process for designations 

under section 54.9 of its rules. 

19. Analysis of Covered List. 

Consistent with the Commission’s 

previous interpretation of the scope of 

Huawei and ZTE equipment and 

services included in the Covered List, 

the Commission interprets the CAA’s 

revised scope of equipment and services 

eligible for reimbursement to include all 

communications equipment and 

services produced or provided by 

Huawei or ZTE. Section 2(b) of the 

Secure Networks Act requires the 

Commission to add to the Covered List 

communications equipment and 

services that satisfy certain functional 

capabilities, as determined by specific 

sources enumerated in section 2(c). In 

the 2020 Supply Chain Order, the 

Commission acknowledged that section 

889(f)(3) of the 2019 NDAA is one of the 

enumerated sources in section 2(c) for 

including equipment and services on 

the Covered List. Section 889(f)(3) 

defines ‘‘covered telecommunications 

equipment and services’’ to include ‘‘(A) 

telecommunications equipment 

produced or provided by Huawei or 


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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 46999 

ZTE; [and] (C) telecommunications or 

video surveillance services provided by 

such entities or using such equipment.’’ 

Notably, the Commission rejected 

arguments that it should have added a 

narrower list of equipment and services 

to the Covered List based upon a 

separate section of the 2019 NDAA, 

section 889(a)(2)(B), that limited the 

‘‘covered telecommunications 

equipment or services’’ in the statute to 

equipment and services that can ‘‘route 

or redirect user data traffic or permit 

visibility into any user data or packets 

that such equipment transmits or 

otherwise handles.’’ The Commission 

found that Congress explicitly limited 

the scope of its procurement restrictions 

to Huawei and ZTE equipment in 

subsections (a) and (b) of the 2019 

NDAA to equipment capable of routing 

or permitting network visibility, but did 

not include such a limitation in 

paragraph 889(f)(3), which governs the 

determination the Commission must 

add on the Covered List. Therefore, 

consistent with the Secure Networks 

Act statutory obligation, the 

Commission placed on the Covered List 

the determination found in section 

889(f)(3)(A), that is, 

‘‘telecommunications equipment 

produced or provided by Huawei or 

ZTE’’ capable of the functions outlined 

in sections 2(b)(2)(A), (B), or (C) of the 

Secure Networks Act. 

20. The Commission finds that the 

Commission’s prior interpretation of the 

2019 NDAA provisions means that 

Huawei and ZTE communications 

equipment and services need not be 

capable of the functions listed in 

sections 2(b)(2)(A) or (B) of the Secure 

Networks Act to be on the Covered List. 

The Commission determined in the 

2020 Supply Chain Order that Congress 

chose to specifically include the broader 

definition of eligible equipment and 

services in section 889(f)(3), and the 

Commission concluded that section 

889(f)(3) incorporated all such Huawei 

and ZTE communications equipment 

and services into the Covered List. 

Furthermore, in dismissing arguments 

to limit inclusion to only Huawei or 

ZTE equipment and services capable of 

the functionality enumerated in section 

889(a)(2)(B) of the 2019 NDAA, the 

Commission interpreted the inclusion of 

section 2(b)(2)(C) of the Secure 

Networks Act, that is, including 

equipment and services capable of 

‘‘otherwise posing an unacceptable risk 

to the national security of the United 

States or the security and safety of 

United States persons,’’ as indicative of 

Congress’s intent to encompass on the 

Covered List equipment and services 

beyond the narrower list of enumerated 

functions. As the Commission stated in 

the 2020 Supply Chain Order, ‘‘[t]o limit 

the NDAA determination to equipment 

capable of routing or permitting network 

visibility would both ignore the plain 

text of the NDAA and read section 

2(b)(2)(C) out of the Secure Networks 

Act, which lists the capabilities of 

communications equipment and 

services that warrant inclusion on the 

Covered List.’’ Section 901 of the CAA 

is consistent with this interpretation. It 

carves out the equipment and services 

eligible for reimbursement into a limited 

subset of the Covered List, that is, only 

communications equipment and 

services as defined in the 2019 Supply 

Chain Order or as determined by the 

process in section 54.9 of the 

Commission’s rules and the Designation 

Orders. The Designation Orders 

prohibited the use of USF support for all 

Huawei and ZTE equipment and 

services. The Commission thus finds 

Congress in the CAA intended 

reimbursement eligibility for all Huawei 

and ZTE equipment and services found 

on the Covered List, that is, all Huawei 

and ZTE communications equipment 

and services. 

21. Its decision today also advances 

the Commission’s goals of developing a 

simple and straightforward 

reimbursement process that facilitates 

the expeditious removal, replacement, 

and disposal of equipment and services 

that threaten the security of its nation’s 

communications systems. The 

Commission agrees with RWA that 

clarifying the scope of equipment and 

services eligible for reimbursement as 

Huawei and ZTE communications 

equipment and services, rather than all 

equipment and services on the Covered 

List, which currently includes three 

other companies and potentially others 

should the Commission add more, 

creates a bright line for Reimbursement 

Program participants to clearly identify 

what equipment and services are 

eligible, thus easing administrative costs 

for eligible providers and the 

Commission. By revising the scope of 

equipment and services eligible for 

reimbursement, the Commission 

provides clarity to providers of 

advanced communications service as to 

the expectations for participation in the 

Reimbursement Program and assurance 

as to what costs associated with the 

removal, replacement, and disposal of 

covered equipment and services they 

can expect to be reimbursed, if 

accepted. 

22. The Commission further interprets 

the CAA amendments to determine that 

other equipment and services on the 

Covered List are not automatically 

eligible for reimbursement. Only 

equipment and services on the Covered 

List that are also defined in the 2019 

Supply Chain Order or that are 

produced or provided by covered 

companies designated under section 

54.9 of the Commission’s rules as posing 

a national security threat to the integrity 

of communications networks or the 

communications supply chain are 

eligible for reimbursement under the 

Reimbursement Program based on the 

CAA. The Commission agrees with CCA 

and Mediacom that the CAA amends 

section 4(c) of the Secure Networks Act 

to permit eligibility of such equipment 

and services from other designated 

companies, should the Public Safety 

and Homeland Security Bureau make 

such a determination pursuant to the 

process set forth in section 54.9 of the 

Commission’s rules. Section 901 of the 

CAA amends section 4(c) of the Secure 

Networks Act to allow reimbursement 

funding to be used for the removal, 

replacement, and disposal of equipment 

and services as defined by the 2019 

Supply Chain Order, which adopted the 

process for designating covered 

companies that pose a national security 

threat to the integrity of 

communications networks or the 

communications supply chain found in 

section 54.9 of the Commission’s rules. 

By listing the 2019 Supply Chain Order 

in the CAA amendment, the 

Commission finds that Congress 

intended that the Commission’s 

designation process serve as a source for 

identifying future equipment and 

services eligible for reimbursement from 

the broader Covered List; otherwise, 

Congress could have merely stated that 

the Designation Orders alone set the 

eligibility parameters. Therefore, should 

future companies be designated as 

posing a national security threat 

pursuant to section 54.9 of the 

Commission’s rules, the Commission 

may consider costs associated with the 

removal, reimbursement, or disposal of 

equipment and services produced or 

provided by those covered companies 

eligible for reimbursement under the 

Reimbursement Program, provided that 

such equipment and services are also on 

the Covered List and the 

Reimbursement Program has an open 

filing window and adequate funding. 

23. The Commission next finds that, 

to the extent there are future 

designations, equipment and services 

from such companies would be eligible 

for reimbursement from the 

Reimbursement Program without 

needing an additional appropriation 

from Congress. Congress has currently 

appropriated $1.9 billion for the 


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Reimbursement Program, which is very 

close to the number the Commission 

publicly identified in the 2019 

information collection, as well as 

presented to Congress, as the cost to 

replace Huawei and ZTE equipment. 

The CAA also amends the eligibility 

cutoff date for covered equipment and 

services for reimbursement to align with 

the date that the Designation Orders 

were released, June 30, 2020. Both 

actions indicate Congress’s intent to 

limit the eligibility of the current 

Reimbursement Program to the scope of 

such Huawei and ZTE equipment and 

services on the Covered List. Yet despite 

the signals that Congress intended this 

current appropriation to fund the 

removal, replacement, and disposal of 

such Huawei and ZTE equipment and 

services on the Covered List through the 

Reimbursement Program, Congress did 

not restrict funding to only those 

equipment and services, nor did it limit 

any future eligibility to specific 

appropriations. Therefore, as discussed 

herein, the Commission will continue to 

administer the Reimbursement Program 

in accordance with the prioritization 

scheme set forth in the CAA and 

adopted in this Third Report and Order. 

24. To maintain consistency within 

the Reimbursement Program, the 

Commission also extends the revised 

scope of equipment and services eligible 

for reimbursement throughout its rules 

related to the administration of the 

Reimbursement Program. Specifically, 

the Commission extends this revised 

scope to all references to ‘‘covered 

communications equipment or service’’ 

contained in section 4 of the Secure 

Networks Act, and the Commission’s 

rules implementing that section. As 

noted herein, while the CAA amends 

the scope of equipment and services 

eligible for reimbursement from those 

solely on the Covered List to those also 

either defined in the 2019 Supply Chain 

Order or subject to the Huawei and ZTE 

Designation Orders and any future 

designated entities identified under its 

designation process established in the 

2019 Supply Chain Order, it does not 

revise the definition of ‘‘covered 

communications equipment or service’’ 

found in section 9 of the Secure 

Networks Act, which defines ‘‘covered 

communications equipment and 

services’’ as equipment and services 

found on the Covered List. As such, 

other references to ‘‘covered 

communications equipment or service’’ 

in section 4 of the Secure Networks Act 

do not reflect the revised scope of 

eligible equipment and services as 

amended by the CAA. This incongruity 

could lead to discrepancies between the 

equipment and services participants are 

required to remove and dispose of and 

the equipment and services for which 

they are permitted to spend 

reimbursement funding for removal, 

replacement, and disposal. The 

Commission believes that Congress 

intended to make reimbursement funds 

available for all such equipment and 

services participants are required to 

remove. To reconcile any potential 

conflicts wherein Reimbursement 

Program participants are required to 

permanently remove and dispose of 

equipment and services from the 

Covered List as set forth in their plans 

as obligated by their participation, the 

Commission interprets the scope of 

covered communications equipment 

and services referenced throughout 

section 4 of the Secure Networks Act as 

aligning with the scope of equipment 

and services eligible for reimbursement, 

that is, such equipment and services on 

the Covered List that are as defined by 

the 2019 Supply Chain Order or as 

determined by the process established 

in the 2019 Supply Chain Order and in 

the Designation Orders. 

25. The Commission emphasizes that 

the CAA’s amendment and its 

subsequent modification to the 

Commission’s rules apply only to the 

Reimbursement Program and do not 

implicate other sections of the Secure 

Networks Act. Congress narrowly 

limited its amendment to section 4 of 

the Secure Networks Act and as such, 

the Commission limits its applicability 

to the corresponding sections of the 

Commission’s rules. The Covered List, 

published and maintained pursuant to 

section 2 of the Secure Networks Act, is 

still in full effect as applicable to the 

section 3 prohibition on the use of 

Federal subsidies and the section 5 

information reporting requirement, and 

to the Commission’s rules implementing 

those provisions of the Secure Networks 

Act. Furthermore, the modification does 

not impact or revise the prohibition on 

the use of USF support for equipment or 

services produced or provided by 

covered companies, pursuant to section 

54.9(a) of the Commission’s rules. The 

Public Safety and Homeland Security 

Bureau may still designate companies 

which pose a national security threat via 

the process set forth in section 54.9(b) 

of the Commission’s rules, to which the 

prohibition in section 54.9(a) would 

apply. 

26. The Commission next determines 

that the modification to the scope of 

equipment and services eligible for 

reimbursement is effective 60 days after 

publication in the Federal Register, as 

applied to prospective applicants to the 

Reimbursement Program. All providers 

of advanced communications service 

that participate in the Reimbursement 

Program must remove, replace, and 

dispose of all such communications 

equipment and services from Huawei 

and ZTE, in accordance with the 

deadlines set forth in the 

Reimbursement Program rules. To the 

extent future designations may identify 

additional companies from the Covered 

List that pose a national security threat 

to the integrity of communications 

networks and the communications 

supply chain after the initial application 

period for the Reimbursement Program, 

the Commission directs the Wireline 

Competition Bureau, in consultation 

with the Office of the Managing 

Director, to issue further guidance 

clarifying the procedure for seeking 

reimbursement for removal, 

replacement, and disposal costs 

associated with eligible equipment and 

services, should the Reimbursement 

Program be accepting applications and 

sufficient reimbursement funding be 

available. 

27. Remove-and-Replace Rule. The 

Commission further revises the removeand-replace rule adopted by the 

Commission in the 2020 Supply Chain 

Order to align the scope of equipment 

and services required for removal and 

replacement with the scope of 

equipment and services now eligible for 

reimbursement through the 

Reimbursement Program. Therefore, 

recipients of funding through the 

Reimbursement Program and ETCs 

receiving USF support must remove and 

replace equipment and services from the 

Covered List that are defined in the 

2019 Supply Chain Order or subject to 

the Designation Orders and the process 

for designating companies that pose a 

national security threat to the integrity 

of communications networks or the 

communications supply chain, as set 

forth in the 2019 Supply Chain Order. 

Because the Commission currently has 

only designated Huawei and ZTE as 

covered companies from the list of five 

companies found on the Covered List, 

Reimbursement Program funding 

recipients and ETCs receiving USF 

support must remove and replace 

Huawei and ZTE communications 

equipment and services from their 

networks. 

28. In the 2020 Supply Chain Order, 

the Commission adopted section 54.11, 

requiring that ETCs receiving USF 

support and recipients of 

Reimbursement Program funding 

remove and replace all covered 

communications equipment and 

services on the Covered List from their 

networks. The Commission made 

compliance with the remove-andVerDate Sep<11>2014 16:11 Aug 20, 2021 Jkt 253001 PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 E:\FR\FM\23AUR1.SGM 23AUR1

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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 47001 

replace requirement contingent upon an 

appropriation from Congress to the 

Reimbursement Program. 

Reimbursement Program recipients 

must certify compliance as a condition 

to their participation, as required by 

various provisions of the Secure 

Networks Act. ETC recipients of USF 

support must certify that they have 

complied with section 54.11 after the 

Reimbursement Program opens, and 

subsequently certify compliance before 

receiving USF support each funding 

year. 

29. Its decision is consistent with the 

Commission’s prior approach to 

requiring removal of vulnerable 

equipment and services from the 

nation’s communications networks. 

Upon adoption of the remove-andreplace rule, the Commission stated its 

intent to align the scope of equipment 

and services subject to section 54.11 of 

the Commission’s rules with the scope 

of equipment and services eligible for 

reimbursement under the 

Reimbursement Program. Doing so, the 

Commission found, ‘‘better aligns 

compliance with removal and 

replacement obligations to the 

administration of the Reimbursement 

Program and creates a bright-line 

determination for ETCs receiving USF 

support and reimbursement recipients 

to easily identify equipment and 

services to remove and replace from 

their networks.’’ Because the 

Commission finds the CAA amends the 

Secure Networks Act to modify the 

equipment and services eligible for 

reimbursement from solely those on the 

Covered List to those on the Covered 

List and also defined in the 2019 Supply 

Chain Order or subject to the 

designation process in section 54.9 of 

the Commission’s rules and the 

Designation Orders, the Commission 

modifies the remove-and-replace rule to 

preserve the alignment of the equipment 

and services subject to removal under 

section 54.11 and through the 

Reimbursement Program. The 

Commission finds that using the 

equipment and services on the Covered 

List that are defined in the 2019 Supply 

Chain Order or subject to the 

designation process in section 54.9 of 

the Commission’s rules and the 

Designation Orders to determine both 

the equipment and services subject to 

the remove-and-replace requirement 

and the equipment and services eligible 

for reimbursement through the 

Reimbursement Program creates a 

bright-line determination for entities 

complying with section 54.11 and those 

participating in the Reimbursement 

Program. Therefore, the Commission 

finds that it should not be overly 

burdensome for entities to identify the 

equipment and services in their 

networks required for removal and 

replacement. 

30. The record supports its decision to 

align the scope of equipment and 

services required for removal under 

section 54.11 with the scope of 

equipment and services eligible for 

reimbursement through the 

Reimbursement Program. As NTCA 

claims, this revision ‘‘eliminates the 

incongruity created by the 

Commission’s prior rules and the Secure 

Networks Act wherein the scope of 

equipment and services that [ETCs] 

were required to remove and replace 

exceeded the equipment and services 

eligible for reimbursement.’’ The 

Commission further concurs with NTCA 

and Mediacom that modifying the scope 

of the remove-and-replace requirement 

to match the scope of eligible equipment 

and services in the Reimbursement 

Program provides clarity to providers, 

thus ultimately easing administrative 

burdens as providers work to remove 

Huawei and ZTE equipment and 

services from their networks. 

31. The Commission rejects Huawei’s 

argument that because the Commission 

lacks authority to mandate removal and 

replacement, it likewise has no 

authority to modify the scope of the 

equipment and services subject to the 

requirement. As discussed at length in 

response to similar arguments Huawei 

raised in the 2020 Supply Chain Order, 

the Commission found that several 

statutory provisions provided 

appropriate authority for adoption of the 

remove-and-replace rule. Section 4 of 

the Secure Networks Act requires 

recipients of Reimbursement Program 

funding to permanently remove and 

replace all covered communications 

equipment and services from their 

networks as a condition of receiving the 

funding, and to certify to that effect 

throughout the reimbursement process. 

The Commission also found that 

provisions of the Communications Act, 

including those related to its authority 

governing universal service, provided 

legal authority for the application of the 

remove-and-replace rule to ETCs that 

receive USF support. Nothing in the 

CAA or the record changes the 

Commission’s previous finding that the 

Commission has authority to require 

recipients of Reimbursement Program 

funding and ETCs receiving USF 

support to remove and replace covered 

equipment and services. While the 

Commission acknowledges that section 

901 of the CAA amends some provisions 

of the Secure Networks Act, including 

the scope of the equipment and services 

eligible for reimbursement, the CAA 

does not disturb the provisions that 

authorize the Commission’s mandate, as 

discussed in the 2020 Supply Chain 

Order. On the contrary, the CAA’s 

amendments to the Secure Networks 

Act bolster its position that the 

Commission has authority to require the 

removal of equipment and services from 

covered companies designated pursuant 

to section 54.9 of the Commission’s 

rules. First, Congress incorporated the 

Commission’s designation process and 

current designations of Huawei and ZTE 

as covered companies into its limitation 

on the use of Reimbursement Program 

funds. Second, Congress revised the 

cutoff date for equipment and services 

eligible for reimbursement to June 30, 

2020, the date the Designation Orders 

were released. Both actions indicate 

Congress’s support for the Commission’s 

authority to designate Huawei and ZTE 

as covered companies and are evidence 

of congressional intent to ensure 

removal of Huawei and ZTE equipment 

and services from its nation’s 

communications networks and supply 

chain. By incorporating the 

Commission’s previous actions as the 

basis for reimbursement eligibility, the 

CAA provides even more support for the 

Commission’s position that it was 

authorized to take that action. 

32. The Commission similarly rejects 

Huawei’s argument that the CAA does 

not provide the authority to expand the 

scope of equipment and services subject 

to the remove-and-replace requirement. 

As discussed above, when adopting the 

remove-and-replace rule, the 

Commission intended to align the scope 

of equipment and services subject to the 

requirement with the scope of 

equipment and services Congress 

intended for reimbursement—prior to 

the CAA’s amendments, the Covered 

List. By amending the scope of 

equipment and services eligible for 

reimbursement to a subset of products 

on the Covered List that are defined in 

the 2019 Supply Chain Order or subject 

to the designation process and 

Designation Orders, the CAA 

necessitates a corresponding 

modification to the scope of equipment 

and services subject to removal and 

replacement under section 54.11 of the 

Commission’s rules. The Commission 

finds the CAA supports its action to 

align the scope of equipment and 

services required for removal with those 

eligible for reimbursement as set forth 

by Congress. 

33. The modifications to the removeand-replace requirement adopted herein 

are limited to the scope of equipment 

and services subject to removal and do 

not revise the scope of entities required 


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47002 Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 

to comply nor the procedures for 

certifying compliance. In the 2020 

Supply Chain Order, the Commission 

stated that both ETCs receiving USF 

support and recipients of 

Reimbursement Program funding are 

required to remove and replace from 

their networks covered communications 

equipment and services. While the 

expansion of eligible participants in the 

Reimbursement Program now includes 

providers of advanced communications 

service with 10 million or fewer 

customers, which, as stated herein, will 

encompass the vast majority of 

providers, participation in the 

Reimbursement Program remains 

voluntary. If a provider of advanced 

communications service decides to 

apply to the Reimbursement Program, it 

expressly agrees to permanently remove 

and dispose of covered communications 

equipment or services. Similarly, the 

Tenth Circuit has held that the 

Commission may ‘‘specify what a USF 

recipient may or must do with the 

funds,’’ consistent with the policy 

principles outlined in section 254(b) of 

the Communications Act, and 

designation as an ETC and participation 

in universal service programs is 

voluntary. Providers currently 

designated as ETCs and that participate 

in USF programs may relinquish their 

ETC status or decline to participate in 

USF programs should they wish to 

avoid compliance with its rules. 

34. Compliance with its mandate to 

remove and replace covered 

communications equipment and 

services as described herein continues 

to apply to ETCs receiving USF support, 

in addition to participants in the 

Reimbursement Program, as a condition 

of receiving universal service or 

reimbursement funding, respectively. 

The CAA amendments did not modify 

those obligations. As such, the 

Commission will continue to require 

ETC recipients of universal service 

funding to certify that they have 

complied with the remove and replace 

requirement for the new scope of 

covered equipment and services from 

the Covered List and as defined in the 

2019 Supply Chain Order or subject to 

the designation process in section 54.9 

of the Commission’s rules and the 

Designation Orders, as established in 

the 2020 Supply Chain Order. 

35. The Commission clarifies that the 

remove-and-replace rule extends only to 

equipment or services on the Covered 

List that have also been produced or 

provided by companies that have been 

designated by the Public Safety and 

Homeland Security Bureau as posing a 

national security threat to the integrity 

of communications networks or the 

communications supply chain. 

Consistent with its original remove-andreplace rule, any future remove-andreplace obligation for additional 

designations that are included on the 

Covered List will be contingent on the 

existence of funding to remove and 

replace the equipment or services 

produced or provided by such 

designated covered company. If the 

Public Safety and Homeland Security 

Bureau makes any such future final 

designations, following any 

appropriations to fund the removal and 

replacement of equipment or services 

produced or provided by those covered 

companies, the Commission will require 

ETCs receiving USF support to remove 

equipment and services produced or 

provided by designated companies that 

are on the Covered List before they are 

next obligated to certify that they have 

removed all covered equipment and 

services from their networks on their 

applications for any USF support. The 

process for announcing an initial 

designation provides adequate notice 

that ETCs receiving USF support may be 

required to remove equipment and 

services from that company, should a 

final designation be issued. 

C. Timing Requirement for the 

Reimbursement Program 

36. The Commission next amends the 

Reimbursement Program rules to allow 

recipients to use reimbursement funds 

to remove, replace, or dispose of any 

equipment or services that were 

purchased, rented, leased, or otherwise 

obtained on or before June 30, 2020, 

consistent with the CAA’s amendments 

to the Secure Networks Act. Currently, 

pursuant to section 4(c)(2)(A) of the 

original Secure Networks Act, its rules 

prohibit Reimbursement Program 

recipients from using such funds to 

remove, replace, or dispose of 

equipment and services obtained, in the 

case of any covered communications 

equipment or service that is on the 

initial Covered List published pursuant 

to section 2(a) of the Secure Networks 

Act, on or after August 14, 2018, or, in 

the case of any covered communications 

equipment or service that is not on the 

initial Covered List published pursuant 

to section 2(a), the date that is 60 days 

after the date on which the Commission 

places such equipment or service on the 

Covered List. The CAA however, 

amends the Secure Networks Act to 

allow recipients of Reimbursement 

Program funding to use such funding on 

equipment and services purchased 

before June 30, 2020, the date that the 

Public Safety and Homeland Security 

Bureau issued the Designation Orders. 

The Commission amends its rules to 

satisfy the new timing for eligible 

equipment and services set forth in the 

CAA amendments. 

37. The clear language of the CAA’s 

amendment to section 4(c)(2)(A) of the 

Secure Networks Act establishing June 

30, 2020 as the eligibility cutoff date 

compels the Commission to modify its 

rules. The amended cutoff date for 

eligible equipment and services is also 

consistent with the Public Safety and 

Homeland Security Bureau’s orders 

designating Huawei and ZTE as 

companies that pose a national security 

threat to the integrity of 

communications networks or the 

communications supply chain. 

Following initial designations adopted 

in the 2019 Supply Chain Order, the 

Public Safety and Homeland Security 

Bureau issued final designations of 

Huawei and ZTE on June 30, 2020, 

pursuant to section 54.9 of the 

Commission’s rules. When setting the 

effective date of Huawei’s final 

designation as immediately upon 

release of the Huawei Designation 

Order, the Public Safety and Homeland 

Security Bureau concluded that ‘‘the 

risks to its national communications 

networks and communications supply 

chain posed by Huawei’s equipment 

necessitate immediate implementation 

of its designation.’’ The Public Safety 

and Homeland Security Bureau relied 

on a similar justification for the 

immediate effective date of ZTE’s final 

designation. Therefore, as of June 30, 

2020, USF support could no longer be 

used to purchase, obtain, maintain, 

improve, modify, or otherwise support 

any equipment or services produced or 

provided by Huawei or ZTE. 

38. In addition to being statutorily 

mandated, the June 30, 2020 cutoff date 

for equipment and services initially 

eligible for removal, replacement, and 

disposal under the Reimbursement 

Program advances the Commission’s 

goals of removing vulnerable equipment 

from its nation’s communications 

networks. Additional equipment and 

services from designated companies that 

may have been legally purchased or 

deployed into networks between 2018 

and June 30, 2020 are now eligible for 

reimbursement, thus ensuring their 

effective removal from the networks of 

participants in the Reimbursement 

Program. Furthermore, by amending the 

eligibility cutoff to June 30, 2020, 

Congress intended to establish the 

Designation Orders as a clear 

delineation for what equipment and 

services would be eligible for 

reimbursement. Consistent with the 

Commission’s rules, Congress did not 

intend to allow providers to seek 

reimbursement for equipment 


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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 47003 

purchased after the Public Safety and 

Homeland Security Bureau issued the 

final Designation Orders. Therefore, the 

Commission revises its rules for the 

Reimbursement Program to limit 

reimbursement to equipment and 

services purchased on or before the 

Designation Orders were released, 

consistent with the CAA. 

39. Commenters support its proposal 

to modify the cutoff date for 

reimbursement eligibility for equipment 

and services. RWA argues that retaining 

the previous cutoff date, August 14, 

2018, would be ‘‘inequitable to eligible 

carriers who at that time were not even 

aware of the availability of a 

reimbursement program,’’ which was 

first introduced in the Secure Networks 

Act in 2019 and later incorporated into 

the Commission’s rules in the 2020 

Supply Chain Order. Northern Michigan 

University posits that adjusting the date 

to align with the effective date of the 

Designation Orders will ‘‘facilitate a 

more timely replacement program’’ and 

ensure that systems will be replaced 

with modern, secure facilities. The 

Commission agrees with commenters 

that amending its Reimbursement 

Program rules to set a June 30, 2020 

cutoff date will help program 

participants to recover costs associated 

with the removal, replacement, and 

disposal of such Huawei and ZTE 

equipment and services at the time the 

Designation Orders were released, thus 

fairly ensuring the timely and effective 

removal and replacement of such 

vulnerable equipment from its 

communications systems. 

40. As discussed above, the 

Commission finds that the current scope 

of the Reimbursement Program is 

limited to such communications 

equipment and services produced or 

provided by the current covered 

companies, i.e., Huawei and ZTE. As a 

result, costs associated with the 

removal, replacement, and disposal of 

all such Huawei and ZTE 

telecommunications equipment or 

services purchased prior to June 30, 

2020, will be eligible for reimbursement. 

This result is further supported by 

Congress’s establishment of June 30, 

2020, the release date of the Designation 

Orders designating Huawei and ZTE as 

covered companies, as the cutoff date. 

Furthermore, Mediacom supports using 

a ‘‘single, certain date’’ to ease 

administrative burdens in determining 

whether purchased equipment or 

services falls within the deadlines for 

reimbursement, rather than continually 

monitoring whether such products that 

may be added to the Covered List are 

eligible under the previous rules. The 

Commission agrees that establishing 

June 30, 2020 as a bright-line date for 

equipment and services eligible for 

reimbursement will help to ease 

administrative burdens by allowing 

participating providers to more easily 

identify such Huawei and ZTE 

equipment and services as eligible for 

removal, replacement, and disposal. 

Aligning the cutoff date with the release 

date for the Huawei and ZTE 

Designation Orders also signals to 

Reimbursement Program participants 

that such Huawei and ZTE equipment 

and services purchased prior to June 30, 

2020 are eligible for reimbursement at 

this time. 

41. CCA supports modifying the 

timing cutoff for eligible equipment and 

services yet asks that the Commission 

ensure that its rule be ‘‘flexible enough 

to encompass dates related to a 

subsequent designation of equipment or 

services manufactured by companies 

that pose a security threat.’’ The 

Commission finds that, since Congress 

intended for equipment and services on 

the Covered List produced or provided 

by companies designated pursuant to 

section 54.9 of the Commission’s rules 

to be eligible for reimbursement 

funding, further clarification as to the 

eligible cutoff date for such equipment 

and services designated in the future is 

warranted. 

42. Prior to its amendment, section 

4(c) of the Secure Networks Act 

established an alternative effective date 

of 60 days after any covered 

communications equipment or services 

are added to the Covered List; however, 

the CAA removes this provision and is 

ultimately silent as to the eligible date 

for equipment and services should the 

Public Safety and Homeland Security 

Bureau designate additional companies 

on the Covered List as national security 

threats under section 54.9 of the 

Commission’s rules. Similar to the 

original provision in the Secure 

Networks Act, the Commission adopts a 

comparable period of 60 days before the 

effect of any subsequent designation. 

Therefore, communications equipment 

or services produced or provided by 

such covered companies designated 

under section 54.9 that are subsequently 

added to the Covered List will become 

eligible 60 days after the date on which 

the Commission places such equipment 

or service on the Covered List. 

Reimbursement Program participants 

will similarly be prohibited from using 

reimbursement funding to remove, 

replace, or dispose of such equipment or 

services purchased, rented, leased, or 

otherwise obtained more than 60 days 

after such designation is final. The 

process by which the Public Safety and 

Homeland Security Bureau designates 

companies as posing a national security 

threat to the integrity of 

communications networks or the 

communications supply chain involves 

several opportunities for notice prior to 

the final designation going into effect. 

Given the precedent for a 60-day 

effective period in the Secure Networks 

Act and the notice provided through the 

designation process, establishing this 

time frame for the effective date of any 

equipment or services from the Covered 

List that are produced or provided by 

companies covered under subsequent 

designations is reasonable for providers 

to identify newly eligible equipment 

and services. This effective period is 

also consistent with the 60-day time 

period in sections 3 and 5 that remains 

in the Secure Networks Act following 

the CAA amendments. 

D. Prioritization if Reimbursement 

Program Demand Exceeds Supply 

43. The Commission next amends its 

Reimbursement Program rules to replace 

the prioritization scheme adopted in the 

2020 Supply Chain Order with the 

prioritization paradigm Congress 

expressly adopted in the CAA. These 

prioritizations will govern the allocation 

of funds in the event requests for 

reimbursement funding exceed the 

appropriated money available for such 

reimbursement. 

44. The Commission, in the 2019 

Information Collection Order, directed 

ETCs to report whether they use or own 

Huawei or ZTE equipment or services in 

their networks, or the networks of their 

affiliates and subsidiaries, and to report 

the cost of removing and replacing such 

equipment and services. The Wireline 

Competition Bureau and the Office of 

Economics and Analytics released the 

results of this information collection in 

September 2020, finding that it would 

cost an estimated $1.837 billion to 

remove and replace Huawei and ZTE 

equipment in respondents’ networks. In 

releasing the estimate, the Wireline 

Competition Bureau and the Office of 

Economics and Analytics noted that not 

all providers of advanced 

communications service that may be 

eligible for reimbursement under the 

Secure Networks Act participated in the 

information collection. Following the 

information collection, Congress 

appropriated $1.9 billion to the 

Commission to ‘‘carry[ ] out’’ the Secure 

Networks Act, including $1.895 billion 

for the Reimbursement Program. 

45. In the 2020 Supply Chain Order, 

issued before the congressional 

appropriation, the Commission adopted 

a prioritization paradigm that would 

take effect should ‘‘the estimated costs 

for replacement submitted by the 


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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 decided to first 

allocate funding to ETCs subject to a 

remove-and-replace requirement under 

the Commission’s rules. If funding is 

insufficient to meet total demand from 

this category, the Commission would 

prioritize ‘‘funding for transitioning the 

core networks of these eligible providers 

before allocating funds to non-core 

network related expenses.’’ If funding 

was available after fully funding the 

prior category, the Commission would 

then prioritize non-ETCs that provided 

cost estimates as part of the 2019 

Information Collection, with the same 

priority for replacing core network 

equipment over non-core equipment. 

Finally, if money remained after 

funding reimbursement requests for the 

first two groups, the Commission would 

disburse funding to other qualified nonETC providers of advanced 

communications services, with the same 

priority for replacing core network 

equipment. The Commission decided to 

prorate the available funding equally 

across all requests in an individual 

category if ‘‘available funding is 

insufficient to satisfy all requests in a 

certain prioritization category.’’ 

46. When Congress enacted the CAA, 

however, it provided its own 

prioritization paradigm for the 

Reimbursement Program. The 

Commission sought comment on how 

the CAA’s prioritization differed from 

the one the Commission adopted in the 

2020 Supply Chain Order and whether, 

in light of these changes, the 

Commission should modify the existing 

Reimbursement Program rules. After 

reviewing the record, the Commission 

adopts the prioritization paradigm 

Congress expressly provided in the CAA 

and discard the one previously adopted 

in the 2020 Supply Chain Order. 

1. CAA Prioritization 

47. The CAA directs that ‘‘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 noncommercial educational institutions 

providing their own facilities-based 

educational broadband services . . . 

[and] health care providers and libraries 

providing advanced communications 

service, [then] to any remaining 

approved applicants determined to be 

eligible for reimbursement under the 

[Reimbursement] Program.’’ 

48. Congress’s intent was clear that 

the CAA should replace the 

Commission’s prioritization paradigm 

with its own. In the 2020 Supply Chain 

Order, the Commission created its own 

prioritization paradigm because, in the 

Secure Networks Act, ‘‘Congress did not 

provide for, or expressly prohibit, any 

funding prioritization scheme.’’ That is 

no longer the case. The Commission 

finds that the Commission has no 

discretion to deviate from the CAA’s 

provided prioritization paradigm. The 

record supports its conclusion. For 

example, USTelecom notes that 

‘‘Congress left the Commission no 

discretion in this regard.’’ CCA also 

agrees that the ‘‘Commission should 

implement Congress’ prioritization 

scheme to ensure funding is distributed 

first to smaller carriers with 2 million or 

fewer customers’’ and argues that the 

‘‘success of the Reimbursement Program 

hinges on rigorous adherence to this 

prioritization scheme.’’ Mediacom also 

supports this change because ‘‘not only 

is the revised schedule consistent with 

the CAA, but it also . . . recognizes that 

those providers [with two million or 

fewer customers] need the greatest 

assistance because they have more 

limited resources.’’ Mediacom adds that 

‘‘the funds appropriated by the CAA 

. . . are finite and rely on data that was 

collected primarily from providers with 

two million or fewer subscribers. The 

Commission must therefore ensure that 

the limited funds are allocated to those 

who need it most and on whose costs 

the funds are based.’’ NTCA expresses 

support for the new prioritization 

process as ‘‘consistent with the CAA as 

well as the [Secure Networks Act]’’ and 

because ‘‘[s]maller providers already 

operate on razor thin margins [and] 

adding the financial cost of replacing 

existing equipment outside of its normal 

upgrade cycle or losing universal 

service funding would be a crushing 

burden.’’ The Commission agrees with 

these commenters and adopt, as 

expressly provided, the prioritization 

paradigm in the CAA to replace the one 

the Commission created in the 2020 

Supply Chain Order. 

49. Under this paradigm, the 

Commission will first allocate funding 

to providers of advanced 

communications service with two 

million or fewer customers. The 

Commission will then allocate funding 

to approved applicants that are 

accredited public or private noncommercial educational institutions 

providing their own facilities-based 

educational broadband services and 

health care providers and libraries 

providing advanced communications 

service. The Commission will then 

allocate funding to any remaining 

applicants determined to be eligible for 

reimbursement under the 

Reimbursement Program. 

2. Other Considered Prioritization 

Categories 

50. The CAA’s amendments did not 

set forth how the Commission should 

allocate funding within a particular 

category if funding was insufficient to 

meet demand. If, for example, demand 

for reimbursement funding among 

qualified applicants with two million or 

fewer customers exceeds $1.895 billion, 

the Commission will not be able to fully 

fund all applicants. After reviewing the 

record, the Commission finds that the 

most equitable solution, and the one 

that is consistent with the Secure 

Networks Act direction that the 

‘‘Commission make reasonable efforts to 

treat all applicants on a just and fair 

basis,’’ requires the Commission to 

adopt a pro-rata distribution system in 

the event demand exceeds supply at any 

given prioritization level. Thus, if 

available funding is insufficient to 

satisfy all requests in a prioritization 

category, the Commission will prorate 

the available funding equally across all 

requests in this category. Applicants 

with accepted applications to 

participate in the Reimbursement 

Program will be funded at a percentage 

proportional to the estimated amount 

included in the application. The 

Commission therefore discards any subprioritization levels adopted in the 2020 

Supply Chain Order. As USTelecom 

explains in support of this position, 

‘‘the Commission should decline to subprioritize within the prioritization 

categories established by Congress.’’ 

USTelecom warns that ‘‘if any subprioritization had any effect, it would be 

to reduce funding to one or more 

applications in favor of others 

notwithstanding Congress’s expectation 

that they would be treated equally.’’ The 

Commission agrees and notes, as 

USTelecom argues, ‘‘Congress had 

knowledge of the prioritization scheme 

that the Commission was going to use 

for its reimbursement program . . . [but] 

intentionally set new, and different, 

priorities.’’ 

a. Decline To Prioritize Core Network 

Equipment 

51. When the Commission adopted its 

previous prioritization paradigm, the 

Commission reasoned 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.’’ Thus, in the 2020 Supply 


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Chain Order, the Commission held that 

if funding is insufficient to meet total 

demand from a particular category, the 

Commission would prioritize ‘‘funding 

for transitioning the core networks of 

these eligible providers before allocating 

funds to non-core network related 

expenses.’’ Though the Commission has 

seen nothing in the record to convince 

it otherwise, and some commenters, 

such as Mediacom ‘‘support[ ] 

prioritizing core equipment over noncore equipment,’’ the prioritization 

scheme in the CAA does not indicate a 

preference for core network equipment 

over non-core equipment. The CAA 

paradigm only asks the Commission to 

first consider applications from 

providers with two million or fewer 

customers. It does not address any 

preference to replace certain types of 

covered equipment in 

telecommunications networks. Neither 

the CAA nor the Secure Networks Act 

provides the Commission with guidance 

to determine which specific 

communications equipment and 

services would comprise any ‘‘core 

network.’’ Thus, to ensure that 

‘‘reimbursement funds are distributed 

equitably across all applicants . . .,’’ 

and to ease administrative burdens, the 

Commission will not prioritize core 

equipment over any other type of 

equipment. The Commission finds that 

discarding this sub-prioritization 

category will provide more clear 

guidance to the Reimbursement Program 

Fund Administrator (Fund 

Administrator) and applicants during 

the Reimbursement Program funding 

allocation process. 

52. The Commission reaches the same 

conclusion in considering Mavenir’s 

suggestion that the Commission 

prioritizes Open Radio Access Network 

(O–RAN) reimbursement requests over 

those from carriers that choose to use 

traditional or proprietary RAN. Mavenir 

comments that the Commission should 

allow for a priority for O–RAN 

technology because such technology 

may be more secure than traditional 

network technology, may allow United 

States-based vendors to compete on a 

more level playing field with foreign 

counterparts, and will allow for easier 

and cheaper network upgrades in the 

future. The Commission is mindful of 

the potential benefits associated with a 

transition to more virtual networks but 

nevertheless decline to establish a 

preference for such equipment and 

services. The CAA’s prioritization 

paradigm expressly provides for no such 

preference for O–RAN or any other type 

of equipment or service, so the 

Commission similarly declines to do so. 

The Commission emphasizes that 

Reimbursement Program recipients may 

choose to replace their existing covered 

equipment and services with O–RAN 

equipment and services, and the 

Commission recommends that providers 

participating in the Reimbursement 

Program consider all potential vendors, 

including O–RAN providers, before 

selecting their replacement equipment 

and services. 

b. Decline To Prioritize Eligible 

Telecommunications Carriers 

53. In the 2020 Supply Chain Order, 

the Commission reasoned that ETCs, 

who are required to remove covered 

equipment and services from their 

networks, ‘‘face greater consequences 

than non-ETC providers’’ so ‘‘there is a 

greater urgency to expeditiously 

accommodate the transition of ETC 

networks over other applicants.’’ The 

Commission thus explicitly prioritized 

ETC applicants over non-ETC 

applicants, who are not required to 

remove covered equipment and services 

unless they participate in the 

Reimbursement Program. However, the 

CAA does not indicate a preference for 

ETC applicants over non-ETC 

applicants. Instead, it directs the 

Commission to prioritize smaller 

carriers first, then schools, health care 

providers, and libraries, and then larger 

carriers. The Commission therefore 

reconsiders and revises its prior 

prioritization scheme to remove any 

preference for ETC applicants for the 

same reasons the Commission declines 

to prioritize the replacement of core 

network equipment and services. To 

ensure Reimbursement Program funding 

is distributed equitably, and to provide 

clear guidance to Reimbursement 

Program applicants, the Commission 

will implement the prioritization 

scheme as provided by Congress in the 

CAA. 

54. The record supports this decision. 

Mediacom argues that the old 

preference for ETCs ‘‘was inconsistent 

with the Secure Networks Act and 

contrary to the public interest.’’ 

Mediacom contends that many nonETCs made ‘‘significant investments in 

removing and replacing their equipment 

and services based on the belief, 

supported by the Secure Networks Act, 

that they would be reimbursed for those 

costs. The Commission should not 

punish those providers that acted early 

and have been proactively attempting to 

comply with the statute.’’ PTA–FLA 

also writes that ‘‘Congress plainly did 

not envision ETCs receiving all or 

virtually all of the funds available since 

it stressed that funds should be made 

available equitably to all applicants, a 

command that would not be heeded if 

non-ETCs are effectively precluded from 

receiving any funds.’’ PTA–FLA argues 

ETCs should receive funding, ‘‘but not 

to the exclusion of other worthy 

recipients who have not had the 

advantage of receiving USF money to 

fund their build-outs and operations.’’ 

55. RWA contends that the CAA 

‘‘does not prohibit such prioritization, 

and such prioritization is consistent 

with the CAA.’’ RWA argues that, 

‘‘[c]onsidering the USF constitutes the 

source of much of ETCs’ funding as 

opposed to non-ETCs, limiting those 

funds has significantly hampered the 

ability of many rural ETCs to maintain 

their networks.’’ RWA asserts that ‘‘the 

FCC already acknowledged the 

importance of ETC networks in its 

Second Report and Order as it agreed 

that ETCs should be allocated 

reimbursement funds first.’’ Further, 

‘‘[i]f there is not enough funding to go 

around initially, the Commission must 

prioritize, and there are substantial 

public interest reasons for prioritizing 

ETCs over non-ETCs. Non-ETCs should 

still be reimbursed; it may just take 

longer.’’ RWA also argues that ‘‘[r]ural 

ETCs . . . are entirely dependent on 

[USF] program funding, in addition to 

business revenue from a sparse number 

of subscribers in high cost areas,’’ and, 

unlike other carriers with access to 

additional sources of capital, ‘‘a 20%– 

30% funding reduction would drive 

small and rural companies out of 

business.’’ 

56. The Commission acknowledges 

that, in the 2020 Supply Chain Order, 

the Commission used a similar 

justification to fund ETCs over nonETCs. However, the Commission 

adopted that priority before Congress 

expressly provided its own 

prioritization scheme, in which it 

explicitly adopted a scheme that does 

not prioritize ETCs over all providers of 

advanced communications services with 

2 million customers or fewer. While the 

CAA does not explicitly prohibit the 

Commission from including additional 

sub-prioritization categories, without 

express direction to further subprioritize the Commission concludes 

that doing so would frustrate its charge, 

from the Secure Networks Act, to ensure 

that Reimbursement Program funds are 

equitably distributed amongst all 

applications. As a result, the 

Commission adopts the paradigm 

advanced by Congress and will not 

prioritize funding to ETCs over nonETCs. If available funding is insufficient 

to satisfy all requests in any individual 

category, the Commission will prorate 

the available funding equally across all 

requests in this category. The 


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Commission finds this scheme is most 

consistent with congressional intent and 

that it will allow, as Congress intended, 

all providers of advanced 

communications services to begin the 

necessary work of removing insecure 

communications equipment and 

services from their networks. 

c. Decline To Prioritize Information 

Collection Participants 

57. In choosing to adopt a pro-rata 

distribution method for the limited 

funds available in the Reimbursement 

Program, the Commission acknowledges 

a departure from earlier rules that 

prioritized non-ETCs who responded to 

the 2019 Information Collection Order. 

The results of the information collection 

showed that ETCs with two million or 

fewer customers required $1.62 billion 

to remove and replace Huawei and ZTE 

equipment from their networks. This 

figure did not account for other 

providers of advanced communications 

service that may be eligible to 

participate in the Reimbursement 

Program. Non-ETCs who voluntarily 

submitted cost estimates to remove and 

replace Huawei and ZTE equipment in 

their networks estimated they would 

require approximately $200 million to 

do so. The total estimated amount 

needed to remove and replace Huawei 

and ZTE equipment from the networks 

of ETCs and non-ETCs who voluntarily 

submitted cost estimates is $1.837 

billion, a figure closely aligned with the 

actual amount appropriated by Congress 

in the CAA. 

58. In the 2020 Supply Chain Order, 

the Commission prioritized non-ETCs 

who voluntarily submitted cost 

estimates over other non-ETC providers 

of advanced communications services. 

The Commission found that it would be 

‘‘inequitable’’ to allow these providers 

to go without funding simply because 

‘‘the costs of non-participating nonETCs were not reported and thus not 

considered.’’ However, the CAA was 

enacted after the Commission adopted 

the 2020 Supply Chain Order, and the 

Commission sought comment on 

whether the language in the CAA 

permitted it to adopt a preference to 

fund non-ETCs who responded to the 

2019 Information Collection Order. 

After reviewing the record, the 

Commission finds that the CAA does 

not require such a preference, and the 

Commission declines to implement one 

for the same reason that the Commission 

declines to prioritize ETCs or the 

replacement of core network equipment 

and services. Congress created a clear 

prioritization program that does not 

express a preference to fund non-ETCs 

who voluntarily submitted cost 

estimates over those that, for whatever 

reason, did not. 

59. Mediacom ‘‘strongly supports the 

Commission’s proposed prioritization 

schedule’’ in part because ‘‘prioritizing 

non-ETCs that responded to the data 

collection over those that did not was 

arbitrary and unfair.’’ Mediacom argues 

that many smaller providers, especially 

while dealing with the COVID–19 

pandemic, ‘‘simply did not have the 

resources necessary to evaluate their 

entire network and respond to what 

they understood was a voluntary data 

collection while still meeting customer 

demands.’’ 

60. PTA–FLA and RWA assert that the 

Commission should maintain this 

preference for non-ETCs who submitted 

cost estimates as part of the information 

collection. PTA–FLA argues that 

‘‘Congress based its calculation of how 

much money to appropriate for the 

Reimbursement Program on the 

estimated expenses submitted by both 

ETCs and non-ETCs during the cost 

estimate process.’’ PTA–FLA thus 

claims ETCs and non-ETCs should be 

prioritized for funding ‘‘to the extent of 

the estimates they submitted last year.’’ 

PTA–FLA argues that this prioritization 

would ‘‘recognize[ ] the fundamental 

fairness of prioritizing funding to parties 

who went to the expense and effort of 

creating a solid record to support 

Congressional funding.’’ If the 

appropriated funds were insufficient to 

meet the demand for these groups, ‘‘all 

parties would have to seek additional 

funding from Congress to make up the 

difference.’’ RWA claims that, ‘‘once 

ETCs receive their funding allocations, 

non-ETCs who participated in the 

Commission’s information collection 

process should be next in line to be 

allocated funds . . . .’’ RWA asserts 

that the non-ETCs who voluntarily 

submitted cost estimates did so ‘‘in 

reliance on the Commission’s indication 

that non-ETC estimates would assist in 

soliciting Congressional funding.’’ RWA 

argues the Commission should continue 

to prioritize these carriers who 

‘‘demonstrated candor before the 

Commission in presenting their costs, 

and most importantly, prioritized 

network security despite regulatory 

uncertainty.’’ RWA proposes a new 

prioritization paradigm that allocates 

funds first to ETCs up to the original 

cost estimates, then to non-ETCs who 

submitted cost estimates up to those 

estimates, then to those providers who 

did not submit cost estimates. RWA’s 

proposal would allow non-ETCs who 

participated in the information 

collection to receive funding allocations 

immediately after the Commission 

allocates funding to ETCs with two 

million or fewer customers. 

61. The Commission rejects these 

arguments as inconsistent with its 

mandate to distribute Reimbursement 

Program funds equitably amongst all 

applications. Although the Commission 

appreciates the time and expense that 

non-ETCs undertook to prepare their 

voluntarily replies to the 2019 

information collection, Congress created 

a scheme that declined to prioritize 

these carriers. The Commission must 

comply with the statute as written and 

decline to prioritize non-ETCs who 

voluntarily submitted cost estimates. 

d. Decline To Prioritize Equipment 

Posing Elevated National Security Risks 

62. In the 2021 Supply Chain Further 

Notice, the Commission sought 

comment on whether to ‘‘prioritiz[e], 

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 

. . . .’’ The Commission asked whether 

certain national security threats 

warranted swift action to remove and 

replace equipment and services at 

various locations around the country. 

The Commission also sought comment 

on whether national security concerns 

would justify the Commission 

prioritizing the removal and 

replacement of equipment and services 

at certain locations ahead of its 

prioritization in the CAA. 

63. After reviewing the record, the 

Commission declines to adopt a 

prioritization for certain equipment and 

services at particular locations that may 

pose an elevated national security risk. 

The Commission does not find express 

support for such a prioritization in the 

CAA and, as PTA–FLA commented, ‘‘if 

Congress had intended to prioritize the 

removal and reimbursement of certain 

equipment or services at particular 

locations . . . it would have said so 

rather than setting explicit priority 

categories . . . .’’ USTelecom and Niki 

N. agree. USTelecom argues the 

Commission would ‘‘clearly violate the 

CAA and frustrate the intent of Congress 

if, for any reason, it prioritizes any 

equipment or services in a lower 

priority category ahead of . . . a higher 

prioritization category.’’ Niki N. 

contends that they do not ‘‘believe the 

Commission should 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.’’ 


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64. Just as the Commission declines to 

sub-prioritize other categories of carriers 

or equipment and services, the fact that 

the CAA itself does not expressly 

prohibit the Commission from including 

additional sub-prioritization categories 

for national security does not convince 

it that doing so is the correct policy 

decision. Instead, it could expressly 

frustrate the Secure Network Act’s 

requirement that Reimbursement 

Program funds be equitably distributed 

amongst all applications. The 

Commission thus declines to prioritize 

equipment or services at particular 

locations or ahead of the prioritization 

levels defined by Congress. 

E. Definition of ‘‘Provider of Advanced 

Communications Service’’ 

65. The Secure Networks Act directed 

the Commission to ‘‘establish [the 

Reimbursement Program] . . . to make 

reimbursements to providers of 

advanced communications service to 

replace covered communications 

equipment or services.’’ The 

Commission now adds a definition of 

‘‘provider of advanced communications 

service’’ in its program rules to match 

the definition Congress enacted in the 

Secure Networks Act, as amended by 

the CAA. This definition will clarify 

which entities are eligible to participate 

in the Reimbursement Program. 

66. 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 defined 

‘‘advanced communications service’’ as 

‘‘the meaning given the term ‘advanced 

telecommunications capability’ in 

section 706 of the Telecommunications 

Act of 1996 (Telecommunications Act).’’ 

In the Telecommunications Act, 

‘‘advanced telecommunications 

capability’’ means ‘‘without regard to 

any transmission media or technology, 

. . . high-speed, switched, broadband 

telecommunications capability that 

enables users to originate and receive 

high-quality voice, data, graphics, and 

video telecommunications using any 

technology.’’ 

67. The Commission has historically 

interpreted ‘‘high-speed, switched, 

broadband telecommunications 

capability’’ to include facilities-based 

providers, whether fixed or mobile, with 

a broadband connection to end users 

with at least 200 kbps in one direction. 

In the 2020 Supply Chain Order, the 

Commission used this guidance to adopt 

a definition of ‘‘advanced 

communications service’’ for the 

Reimbursement Program. As a result, 

participation in the Reimbursement 

Program is limited to providers of 

‘‘high-speed, switched, broadband 

telecommunications capability that 

enables users to originate and receive 

high-quality voice, data, graphics, and 

video telecommunications using any 

technology with connection speeds of at 

least 200 kbps in either direction.’’ The 

Commission also clarified 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, if it provisions 

facilities-based broadband connections 

of at least 200 kbps in one direction to 

end users . . . .’’ 

68. In the CAA, Congress amended its 

definition of ‘‘provider of advanced 

communications service’’ to specifically 

include ‘‘accredited public or private 

non-commercial educational 

institutions providing their own 

facilities-based educational broadband 

service as defined in section 27.4 of the 

Commission’s rules,’’ and ‘‘health care 

providers and libraries providing 

advanced communications services.’’ 

Accordingly, the Commission explicitly 

includes, in its definition of ‘‘provider 

of advanced telecommunications 

service,’’ ‘‘accredited public or private 

non-commercial educational 

institutions providing their own 

facilities-based educational broadband 

service as defined in Part 27, Subpart M 

of the Commission’s rules,’’ and ‘‘health 

care providers and libraries providing 

advanced communications services.’’ 

Such entities are thus eligible for 

participation in the Reimbursement 

Program, provided they comply with all 

other relevant requirements, and are 

included in the first prioritization 

category if they have fewer than two 

million customers. No commenters 

disagreed with this proposal, and 

Northern Michigan University 

comments that ‘‘[it] support[s] the 

amendment to the CAA by Congress to 

include accredited public or private 

noncommercial educational institutions 

providing their own facilities-based 

educational broadband service.’’ 

QCommunications, LLC also ‘‘agrees, 

concurs and supports the Commission’s 

proposal to . . . [r]edefine the term 

‘provider of advanced communications 

service,’ adding: libraries, healthcare, 

[and] accredited noncommercial 

education . . . .’’ 

69. The Commission also clarifies that 

it limits the term ‘‘educational 

broadband service as defined in Part 27, 

Subpart M of the Commission’s rules’’ 

to solely reference licensees in the 

Commission’s Educational Broadband 

Service (EBS). Commenters support this 

interpretation. For instance, Northern 

Michigan University argues that 

‘‘Congress’s intent in the CAA is to 

allow EBS licensees who actively 

provide advanced communications 

services with the means to receive 

equipment replacement funds through 

the Supply Chain Reimbursement 

Program.’’ USTelecom agrees that ‘‘the 

definition of educational broadband 

service is limited, as indicated by the 

CAA unambiguously, to EBS licensees. 

The CAA derives its definition from 47 

CFR 27.4 which includes the licensing 

requirement as part of the definition.’’ 

The Commission agrees with these 

commenters that this limitation 

accurately reflects Congress’s intent to 

limit participation in the 

Reimbursement Program to entities 

already licensed for certain frequency 

bands. 

70. The Commission rejects 

USTelecom’s position that ‘‘[a]lthough it 

might be argued that an EBS licensee 

with fewer than 2 million ‘customers’ 

could be in category 1, it is apparent 

that such a result could not have been 

Congress’s intent.’’ USTelecom argues 

that all EBS licensees, even those with 

two million or fewer customers, should 

be prioritized after funding is 

distributed to all other advanced 

communications service providers with 

two million or fewer customers. This 

interpretation of the CAA is contrary to 

the plain language of the statute, which 

tasks the Commission with first funding 

all advanced communications service 

providers with two million or fewer 

customers, and defines ‘‘providers of 

advanced communications service’’ to 

include such EBS licensees. The 

Commission interprets the word ‘‘all’’ to 

include these EBS licensees who are 

otherwise eligible for participation in 

the Reimbursement Program, even if 

there currently exist no such providers 

who can claim more than two million 

customers. 

71. The Commission does not expect 

the addition to the existing 

Reimbursement Program rules of a 

definition of ‘‘provider of advanced 

communications service’’ to have any 

practical effect on the number or type of 

carriers eligible to participate in the 

Reimbursement Program. The 2020 

Supply Chain Order already provided 

that ‘‘accredited public or private noncommercial educational institutions 

providing their own facilities-based 

educational broadband service as 

defined in section 27.4 of the 

Commission’s rules,’’ and ‘‘health care 

providers and libraries providing 

advanced communications services’’ 

would be eligible for participation. 


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Nevertheless, the Commission will 

amend its definition to explicitly 

include these providers. 

72. The Secure Networks Act further 

limited eligibility in the Reimbursement 

Program to ‘‘providers of advanced 

communications service . . . [with] . . . 

customers.’’ The word ‘‘customers’’ is 

defined as either customers of the 

provider of advanced communications 

services or the customers of any affiliate 

of a providers of advanced 

communications service. LATAM 

claims that Congress, by expanding the 

definition of ‘‘provider of advanced 

communications service’’ in the CAA, 

intended to ‘‘better capture all the 

networks that may be used for the 

provision of advanced communications 

services to consumers,’’ including 

intermediate providers, who carry traffic 

for other carriers only, and neither 

originate nor terminate that traffic. It 

also argues that, from a policy 

perspective, ‘‘it does not make sense to 

exclude intermediate providers from 

participation in the Reimbursement 

Program since the security concerns 

would be similar to providers of 

advanced communications services.’’ 

73. The Commission agrees, but do 

not think its existing rules prohibit such 

intermediate providers from 

participation in the Reimbursement 

Program. Its existing definition did not 

limit eligibility to providers who offer 

service to end users. Rather, it extended 

eligibility to providers of ‘‘high-speed, 

switched, broadband 

telecommunications capability that 

enables users to originate and receive 

high-quality voice, data, graphics, and 

video telecommunications using any 

technology with connection speeds of at 

least 200 kbps in either direction.’’ 

Intermediate providers, such as 

LATAM, likely provide such a service to 

their customers, notwithstanding 

whether those customers are carrier 

customers or end-user customers. The 

Commission intends to include 

intermediate providers in the 

Reimbursement Program because, by 

doing so, the Commission can secure 

against ‘‘potential vulnerabilities to the 

broader network.’’ Its goal is to ensure 

the safety and security of the entire 

network, not only to those portions that 

provide service to end users. Thus, the 

Commission clarifies that intermediate 

providers are eligible for participation 

in the Reimbursement Program. 

74. Finally, the Commission reiterates 

that the adopted changes to the 

definition of ‘‘provider of advanced 

communication services’’ apply only to 

the Reimbursement Program. The 

Commission does not amend the term as 

it is defined in any other section of its 

rules. 

F. Reimbursement Program 

Clarifications 

75. The Commission next clarifies 

various other aspects of the 

Reimbursement Program adopted in the 

2020 Supply Chain Order. Specifically, 

the Commission clarifies: (1) The ‘‘costs 

reasonably incurred’’ standard adopted 

for determining eligible reimbursement 

expenses with technology upgrades; (2) 

the initial application filing window; (3) 

the consideration of requests for 

individual extensions of the removal, 

replacement, and disposal term; (4) 

additional expectations for and 

obligations of Reimbursement Program 

participants regarding reimbursement 

claim requests and the filing of final 

spending reports and final certification 

updates; (5) the process by which to 

account for removal, replacement, and 

disposal of covered equipment and 

services; (6) parameters when 

accounting for reimbursement funds; 

and (7) delegation of financial oversight 

to the Office of the Managing Director 

(OMD). 

76. Costs Reasonably Incurred 

Standard—Technology Upgrades. The 

Commission clarifies the ‘‘costs 

reasonably incurred’’ standard adopted 

in the 2020 Supply Chain Order and 

provide additional guidance as to the 

types of replacement options that would 

be considered comparable facilities and 

technology upgrades. As adopted in the 

2020 Supply Chain Order, the 

Reimbursement Program will reimburse 

costs reasonably incurred for the 

removal, replacement, and disposal of 

covered communications equipment 

and services in accordance with the 

Secure Networks Act. In the 2020 

Supply Chain Order, the Commission 

considered as reasonable ‘‘replacement 

facilities comparable to the facilities in 

use by the provider prior to the removal, 

replacement, and disposal of covered 

communications equipment or service.’’ 

The Commission further acknowledged, 

however, that replacing older 

technology inevitably involves a certain 

amount of technology upgrade and as a 

result expressly allowed for the 

replacement of older mobile wireless 

networks with 4G LTE equipment or 

service that is 5G ready. The 

Commission cautioned, however, that 

providers electing ‘‘’to purchase 

optional equipment capability or make 

other upgrades’ . . . must do so using 

their own funds.’’ 

77. Providers considering replacement 

options have expressed interest in 

changing their technology path and 

have asked for clarification regarding 

what is considered comparable and 

eligible for reimbursement and what is 

considered a technology upgrade and 

ineligible for reimbursement. For 

example, providers may want to 

transition from older mobile wireless 

technologies to 5G or move from fixed 

wireless to fiber. The Commission 

therefore provides additional guidance 

on what is considered a technology 

upgrade, how to estimate cost for the 

Reimbursement Program for a 

technology upgrade, and how the 

Commission will allocate funding for 

such requests. 

78. As a policy matter, the 

Commission encourages providers to 

upgrade their networks and to transition 

to efficient, scalable, and secure 

technology, thereby providing more 

choices and capabilities to end users. 

The Reimbursement Program is, 

however, limited in funding and 

focused on assisting ‘‘small 

communications providers with the 

costs of removing prohibited equipment 

and services from their networks and 

replacing prohibited equipment with 

more secure communications 

equipment and services.’’ Additionally, 

Congress specifically stated that the 

Commission is expected ‘‘to preclude 

network upgrades that go beyond the 

replacement of covered communications 

equipment or services from eligibility.’’ 

The Commission thus interprets the 

‘‘costs reasonably incurred’’ standard to 

make providers responsible for the 

additional incremental cost of funding 

upgrades that exceed what is reasonably 

necessary to transition to a comparable 

replacement. That said, and as the 

Commission previously acknowledged, 

replacing older technology inevitably 

involves a certain level of upgrade as 

the equipment and services currently 

available in the marketplace typically 

contain features and capabilities not 

present in the legacy equipment and 

services no longer offered. Accordingly, 

a certain degree of upgrade may be 

entirely reasonable, and eligible for 

reimbursement, depending on the 

comparable replacements available in 

the marketplace. In particular, the 

Commission reiterates, as previously 

stated in the 2020 Supply Chain Order, 

that 4G Long Term Evolution (LTE) 

network equipment or service, which 

would include VoLTE technology, 

would be treated as a comparable 

replacement for an older mobile 

wireless network for purposes of the 

Reimbursement Program. 

79. Whether an upgrade is treated as 

a reasonable, comparable replacement 

necessary for the transition, and thus 

acceptable, or a technology upgrade 

ineligible for reimbursement will likely 


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depend on the facts in each case. The 

Commission expects the Wireline 

Competition Bureau, with the assistance 

of the Fund Administrator, will first 

consider whether the cost is typically 

incurred when transitioning from 

covered communications equipment 

and services to a replacement. Other 

factors the Wireline Competition Bureau 

and Fund Administrator may consider 

when determining whether a change is 

necessary, reasonable, and comparable 

are the costs in relation to alternative 

equipment and services and the 

capabilities and functions performed by 

the replacement equipment and services 

as compared to the equipment and 

services removed. 

80. As a general matter, the 

Commission does not consider replacing 

microwave backhaul with fiber 

backhaul or replacing last-mile fixed 

wireless links with fiber-to-the-premises 

(FTTP) necessary for the removal, 

replacement, and disposal of such 

communications equipment or service 

produced or provided by Huawei and 

ZTE that is listed on the Covered List. 

The Rural Wireless Broadband Coalition 

states that higher-capacity fiber 

backhaul is needed to support the 

replacement of older technology 

networks with 5G ready equipment that 

is subsequently made 5G operable by a 

provider. Santel ‘‘would like’’ to replace 

its four transmitters with an FTTP 

wireline network serving 850 customers 

to provide a far better quality service 

that ‘‘even exceeds 5G wireless 

solutions.’’ In either case, the 

Commission fails to see how such 

expenses are reasonably necessary to the 

removal, replacement, and disposal of 

covered communications equipment or 

services eligible for reimbursement. 

Moreover, the cost of replacing 

microwave with fiber backhaul and 

fixed wireless links to end users with 

FTTP would likely greatly exceed the 

cost of other wireless alternatives. As 

the Commission stated in the C-Band 

proceeding, relocation support is not 

intended ‘‘to provide a means of 

funding [an] incumbent[’s] . . . 

transition to fiber’’ and ‘‘while a 

transition to fiber in some cases may be 

a more efficient or desirable approach 

for certain . . . operators, incumbents 

would only be reimbursed for the 

reasonable costs of relocating existing 

services. . . .’’ This same rationale 

applies to the Reimbursement Program. 

Accordingly, the Commission will 

generally view fiber link replacements 

as a technology upgrade and not a 

reasonable, comparable replacement. 

81. Participants may obtain 

Reimbursement Program support for an 

amount equivalent to the cost estimate 

of a comparable replacement. If, 

however, a participant ultimately 

decides to upgrade to a higher quality, 

more advanced, non-comparable 

replacement, then the program 

participant will bear the difference in 

cost between the comparable 

replacement and the technology 

upgrade solution chosen. When 

Reimbursement Program participants 

seek to replace eligible covered 

communications equipment or service 

with a technology upgrade in excess of 

the costs of a comparable replacement, 

they will need to provide price quotes 

for the comparable replacement with 

their Application Request for Funding 

Allocation and may not rely on the cost 

estimates contained in the Catalog of 

Eligible Expenses (Catalog). This 

approach is consistent with the 

Commission’s treatment of situations 

where the estimated cost is not provided 

in the Catalog, and the applicant must 

provide additional documentation to 

support the identified cost estimate. 

They will also need to separately certify, 

as already required by the Commission’s 

rules, that the estimated cost is made in 

good faith. 

82. Price quotes will provide a more 

accurate estimation of costs for funding 

allocations than using the Catalog when 

participants request a technology 

upgrade and will help address concerns 

about inflated cost estimates and the 

over allocation of support. The 

Commission anticipates the Catalog 

largely reflects list prices, and not the 

amount providers will actually pay after 

any purchasing discounts are applied. 

While the Catalog reduces burdens for 

the applicant during the submission 

process, reliance on it in some 

circumstances could result in the 

overestimation of cost, and the overallocation of support. Accordingly, to 

ensure more accurate cost estimates and 

to minimize the over-allocation of 

funding, the Commission clarifies that it 

will treat requests for reimbursement 

towards a technology upgrade as outside 

the scope of the Catalog. Applicants 

seeking support when completing a 

technology upgrade will need to provide 

their own cost estimates for a 

comparable replacement with price 

quotes. 

83. Costs Reasonably Incurred— 

Handset Upgrades. The Commission 

rejects RWA’s request that the 

Commission add VoLTE compatible 

replacement subscriber handsets to its 

Catalog and permit recipients of the 

Reimbursement Program to replace 

consumer handsets. RWA argues that 

the subscribers of some potential 

applicants of the Reimbursement 

Program have only CDMA-capable 

handset devices and those devices 

would need to be replaced because the 

handsets will not be compatible with a 

newer technology replacement network. 

RWA thus seeks reimbursement for the 

replacement cost of non-Huawei and 

ZTE handsets that will no longer be 

compatible with replacement networks. 

The Commission finds CDMA-capable 

handsets not produced or provided by 

Huawei or ZTE ineligible for 

reimbursement under the 

Reimbursement Program rules because 

replacing such handsets with VoLTE 

compatible subscriber handsets is not 

reasonably necessary to the removal, 

replacement, and disposal of covered 

communications equipment or service. 

84. The Reimbursement Program has 

limited funding aimed at securing its 

nation’s communication networks from 

national security threats. Expanding the 

scope of reimbursement eligibility to 

include subscriber mobile handheld 

devices not produced or provided by 

Huawei or ZTE threatens to detract 

substantial funding away from the core 

mission of securing the nation’s 

networks. Handsets and other customer 

premises equipment, including Internet 

of Things devices, used by end users to 

access and utilize advanced 

communications services are distinctly 

different from the cell sites, backhaul, 

core network, etc. used to operate a 

network and provide advanced 

communications services. Consumers 

typically choose on their own to 

upgrade their mobile handsets every 

two years on average absent any 

network transition, and newer 

comparable replacement networks are 

often backward compatible with older 

technology handsets with some limited 

exceptions. Accordingly, the 

Commission finds the replacement of 

non-Huawei or ZTE mobile devices not 

reasonably necessary to the removal, 

replacement, and disposal of covered 

communications equipment or service. 

Additionally, without detailed 

information as to the handset models 

end users own, it is unclear whether a 

transition to a newer technology 

network will prevent those users from 

accessing the network. Similar to any 

network upgrade, the Commission 

anticipates providers will assist their 

customers with incompatible handsets 

to upgrade as necessary to mitigate any 

disruptions in service if for some reason 

their handsets are not compatible with 

the new network. 

85. Filing Window. Consistent with 

the Secure Networks Act, the 

Commission established an application 

process for Reimbursement Program 

participation in the 2020 Supply Chain 

Order. To participate in the 


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47010 Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 

Reimbursement Program, eligible 

providers are required to submit initial 

estimates of the costs to be reasonably 

incurred for the removal, replacement, 

and disposal of covered 

communications equipment or services 

to participate in the Program. In the 

2020 Supply Chain Order, the 

Commission directed the Wireline 

Competition Bureau to establish an 

initial 30-day filing window for the 

submission of cost estimates and to 

establish additional filing windows as 

necessary. The accompanying rules 

adopted, however, do not specify a 

period of time for the filing window. 

Given the complexity of the 

Reimbursement Program, the 

Commission wants to ensure that 

applicants have sufficient opportunity 

to familiarize themselves with and 

utilize the application filing portal. 

Therefore, the Commission clarifies that 

the Wireline Competition Bureau has 

discretion to establish an initial filing 

window that provides sufficient time for 

applicants to submit cost estimates, 

which may be for a period longer than 

30 days if a longer window is needed to 

help applicants navigate the application 

filing portal or to compile the necessary 

documentation required for the filing 

requirements. 

86. Individual Extensions. The 

Commission further clarifies the factors 

the Wireline Competition Bureau, with 

the assistance of the Fund 

Administrator, will consider when 

evaluating whether to grant an 

individual extension of the removal, 

replacement, and disposal term 

available to program participants. 

Program participants are required to 

complete the removal, replacement and 

disposal of the equipment within one 

year of the initial disbursement. Its rules 

permit participants to petition the 

Wireline Competition Bureau for an 

extension of the removal, replacement, 

and disposal term prior to the expiration 

of the term. The Wireline Competition 

Bureau will generally review such 

requests on a case-by-case basis, and 

may grant an extension for up to six 

months after finding that, due to no 

fault of such recipient, such recipient is 

unable to complete the permanent 

removal, replacement, and disposal by 

the end of the term. The Wireline 

Competition Bureau may grant more 

than one extension request to a recipient 

if circumstances warrant. 

87. The Commission acknowledges 

that there are circumstances that may 

increase the difficulty of a 

Reimbursement Program participant’s 

ability to complete removal, 

replacement, and disposal within the 

one-year term. For example, the 

Commission understands that some 

replacement options, such as O–RAN or 

virtual RAN, may require additional 

time for system integration. For program 

participants choosing an O–RAN or 

virtual RAN replacement option, the 

Commission directs the Wireline 

Competition Bureau, when evaluating 

an extension request, to consider the 

high likelihood of additional time 

needed as a significant factor favoring 

an extension. Additionally, the 

Commission understands the concern 

some commenters raise regarding the 

availability of replacement technology 

and semiconductors. USTelecom 

requests that the Commission 

acknowledge that the current shortage of 

semiconductors could impact the 

availability of replacement equipment, 

thereby warranting a waiver. NTCA 

highlights delays in obtaining 

equipment that are impacting providers 

of all sizes, but especially smaller 

providers who are forced to further 

compete with larger operators for labor 

and equipment. The Commission agrees 

with these commenters and direct the 

Wireline Competition Bureau to 

consider limited availability of the 

replacement options as a factor for 

whether to grant an individual 

extension request, including impacts 

caused by a shortage of semiconductors. 

A commenter raised another potential 

factor that may delay completion within 

the one-year team. Union Telephone 

Company argues that providers of 

advanced communications service may 

need to modify or replace their outdated 

network infrastructure, including 

cellular towers, to comply with current 

structural standards, which will also 

require federal permitting approval. The 

Commission directs the Wireline 

Competition Bureau to consider delays 

in federal permitting as one potential 

factor to consider when reviewing 

requests for extensions of time. 

88. Vantage Point Solutions also 

identifies possible delays caused by 

equipment availability, weather 

considerations for construction, and 

cash flow and replacement funding 

distribution timing that may specifically 

impact providers in Alaska. It asks the 

Commission to consider extensions of 

time for these providers to complete the 

removal, replacement, and disposal of 

covered equipment beyond the term set 

by the Reimbursement Program. 

89. The Commission acknowledges 

that certain locations will have 

challenges meeting the term deadline 

due to weather or other issues. The 

Commission further recognizes that the 

claims raised by USTelecom and others 

regarding the availability of 

semiconductors are valid, and that 

certain situations may impact smaller or 

rural providers such that they are 

unable to meet the timing requirements 

for removal, replacement, and disposal 

through the Reimbursement Program. 

The examples included in this item are 

not an exhaustive list of factors that the 

Wireline Competition Bureau will 

consider in the event a provider files an 

individual extension request. The 

Commission directs the Wireline 

Competition Bureau to consider all 

factors included in an individual 

extension request when evaluating the 

request. Additionally, the Commission 

directs the Wireline Competition Bureau 

to review individual extension requests 

on a case-by-case basis. As the 

Commission found in the 2020 Supply 

Chain Order, however, the Secure 

Networks Act authorizes the 

Commission to grant extensions of time 

to allow providers of advanced 

communications services to complete 

the removal, replacement, and disposal 

of covered communications equipment 

and services, either as a ‘‘general’’ sixmonth extension to all recipients of 

reimbursement funding, or as individual 

extensions on a case-by-case basis. In 

the event circumstances regarding the 

availability of equipment do not 

improve, or if there is sufficient 

justification to warrant an extension, 

such information may influence the 

Wireline Competition Bureau’s 

consideration of a six-month extension, 

whether for all program participants or 

on an individual, case-by-case basis. 

90. General Extension. The Secure 

Networks Act authorizes the 

Commission to grant a six-month 

extension of the removal, replacement, 

and disposal term deadline ‘‘to all 

recipients of reimbursements . . . if the 

Commission finds that the supply of 

replacement communications 

equipment or services needed by the 

recipients to achieve the purposes of the 

[Reimbursement] Program are 

inadequate.’’ Several commenters have 

recommended that the Commission 

proactively grant this six-month general 

extension immediately, citing supply 

chain and labor shortages and the 

potential non-availability of 

semiconductors due to the impacts of 

the COVID–19 pandemic and the 

increased demand for scarce resources 

driven by the requirement to remove, 

replace, and dispose of covered 

communications equipment and 

services. However, the Commission 

finds such requests to extend a deadline 

that is not yet established premature, 

and run counter to the intent of 

Congress of having a one-year removal, 

replacement, and disposal term. 


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Accordingly, the Commission rejects 

these requests. 

91. Removal, Replacement and 

Disposal Term—Reimbursement Claims. 

The Commission clarifies that only 

reasonable expenses incurred before the 

expiration of the removal, replacement, 

and disposal term are eligible for 

reimbursement. Reimbursement 

Program participants have one year from 

the initial disbursement to complete the 

permanent removal, replacement, and 

disposal of covered communications 

equipment or services. As a result, 

program participants may only submit 

reimbursement claims for costs incurred 

within one year of the initial 

disbursement date. If a program 

participant requests, and the Wireline 

Competition Bureau grants, a term 

extension according to its rules, all 

reimbursement claims must cover 

eligible expenses incurred prior to the 

term end date as adjusted by the granted 

extension. Any expenses incurred after 

the term ends will be ineligible for 

reimbursement. Additionally, any 

expenses incurred while an individual 

extension request is pending will not be 

reimbursable if the request is ultimately 

denied and the expenses were incurred 

outside of the one-year term. 

92. Final Certification Update Timing. 

Within 10 days following the expiration 

of the removal, replacement, and 

disposal term, Reimbursement Program 

recipients are required to file a final 

certification with the Commission 

indicating, among other things, whether 

or not the recipient has fully complied 

with all terms of program participation. 

Program participants stating in their 

final certification that they have not 

‘‘fully complied’’ are then required by 

both the Secure Networks Act and the 

2020 Supply Chain Order to file an 

updated final certification ‘‘when the 

recipient has fully complied.’’ Both the 

Secure Networks Act and the 2020 

Supply Chain Order are silent as to a 

deadline for filing the final certification 

update. 

93. Program participants are required 

to complete the permanent removal, 

replacement, and disposal of the 

equipment or services, and thus the 

terms of program participation, before 

the expiration of the removal, 

replacement, and disposal term. The 

Commission recognizes that unforeseen 

delays may extend the removal, 

replacement, and disposal process 

beyond the one-year term, and the 

Commission expects program 

participants who anticipate they will 

not complete removal, replacement, and 

disposal by the end of their term will 

request an individual extension from 

the Wireline Competition Bureau before 

the end of that term. 

94. If a program participant fails to 

timely submit a final certification, the 

program participant may be subject to 

forfeitures as provided for under the 

Communications Act of 1934, as 

amended. Further, if a program 

participant files a final certification 

indicating that it has not ‘‘fully 

complied’’ with the terms of the 

program, but subsequently fails to file 

an updated final certification indicating 

full compliance within 60 days after the 

final certification deadline, the program 

participant may be subject to forfeitures 

as provided for under the 

Communications Act of 1934, as 

amended. Additionally, program 

participants found in violation of the 

Secure Networks Act, the Commission’s 

rules implementing the statute, or the 

commitments made by the recipient in 

the application for reimbursement may 

be: (1) Required to repay reimbursement 

funds; (2) barred from further 

participation in the Reimbursement 

Program; (3) referred to all appropriate 

law enforcement agencies or officials for 

further action under applicable criminal 

and civil law; and (4) barred from 

participation in other programs of the 

Commission, including the Federal 

universal service support programs 

established under section 254 of the 

Communications Act of 1934, as 

amended. The aforementioned penalties 

are within the Commission’s 

jurisdiction. The Commission notes that 

applicants that commit fraud may 

separately be subject to the False Claims 

Act or other legal action as provided by 

existing statutes. 

95. Final Spending Report Timing. 

Under the Reimbursement Program 

rules, program recipients must file their 

final spending report after the final 

certification. The Commission was 

silent, however, as to the deadline for 

filing the final spending report. The 

Commission clarifies the timeframe and 

expect program participants to submit 

the final spending report no later than 

60 days following the expiration of the 

program participant’s reimbursement 

claim deadline. If a program participant 

has not submitted a final spending 

report within 60 days of the expiration 

of the reimbursement claim deadline, 

the matter may be referred to the 

Enforcement Bureau for further 

investigation. 

96. Accounting for Removal, 

Replacement, and Disposal of Covered 

Equipment. Some program participants 

participating in other funding programs 

or subject to rate regulation could 

receive duplicate recovery for support 

received from the Reimbursement 

Program for network changes. As a 

result, the Commission clarifies 

provider requirements with respect to 

maintaining books of account using the 

Uniform System of Accounts contained 

in Part 32 of the Commission’s rules 

(USOA carriers). To the extent a USOA 

carrier has purchased and installed 

covered equipment, that equipment 

should currently be recognized as an 

investment in the USOA carrier’s 

telecommunications plant and subject to 

retirement and depreciation rules which 

require the carrier to establish estimated 

lives and ratable depreciation of the 

assets. Because the Commission is 

requiring recipients of reimbursement 

funds under the Reimbursement 

Program and ETCs receiving USF 

support to remove and replace from 

their network and operations 

environments equipment and services 

included on the Covered List, and as 

defined in the 2019 Supply Chain Order 

or as designated pursuant to section 

54.9 of the Commission’s rules and in 

the Designation Orders, the Commission 

also must address the accounting 

treatment of USOA carriers’ retirement 

of covered equipment. 

97. To ensure consistent accounting 

treatment, and to prevent the removal, 

replacement, and disposal of covered 

equipment by USOA carriers from 

unduly depleting such carriers’ 

depreciation reserve, such carriers may 

treat the removal, replacement and 

disposal of covered equipment as an 

‘‘extraordinary retirement,’’ subject to 

the amortization schedule that the 

Commission provides below. For an 

event to be considered an extraordinary 

retirement, it must satisfy three 

requirements: (1) The impending 

retirement was not adequately 

considered in setting past depreciation 

rates; (2) the charging of the retirement 

against the reserve will unduly deplete 

that reserve; and (3) the retirement is 

unusual such that similar retirements 

are not likely to recur in the future. 

98. The Commission finds that the 

first and third of these requirements are 

met for retirements made in accordance 

with the 2019 Supply Chain Order. 

Carriers that purchased covered 

equipment could not have anticipated 

that the Commission and Congress 

would require retirement of covered 

equipment and that Congress would 

make reimbursement funds available to 

replace covered equipment. As a result, 

early retirements resulting from 

Commission and congressional action 

were not and could not have been 

considered in setting past depreciation 

rates. Furthermore, given the unusual 

circumstances that led to these 

retirements, it is highly unlikely that 


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similar retirements will occur again in 

the future. 

99. Regarding the second prong, the 

question of whether charging a 

retirement against a particular carrier’s 

reserve would unduly deplete that 

reserve is normally determined on a 

case-by-case basis. The retirements at 

issue here, however, are compulsory, 

and the Commission finds that 

conducting case-by-case reviews for 

each carrier would be unduly 

burdensome for the Commission and for 

the carriers, particularly given the 

critical importance of these retirements 

for ensuring the security of the nation’s 

infrastructure. Accordingly, on its own 

motion, the Commission finds there is 

good cause to waive the second prong 

to allow a USOA carrier to treat the 

retirements required by this docket as 

extraordinary retirements. The 

Commission therefore establishes a 

uniform process for addressing 

significant reserve deficiencies. 

100. As part of this process, the 

Commission directs USOA carriers that 

take advantage of the waiver to credit 

Account 3100, Accumulated 

Depreciation, and charge Account 1438, 

Deferred Maintenance, retirements and 

other deferred charges, with the 

unprovided-for loss in service value 

resulting from the actions the 

Commission has taken in this docket. 

The amount of the unprovided-for loss 

in service value is recorded in Account 

1438 and shall be amortized to Account 

6561, Depreciation expense— 

Telecommunications plant in service, or 

Account 6562, Depreciation expense— 

property held for future 

telecommunications use. This treatment 

will reflect the amortization of the 

amounts in Account 1438 as 

depreciation expenses, thereby allowing 

carriers to include those amounts in 

their revenue requirement. 

101. The asset category for the type of 

equipment subject to removal, 

replacement, and disposal is largely 

circuit equipment, and has an expected 

life in the 10-year range. To mitigate the 

effects of any excess depletion in the 

depreciation expense, the Commission 

waives its rules to allow carriers to use 

the following amortization schedules for 

covered equipment they are required to 

retire. First, if the expected remaining 

service life of the covered equipment 

being retired is two years or less, a 

USOA carrier may amortize one-half of 

the balance from Account 1438 each of 

the next two years. Second, if the 

covered equipment being retired has an 

expected remaining service life of 

between three and five years, the USOA 

carrier may amortize one-third of the 

balance from Account 1438 each of the 

next three years. If the covered 

equipment being retired has an expected 

remaining service life of more than six 

years, the USOA carrier will may 

amortize one-fourth of the balance from 

Account 1438 each of the next four 

years. 

102. Accounting for Reimbursement. 

The Reimbursement Program will 

reimburse providers for some or all of 

the costs of removal, replacement, and 

disposal of covered communications 

equipment or services. The Commission 

clarifies that, consistent with the 

limitation on reimbursements, USOA 

carriers should account for reimbursed 

amounts as contributions by crediting 

the asset account charged with the 

reimbursed amount of the plant or 

equipment. This accounting treatment is 

appropriate because the contributions 

are not investor-supplied funds and 

should not be accorded a return on 

investment. This approach also 

conforms with the treatment of 

contribution to capital addressed in 

section 32.2000(a)(2) of the 

Commission’s rules, and is consistent 

with how the accounting was handled 

for support payments awarded in the 

2012 BTOP/BIP stimulus funding. 

103. Delegation to the Office of the 

Managing Director. In the 2020 Supply 

Chain Order, the Commission directed 

OMD to develop a system to audit the 

Reimbursement Program. In this Third 

Report and Order, the Commission 

delegates financial oversight of the 

Reimbursement Program to the 

Commission’s Office of the Managing 

Director and direct OMD to work in 

coordination with the Wireline 

Competition Bureau to ensure that all 

financial aspects of the program have 

adequate internal controls. These duties 

fall within OMD’s current delegated 

authority to ensure that the Commission 

operates in accordance with federal 

financial statutes and guidance. Such 

financial oversight must be consistent 

with this Third Report and Order and 

the rules adopted in the 2020 Supply 

Chain Order. OMD performs this role 

with respect to the Universal Service 

Administrative Company’s 

administration of the Commission’s 

Universal Service programs, the 

COVID–19 Telehealth program, and the 

Emergency Broadband Benefit Program, 

and the Commission anticipates that 

OMD will leverage existing policies and 

procedures, to the extent practicable 

and consistent with section 904, to 

ensure the efficient and effective 

management of the program. Finally, the 

Commission notes that OMD is required 

to consult with the Wireline 

Competition Bureau on any policy 

matters affecting the program, consistent 

with section 0.91(a) of the Commission’s 

rules. OMD, in coordination with the 

Wireline Competition Bureau, may issue 

additional directions to Program 

Administrator Ernst and Young LLC 

(Ernst & Young) and program 

participants in furtherance of its 

responsibilities. 

G. Cost-Benefit Analysis 

104. Based on presently available 

information obtained from the 2019 

information collection, the Commission 

estimated the cost of the removal, 

replacement, and disposal of Covered 

List equipment and services subject to 

the Designation Orders and the process 

set forth in the 2019 Supply Chain 

Order to be $1.62 billion for ETCs with 

two million or fewer customers, and at 

least $1.837 billion for providers with 

10 million or fewer customers. As the 

Commission recognized in the 

Information Collection Results Public 

Notice, there may be ‘‘other providers of 

advanced communications [who] may 

not have participated in the information 

collection and yet still [are] eligible for 

reimbursement under the terms of [the 

Secure Networks] Act.’’ Though 

Congress appropriated $1.895 billion to 

the Reimbursement Program in the 

CAA, it also expanded the eligibility 

criteria for participation in the 

Reimbursement Program. The 

Commission does not have cost 

estimates for the cost of the removal, 

replacement, and disposal of eligible 

equipment for the entire potential pool 

of eligible providers. 

105. Nevertheless, this Third Report 

and Order implements requirements 

from the CAA, and the Commission has 

no discretion to ignore such 

congressional direction. The 

Commission also concludes that even if 

the total replacement cost exceeds the 

$1.837 billion reported by providers 

with 10 million or fewer customers, that 

cost will be far exceeded by the benefits 

obtained in addressing the important 

national security concerns posed by the 

equipment and services eligible for 

reimbursement. The $1.895 billion 

reimbursement appropriation suggests 

that Congress anticipated great costs and 

even greater benefits would be 

generated by the Secure Networks Act. 

As the Commission explained in the 

2019 Supply Chain Order, the benefits 

of removing covered equipment and 

services ‘‘extend to [hard] to quantify 

matters, such as preventing 

untrustworthy elements in the 

communications network from 

impacting its nation’s defense, public 

safety, and homeland security 

operations, its military readiness, and 

its critical infrastructure, let alone the 


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collateral damage such as loss of life 

that may occur with any mass 

disruption to its nation’s 

communications networks.’’ Any 

increasing costs due to the CAA’s 

expansion of the eligibility criteria for 

participation in the Reimbursement 

Program will be exceeded by the 

benefits of removing, replacing, and 

disposing of even more insecure 

equipment and services from U.S. 

networks. 

III. Procedural Matters 

106. Paperwork Reduction Act of 1995 

Analysis. This document does not 

contain modified information collection 

requirements subject to the Paperwork 

Reduction Act of 1995 (PRA), Public 

Law 104–13. In addition, therefore, it 

does not contain any new or modified 

information collection burden for small 

business concerns with fewer than 25 

employees, pursuant to the Small 

Business Paperwork Relief Act of 2002, 

Public Law 107–198, see 44 U.S.C. 

3506(c)(4). 

107. Final Regulatory Flexibility 

Analysis. The Regulatory Flexibility Act 

of 1980 (RFA) requires that an agency 

prepare a regulatory flexibility analysis 

for notice and comment rulemakings, 

unless the agency certifies that ‘‘the rule 

will not, if promulgated, have a 

significant economic impact on a 

substantial number of small entities.’’ 

Accordingly, the Commission has 

prepared a Final Regulatory Flexibility 

Analysis (FRFA) concerning the 

possible impact of the rule changes 

contained in this Third Report and 

Order on small entities. 

108. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), an Initial Regulatory Flexibility 

Analysis (IRFA) was incorporated in the 

Third Further Notice of Proposed 

Rulemaking (2021 Supply Chain Further 

Notice) in this proceeding. The 

Commission sought written comment on 

the proposals in the 2021 Supply Chain 

Further Notice, including comment on 

the accompanying IRFA. The present 

Final Regulatory Flexibility Analysis 

(FRFA) addresses comments received on 

the IRFA and conforms to the RFA. 

A. Need for, and Objectives of, the Rules 

109. As directed by the Secure and 

Trusted Communications Networks Act 

of 2019 (Secure Networks Act) and the 

Consolidated Appropriations Act, 2021 

(CAA), and in light of increasing 

concern about ensuring 

communications supply chain integrity, 

and consistent with its obligation to be 

responsible stewards of the public funds 

used in Universal Service Fund (USF) 

programs, this Third Report and Order 

adopts rules to modify the Secure and 

Trusted Communications Networks 

Reimbursement Program 

(Reimbursement Program) according to 

sections 901 and 906 of the CAA. 

110. Specifically, the Commission 

increases the eligibility cap to allow 

providers of advanced communications 

services with 10 million or fewer 

customers to participate in the 

Reimbursement Program. Additionally, 

the Commission modifies the equipment 

and services eligible for reimbursement 

through the Reimbursement Program 

and amends its rules to allow 

Reimbursement Fund participants to 

use such funds to remove, replace, or 

dispose of equipment or services from 

the Covered List that are defined in the 

2019 Supply Chain Order or subject to 

the Designation Orders and the process 

for designating companies that pose a 

national security threat to the integrity 

of communications networks or the 

communications supply chain, as set 

forth in the 2019 Supply Chain Order, 

and were purchased, rented, leased, or 

otherwise obtained on or before June 30, 

2020. The Commission also alters its 

prioritization scheme that will guide 

fund allocation if demand for 

reimbursement funds exceeds the 

$1.895 billion appropriated by Congress. 

The new prioritization scheme will first 

fund reimbursement claims from 

eligible providers with two million or 

fewer customers. Next, it will fund 

claims from approved applicants that 

are accredited public or private noncommercial educational institutions 

providing their own facilities-based 

educational broadband services. Last, it 

will fund eligible providers with 10 

million or fewer customers. The 

Commission also alters the definition of 

‘‘provider of advanced communications 

services’’ to mirror the definition 

provided in the CAA. Finally, the 

Commission clarifies (1) the ‘‘costs 

reasonably incurred’’ standard adopted 

for determining eligible reimbursement 

expenses with technology upgrades; (2) 

the initial application filing window; (3) 

the consideration of requests for 

individual extensions of the removal, 

replacement, and disposal term; (4) 

additional expectations for and 

obligations of Reimbursement Program 

participants regarding reimbursement 

claim requests and the filing of final 

spending reports and final certification 

updates; (5) the process by which to 

account for removal, replacement, and 

disposal of covered equipment and 

services; (6) parameters when 

accounting for reimbursement funds; 

and (7) delegation of financial oversight 

to the Office of the Managing Director 

(OMD). 

B. Summary of Significant Issues Raised 

by Public Comments in Response to the 

IRFA 

111. No comments were filed in 

response to the IRFAs. However, parties 

did file comments addressing the 

impact of some proposals on small 

entities. 

112. The Competitive Carriers 

Association supports the Commission’s 

adoption of the prioritization scheme 

expressly provided for in the CAA. CCA 

argued that ‘‘[t]hose provider with 2 

million or fewer customers include the 

small and rural carriers that serve some 

of the most remote and expensive areas 

of the country and are bridging the 

digital divide by bringing service to 

places where there would not be a 

business case to offer service absent 

support . . . . Loss of funding would 

have an immediate and detrimental 

effect on the carriers’ ability to provide 

services and, thus, access to rural 

America.’’ Mediacom supports the 

Commission’s new prioritization 

schedule because ‘‘those providers need 

the greatest assistance because they 

have more limited resources.’’ NTCA 

agrees, writing that ‘‘[s]maller providers 

already operate on razor thin margins; 

adding the financial cost of replacing 

existing equipment outside of its normal 

upgrade cycle or losing universal 

service funding would be a crushing 

burden.’’ While some commenters 

quibble about additional prioritization 

categories, there is broad support in the 

record for offering first priority to 

Reimbursement Program funding to 

those providers with two million or 

fewer customers. The Commission 

agrees and finds that its new 

prioritization paradigm will target those 

smaller providers who are most affected 

by any remove-and-replace requirement. 

113. Northern Michigan University 

(NMU) supports the Commission’s 

decision to ‘‘modify the acceptable use 

of reimbursement funds for the removal, 

replacement, and disposal of covered 

equipment obtained prior to July 1, 2020 

. . . .’’ NMU writes that ‘‘[m]oving the 

eligible replacement equipment date to 

June 30, 2020 accounts for the 

additional expenses providers have 

incurred in maintaining robust internet 

services to customers and ensures that 

these systems will be replaced with 

more modern, secure facilities.’’ NMU 

also believes that this action will help 

smaller providers who ‘‘often lack the 

cash reserves typically required for large 

construction projects. In the case of 

Supply Chain wholesale equipment 

replacement, portions of systems 


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deemed ineligible for replacement funds 

may delay their replacement until the 

required finances are available.’’ Mark 

Twain Communications Company also 

supports this action because ‘‘the costs 

associated with the replacement of 

existing networks equipment which in 

the future is determined to violate the 

proposed rule imposes a significant and 

unreasonable financial burden on rural 

telecommunications companies.’’ 

C. Response to Comments by the Chief 

Counsel for Advocacy of the Small 

Business Administration 

114. Pursuant to the Small Business 

Jobs Act of 2010, which amended the 

RFA, the Commission is required to 

respond to any comments filed by the 

Chief Counsel for Advocacy of the Small 

Business Administration (SBA), and to 

provide a detailed statement of any 

change made to the proposed rules as a 

result of those comments. 

115. The Chief Counsel did not file 

any comments in response to this 

proceeding. 

D. Description and Estimate of the 

Number of Small Entities to Which the 

Rules Will Apply 

116. 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 rules adopted pursuant to the Third 

Report and Order. 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. A ‘‘small business 

concern’’ is one which (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. 

117. Small Businesses, Small 

Organizations, Small Governmental 

Jurisdictions. Its 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 

Small Business Administration’s (SBA) 

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 30.7 million 

businesses. 

118. 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.’’ The Internal Revenue Service 

(IRS) uses a revenue benchmark of 

$50,000 or less to delineate its annual 

electronic filing requirements for small 

exempt organizations. Nationwide, for 

tax year 2018, there were approximately 

571,709 small exempt organizations in 

the U.S. reporting revenues of $50,000 

or less according to the registration and 

tax data for exempt organizations 

available from the IRS. 

119. 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. 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.’’ 

120. Small entities potentially 

affected by the rules 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. 

1. Schools and Libraries 

121. As noted, ‘‘small entity’’ includes 

non-profit and small government 

entities. Under the schools and libraries 

universal service support mechanism, 

which provides support for elementary 

and secondary schools and libraries, an 

elementary school is generally ‘‘a nonprofit institutional day or residential 

school, that provides elementary 

education, as determined under state 

law.’’ A secondary school is generally 

defined as ‘‘a non-profit institutional 

day or residential school . . . , that 

provides secondary education, as 

determined under state law,’’ and not 

offering education beyond grade 12. A 

library includes ‘‘(1) [a] public library; 

(2) [a] public elementary school or 

secondary school library; (3) [a]n 

academic library; (4) [a] research library 

. . . ; and (5) [a] private library, but only 

if the state in which such private library 

is located determines that the library 

should be considered a library for the 

purposes of this definition.’’ For-profit 

schools and libraries, and schools and 

libraries with endowments in excess of 

$50,000,000, are not eligible to receive 

discounts under the program, nor are 

libraries whose budgets are not 

completely separate from any schools. 

Certain other statutory definitions apply 

as well. The SBA has defined for-profit, 

elementary and secondary schools 

having $12 million or less in annual 

receipts, and libraries having $16.5 

million or less in annual receipts, as 

small entities. In funding year 2007, 

approximately 105,500 schools and 

10,950 libraries received funding under 

the schools and libraries universal 

service mechanism. Although the 

Commission is unable to estimate with 

precision the number of these entities 

that would qualify as small entities 

under SBA’s size standard, the 

Commission estimates that fewer than 

105,500 schools and 10,950 libraries 

might be affected annually by its action, 

under current operation of the program. 

2. Healthcare Providers 

122. Offices of Physicians (except 

Mental Health Specialists). This U.S. 

industry comprises establishments of 

health practitioners having the degree of 

M.D. (Doctor of Medicine) or D.O. 

(Doctor of Osteopathy) primarily 

engaged in the independent practice of 

general or specialized medicine (except 

psychiatry or psychoanalysis) or 

surgery. These practitioners operate 

private or group practices in their own 

offices (e.g., centers, clinics) or in the 

facilities of others, such as hospitals or 

HMO medical centers. The SBA has 

created a size standard for this industry, 

which is annual receipts of $12 million 

or less. According to 2012 U.S. 

Economic Census, 152,468 firms 

operated throughout the entire year in 

this industry. Of that number, 147,718 

had annual receipts of less than $10 

million, while 3,108 firms had annual 

receipts between $10 million and 

$24,999,999. Based on this data, the 

Commission concludes that a majority 

of firms operating in this industry are 

small under the applicable size 

standard. 

123. Offices of Physicians, Mental 

Health Specialists. This U.S. industry 


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comprises establishments of health 

practitioners having the degree of M.D. 

(Doctor of Medicine) or D.O. (Doctor of 

Osteopathy) primarily engaged in the 

independent practice of psychiatry or 

psychoanalysis. These practitioners 

operate private or group practices in 

their own offices (e.g., centers, clinics) 

or in the facilities of others, such as 

hospitals or HMO medical centers. The 

SBA has established a size standard for 

businesses in this industry, which is 

annual receipts of $12 million dollars or 

less. The 2012 U.S. Economic Census 

indicates that 8,809 firms operated 

throughout the entire year in this 

industry. Of that number 8,791 had 

annual receipts of less than $10 million, 

while 13 firms had annual receipts 

between $10 million and $24,999,999. 

Based on this data, the Commission 

concludes that a majority of firms in this 

industry are small under the applicable 

standard. 

124. Offices of Dentists. This U.S. 

industry comprises establishments of 

health practitioners having the degree of 

D.M.D. (Doctor of Dental Medicine), 

D.D.S. (Doctor of Dental Surgery), or 

D.D.Sc. (Doctor of Dental Science) 

primarily engaged in the independent 

practice of general or specialized 

dentistry or dental surgery. These 

practitioners operate private or group 

practices in their own offices (e.g., 

centers, clinics) or in the facilities of 

others, such as hospitals or HMO 

medical centers. They can provide 

either comprehensive preventive, 

cosmetic, or emergency care, or 

specialize in a single field of dentistry. 

The SBA has established a size standard 

for that industry of annual receipts of $8 

million or less. The 2012 U.S. Economic 

Census indicates that 115,268 firms 

operated in the dental industry 

throughout the entire year. Of that 

number 114,417 had annual receipts of 

less than $5 million, while 651 firms 

had annual receipts between $5 million 

and $9,999,999. Based on this data, the 

Commission concludes that a majority 

of business in the dental industry are 

small under the applicable standard. 

125. Offices of Chiropractors. This 

U.S. industry comprises establishments 

of health practitioners having the degree 

of D.C. (Doctor of Chiropractic) 

primarily engaged in the independent 

practice of chiropractic. These 

practitioners provide diagnostic and 

therapeutic treatment of 

neuromusculoskeletal and related 

disorders through the manipulation and 

adjustment of the spinal column and 

extremities, and operate private or 

group practices in their own offices 

(e.g., centers, clinics) or in the facilities 

of others, such as hospitals or HMO 

medical centers. The SBA has 

established a size standard for this 

industry, which is annual receipts of $8 

million or less. The 2012 U.S. Economic 

Census statistics show that in 2012, 

33,940 firms operated throughout the 

entire year. Of that number 33,910 

operated with annual receipts of less 

than $5 million per year, while 26 firms 

had annual receipts between $5 million 

and $9,999,999. Based on this data, the 

Commission concludes that a majority 

of chiropractors are small. 

126. Offices of Optometrists. This U.S. 

industry comprises establishments of 

health practitioners having the degree of 

O.D. (Doctor of Optometry) primarily 

engaged in the independent practice of 

optometry. These practitioners examine, 

diagnose, treat, and manage diseases 

and disorders of the visual system, the 

eye and associated structures as well as 

diagnose related systemic conditions. 

Offices of optometrists prescribe and/or 

provide eyeglasses, contact lenses, low 

vision aids, and vision therapy. They 

operate private or group practices in 

their own offices (e.g., centers, clinics) 

or in the facilities of others, such as 

hospitals or HMO medical centers, and 

may also provide the same services as 

opticians, such as selling and fitting 

prescription eyeglasses and contact 

lenses. The SBA has established a size 

standard for businesses operating in this 

industry, which is annual receipts of $8 

million or less. The 2012 Economic 

Census indicates that 18,050 firms 

operated the entire year. Of that 

number, 17,951 had annual receipts of 

less than $5 million, while 70 firms had 

annual receipts between $5 million and 

$9,999,999. Based on this data, the 

Commission concludes that a majority 

of optometrists in this industry are 

small. 

127. Offices of Mental Health 

Practitioners (except Physicians). This 

U.S. industry comprises establishments 

of independent mental health 

practitioners (except physicians) 

primarily engaged in (1) the diagnosis 

and treatment of mental, emotional, and 

behavioral disorders and/or (2) the 

diagnosis and treatment of individual or 

group social dysfunction brought about 

by such causes as mental illness, 

alcohol and substance abuse, physical 

and emotional trauma, or stress. These 

practitioners operate private or group 

practices in their own offices (e.g., 

centers, clinics) or in the facilities of 

others, such as hospitals or HMO 

medical centers. The SBA has created a 

size standard for this industry, which is 

annual receipts of $8 million or less. 

The 2012 U.S. Economic Census 

indicates that 16,058 firms operated 

throughout the entire year. Of that 

number, 15,894 firms received annual 

receipts of less than $5 million, while 

111 firms had annual receipts between 

$5 million and $9,999,999. Based on 

this data, the Commission concludes 

that a majority of mental health 

practitioners who do not employ 

physicians are small. 

128. Offices of Physical, Occupational 

and Speech Therapists and 

Audiologists. This U.S. industry 

comprises establishments of 

independent health practitioners 

primarily engaged in one of the 

following: (1) Providing physical 

therapy services to patients who have 

impairments, functional limitations, 

disabilities, or changes in physical 

functions and health status resulting 

from injury, disease or other causes, or 

who require prevention, wellness or 

fitness services; (2) planning and 

administering educational, recreational, 

and social activities designed to help 

patients or individuals with disabilities, 

regain physical or mental functioning or 

to adapt to their disabilities; and (3) 

diagnosing and treating speech, 

language, or hearing problems. These 

practitioners operate private or group 

practices in their own offices (e.g., 

centers, clinics) or in the facilities of 

others, such as hospitals or HMO 

medical centers. The SBA has 

established a size standard for this 

industry, which is annual receipts of $8 

million or less. The 2012 U.S. Economic 

Census indicates that 20,567 firms in 

this industry operated throughout the 

entire year. Of this number, 20,047 had 

annual receipts of less than $5 million, 

while 270 firms had annual receipts 

between $5 million and $9,999,999. 

Based on this data, the Commission 

concludes that a majority of businesses 

in this industry are small. 

129. Offices of Podiatrists. This U.S. 

industry comprises establishments of 

health practitioners having the degree of 

D.P.M. (Doctor of Podiatric Medicine) 

primarily engaged in the independent 

practice of podiatry. These practitioners 

diagnose and treat diseases and 

deformities of the foot and operate 

private or group practices in their own 

offices (e.g., centers, clinics) or in the 

facilities of others, such as hospitals or 

HMO medical centers. The SBA has 

established a size standard for 

businesses in this industry, which is 

annual receipts of $8 million or less. 

The 2012 U.S. Economic Census 

indicates that 7,569 podiatry firms 

operated throughout the entire year. Of 

that number, 7,545 firms had annual 

receipts of less than $5 million, while 

22 firms had annual receipts between $5 

million and $9,999,999. Based on this 

data, the Commission concludes that a 


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majority of firms in this industry are 

small. 

130. Offices of All Other 

Miscellaneous Health Practitioners. This 

U.S. industry comprises establishments 

of independent health practitioners 

(except physicians; dentists; 

chiropractors; optometrists; mental 

health specialists; physical, 

occupational, and speech therapists; 

audiologists; and podiatrists). These 

practitioners operate private or group 

practices in their own offices (e.g., 

centers, clinics) or in the facilities of 

others, such as hospitals or HMO 

medical centers. The SBA has 

established a size standard for this 

industry, which is annual receipts of $8 

million or less. The 2012 U.S. Economic 

Census indicates that 11,460 firms 

operated throughout the entire year. Of 

that number, 11,374 firms had annual 

receipts of less than $5 million, while 

48 firms had annual receipts between $5 

million and $9,999,999. Based on this 

data, the Commission concludes the 

majority of firms in this industry are 

small. 

131. Family Planning Centers. This 

U.S. industry comprises establishments 

with medical staff primarily engaged in 

providing a range of family planning 

services on an outpatient basis, such as 

contraceptive services, genetic and 

prenatal counseling, voluntary 

sterilization, and therapeutic and 

medically induced termination of 

pregnancy. The SBA has established a 

size standard for this industry, which is 

annual receipts of $12 million or less. 

The 2012 Economic Census indicates 

that 1,286 firms in this industry 

operated throughout the entire year. Of 

that number 1,237 had annual receipts 

of less than $10 million, while 36 firms 

had annual receipts between $10 

million and $24,999,999. Based on this 

data, the Commission concludes that the 

majority of firms in this industry is 

small. 

132. Outpatient Mental Health and 

Substance Abuse Centers. This U.S. 

industry comprises establishments with 

medical staff primarily engaged in 

providing outpatient services related to 

the diagnosis and treatment of mental 

health disorders and alcohol and other 

substance abuse. These establishments 

generally treat patients who do not 

require inpatient treatment. They may 

provide a counseling staff and 

information regarding a wide range of 

mental health and substance abuse 

issues and/or refer patients to more 

extensive treatment programs, if 

necessary. The SBA has established a 

size standard for this industry, which is 

$16.5 million or less in annual receipts. 

The 2012 U.S. Economic Census 

indicates that 4,446 firms operated 

throughout the entire year. Of that 

number, 4,069 had annual receipts of 

less than $10 million while 286 firms 

had annual receipts between $10 

million and $24,999,999. Based on this 

data, the Commission concludes that a 

majority of firms in this industry are 

small. 

133. HMO Medical Centers. This U.S. 

industry comprises establishments with 

physicians and other medical staff 

primarily engaged in providing a range 

of outpatient medical services to the 

health maintenance organization (HMO) 

subscribers with a focus generally on 

primary health care. These 

establishments are owned by the HMO. 

Included in this industry are HMO 

establishments that both provide health 

care services and underwrite health and 

medical insurance policies. The SBA 

has established a size standard for this 

industry, which is $35 million or less in 

annual receipts. The 2012 U.S. 

Economic Census indicates that 14 firms 

in this industry operated throughout the 

entire year. Of that number, 5 firms had 

annual receipts of less than $25 million, 

while 1 firm had annual receipts 

between $25 million and $99,999,999. 

Based on this data, the Commission 

concludes that approximately one-third 

of the firms in this industry are small. 

134. Freestanding Ambulatory 

Surgical and Emergency Centers. This 

U.S. industry comprises establishments 

with physicians and other medical staff 

primarily engaged in (1) providing 

surgical services (e.g., orthoscopic and 

cataract surgery) on an outpatient basis 

or (2) providing emergency care services 

(e.g., setting broken bones, treating 

lacerations, or tending to patients 

suffering injuries as a result of 

accidents, trauma, or medical 

conditions necessitating immediate 

medical care) on an outpatient basis. 

Outpatient surgical establishments have 

specialized facilities, such as operating 

and recovery rooms, and specialized 

equipment, such as anesthetic or X-ray 

equipment. The SBA has established a 

size standard for this industry, which is 

annual receipts of $16.5 million or less. 

The 2012 U.S. Economic Census 

indicates that 3,595 firms in this 

industry operated throughout the entire 

year. Of that number, 3,222 firms had 

annual receipts of less than $10 million, 

while 289 firms had annual receipts 

between $10 million and $24,999,999. 

Based on this data, the Commission 

concludes that a majority of firms in this 

industry are small. 

135. All Other Outpatient Care 

Centers. This U.S. industry comprises 

establishments with medical staff 

primarily engaged in providing general 

or specialized outpatient care (except 

family planning centers, outpatient 

mental health and substance abuse 

centers, HMO medical centers, kidney 

dialysis centers, and freestanding 

ambulatory surgical and emergency 

centers). Centers or clinics of health 

practitioners with different degrees from 

more than one industry practicing 

within the same establishment (i.e., 

Doctor of Medicine and Doctor of Dental 

Medicine) are included in this industry. 

The SBA has established a size standard 

for this industry, which is annual 

receipts of $22 million or less. The 2012 

U.S. Economic Census indicates that 

4,903 firms operated in this industry 

throughout the entire year. Of this 

number, 4,269 firms had annual receipts 

of less than $10 million, while 389 firms 

had annual receipts between $10 

million and $24,999,999. Based on this 

data, the Commission concludes that a 

majority of firms in this industry are 

small. 

136. Blood and Organ Banks. This 

U.S. industry comprises establishments 

primarily engaged in collecting, storing, 

and distributing blood and blood 

products and storing and distributing 

body organs. The SBA has established a 

size standard for this industry, which is 

annual receipts of $35 million or less. 

The 2012 U.S. Economic Census 

indicates that 314 firms operated in this 

industry throughout the entire year. Of 

that number, 235 operated with annual 

receipts of less than $25 million, while 

41 firms had annual receipts between 

$25 million and $49,999,999. Based on 

this data, the Commission concludes 

that approximately three-quarters of 

firms that operate in this industry are 

small. 

137. All Other Miscellaneous 

Ambulatory Health Care Services. This 

U.S. industry comprises establishments 

primarily engaged in providing 

ambulatory health care services (except 

offices of physicians, dentists, and other 

health practitioners; outpatient care 

centers; medical and diagnostic 

laboratories; home health care 

providers; ambulances; and blood and 

organ banks). The SBA has established 

a size standard for this industry, which 

is annual receipts of $16.5 million or 

less. The 2012 U.S. Economic Census 

indicates that 2,429 firms operated in 

this industry throughout the entire year. 

Of that number, 2,318 had annual 

receipts of less than $10 million, while 

56 firms had annual receipts between 

$10 million and $24,999,999. Based on 

this data, the Commission concludes 

that a majority of the firms in this 

industry is small. 

138. Medical Laboratories. This U.S. 

industry comprises establishments 


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known as medical laboratories primarily 

engaged in providing analytic or 

diagnostic services, including body 

fluid analysis, generally to the medical 

profession or to the patient on referral 

from a health practitioner. The SBA has 

established a size standard for this 

industry, which is annual receipts of 

$35 million or less. The 2012 U.S. 

Economic Census indicates that 2,599 

firms operated in this industry 

throughout the entire year. Of this 

number, 2,465 had annual receipts of 

less than $25 million, while 60 firms 

had annual receipts between $25 

million and $49,999,999. Based on this 

data, the Commission concludes that a 

majority of firms that operate in this 

industry are small. 

139. Diagnostic Imaging Centers. This 

U.S. industry comprises establishments 

known as diagnostic imaging centers 

primarily engaged in producing images 

of the patient generally on referral from 

a health practitioner. The SBA has 

established size standard for this 

industry, which is annual receipts of 

$16.5 million or less. The 2012 U.S. 

Economic Census indicates that 4,209 

firms operated in this industry 

throughout the entire year. Of that 

number, 3,876 firms had annual receipts 

of less than $10 million, while 228 firms 

had annual receipts between $10 

million and $24,999,999. Based on this 

data, the Commission concludes that a 

majority of firms that operate in this 

industry are small. 

140. Home Health Care Services. This 

U.S. industry comprises establishments 

primarily engaged in providing skilled 

nursing services in the home, along with 

a range of the following: Personal care 

services; homemaker and companion 

services; physical therapy; medical 

social services; medications; medical 

equipment and supplies; counseling; 24- 

hour home care; occupation and 

vocational therapy; dietary and 

nutritional services; speech therapy; 

audiology; and high-tech care, such as 

intravenous therapy. The SBA has 

established a size standard for this 

industry, which is annual receipts of 

$16.5 million or less. The 2012 U.S. 

Economic Census indicates that 17,770 

firms operated in this industry 

throughout the entire year. Of that 

number, 16,822 had annual receipts of 

less than $10 million, while 590 firms 

had annual receipts between $10 

million and $24,999,999. Based on this 

data, the Commission concludes that a 

majority of firms that operate in this 

industry are small. 

141. Ambulance Services. This U.S. 

industry comprises establishments 

primarily engaged in providing 

transportation of patients by ground or 

air, along with medical care. These 

services are often provided during a 

medical emergency but are not 

restricted to emergencies. The vehicles 

are equipped with lifesaving equipment 

operated by medically trained 

personnel. The SBA has established a 

size standard for this industry, which is 

annual receipts of $16.5 million or less. 

The 2012 U.S. Economic Census 

indicates that 2,984 firms operated in 

this industry throughout the entire year. 

Of that number, 2,926 had annual 

receipts of less than $15 million, while 

133 firms had annual receipts between 

$10 million and $24,999,999. Based on 

this data, the Commission concludes 

that a majority of firms in this industry 

is small. 

142. Kidney Dialysis Centers. This 

U.S. industry comprises establishments 

with medical staff primarily engaged in 

providing outpatient kidney or renal 

dialysis services. The SBA has 

established assize standard for this 

industry, which is annual receipts of 

$41.5 million or less. The 2012 U.S. 

Economic Census indicates that 396 

firms operated in this industry 

throughout the entire year. Of that 

number, 379 had annual receipts of less 

than $25 million, while 7 firms had 

annual receipts between $25 million 

and $49,999,999. Based on this data, the 

Commission concludes that a majority 

of firms in this industry are small. 

143. General Medical and Surgical 

Hospitals. This U.S. industry comprises 

establishments known and licensed as 

general medical and surgical hospitals 

primarily engaged in providing 

diagnostic and medical treatment (both 

surgical and nonsurgical) to inpatients 

with any of a wide variety of medical 

conditions. These establishments 

maintain inpatient beds and provide 

patients with food services that meet 

their nutritional requirements. These 

hospitals have an organized staff of 

physicians and other medical staff to 

provide patient care services. These 

establishments usually provide other 

services, such as outpatient services, 

anatomical pathology services, 

diagnostic X-ray services, clinical 

laboratory services, operating room 

services for a variety of procedures, and 

pharmacy services. The SBA has 

established a size standard for this 

industry, which is annual receipts of 

$41.5 million or less. The 2012 U.S. 

Economic Census indicates that 2,800 

firms operated in this industry 

throughout the entire year. Of that 

number, 877 has annual receipts of less 

than $25 million, while 400 firms had 

annual receipts between $25 million 

and $49,999,999. Based on this data, the 

Commission concludes that 

approximately one-quarter of firms in 

this industry are small. 

144. Psychiatric and Substance Abuse 

Hospitals. This U.S. industry comprises 

establishments known and licensed as 

psychiatric and substance abuse 

hospitals primarily engaged in 

providing diagnostic, medical treatment, 

and monitoring services for inpatients 

who suffer from mental illness or 

substance abuse disorders. The 

treatment often requires an extended 

stay in the hospital. These 

establishments maintain inpatient beds 

and provide patients with food services 

that meet their nutritional requirements. 

They have an organized staff of 

physicians and other medical staff to 

provide patient care services. 

Psychiatric, psychological, and social 

work services are available at the 

facility. These hospitals usually provide 

other services, such as outpatient 

services, clinical laboratory services, 

diagnostic X-ray services, and 

electroencephalograph services. The 

SBA has established a size standard for 

this industry, which is annual receipts 

of $41.5 million or less. The 2012 U.S. 

Economic Census indicates that 404 

firms operated in this industry 

throughout the entire year. Of that 

number, 185 had annual receipts of less 

than $25 million, while 107 firms had 

annual receipts between $25 million 

and $49,999,999. Based on this data, the 

Commission concludes that more than 

one-half of the firms in this industry are 

small. 

145. Specialty (Except Psychiatric and 

Substance Abuse) Hospitals. This U.S. 

industry consists of establishments 

known and licensed as specialty 

hospitals primarily engaged in 

providing diagnostic, and medical 

treatment to inpatients with a specific 

type of disease or medical condition 

(except psychiatric or substance abuse). 

Hospitals providing long-term care for 

the chronically ill and hospitals 

providing rehabilitation, restorative, and 

adjustive services to physically 

challenged or disabled people are 

included in this industry. These 

establishments maintain inpatient beds 

and provide patients with food services 

that meet their nutritional requirements. 

They have an organized staff of 

physicians and other medical staff to 

provide patient care services. These 

hospitals may provide other services, 

such as outpatient services, diagnostic 

X-ray services, clinical laboratory 

services, operating room services, 

physical therapy services, educational 

and vocational services, and 

psychological and social work services. 

The SBA has established a size standard 

for this industry, which is annual 


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receipts of $41.5 million or less. The 

2012 U.S. Economic Census indicates 

that 346 firms operated in this industry 

throughout the entire year. Of that 

number, 146 firms had annual receipts 

of less than $25 million, while 79 firms 

had annual receipts between $25 

million and $49,999,999. Based on this 

data, the Commission concludes that 

more than one-half of the firms in this 

industry are small. 

146. Emergency and Other Relief 

Services. This industry comprises 

establishments primarily engaged in 

providing food, shelter, clothing, 

medical relief, resettlement, and 

counseling to victims of domestic or 

international disasters or conflicts (e.g., 

wars). The SBA has established a size 

standard for this industry which is 

annual receipts of $35 million or less. 

The 2012 U.S. Economic Census 

indicates that 541 firms operated in this 

industry throughout the entire year. Of 

that number, 509 had annual receipts of 

less than $25 million, while 7 firms had 

annual receipts between $25 million 

and $49,999,999. Based on this data, the 

Commission concludes that a majority 

of firms in this industry are small. 

3. Providers of Telecommunications and 

Other Services 

a. Telecommunications Service 

Providers 

147. Incumbent Local Exchange 

Carriers (LECs). Neither the Commission 

nor the SBA has developed a small 

business size standard specifically for 

incumbent local exchange services. The 

closest applicable NAICS Code category 

is Wired Telecommunications Carriers. 

Under the applicable SBA size standard, 

such a business is small if it has 1,500 

or fewer employees. U.S. Census Bureau 

data for 2012 indicate that 3,117 firms 

operated the entire year. Of this total, 

3,083 operated with fewer than 1,000 

employees. Consequently, the 

Commission estimates that most 

providers of incumbent local exchange 

service are small businesses that may be 

affected by its actions. According to 

Commission data, one thousand three 

hundred and seven (1,307) Incumbent 

Local Exchange Carriers reported that 

they were incumbent local exchange 

service providers. Of this total, an 

estimated 1,006 have 1,500 or fewer 

employees. Thus, using the SBA’s size 

standard the majority of incumbent 

LECs can be considered small entities. 

148. Competitive Local Exchange 

Carriers (Competitive LECs), 

Competitive Access Providers (CAPs), 

Shared-Tenant Service Providers, and 

Other Local Service Providers. Neither 

the Commission nor the SBA has 

developed a small business size 

standard specifically for these service 

providers. The appropriate NAICS Code 

category is Wired Telecommunications 

Carriers and under that size standard, 

such a business is small if it has 1,500 

or fewer employees. U.S. Census Bureau 

data for 2012 indicate that 3,117 firms 

operated during that year. Of that 

number, 3,083 operated with fewer than 

1,000 employees. Based on these data, 

the Commission concludes that the 

majority of Competitive LECS, CAPs, 

Shared-Tenant Service Providers, and 

Other Local Service Providers, are small 

entities. According to Commission data, 

1,442 carriers reported that they were 

engaged in the provision of either 

competitive local exchange services or 

competitive access provider services. Of 

these 1,442 carriers, an estimated 1,256 

have 1,500 or fewer employees. In 

addition, 17 carriers have reported that 

they are Shared-Tenant Service 

Providers, and all 17 are estimated to 

have 1,500 or fewer employees. Also, 72 

carriers have reported that they are 

Other Local Service Providers. Of this 

total, 70 have 1,500 or fewer employees. 

Consequently, based on internally 

researched FCC data, the Commission 

estimates that most providers of 

competitive local exchange service, 

competitive access providers, SharedTenant Service Providers, and Other 

Local Service Providers are small 

entities. 

149. Interexchange Carriers (IXCs). 

Neither the Commission nor the SBA 

has developed a small business size 

standard specifically for Interexchange 

Carriers. The closest applicable NAICS 

Code category is Wired 

Telecommunications Carriers. The 

applicable size standard under SBA 

rules is that such a business is small if 

it has 1,500 or fewer employees. U.S. 

Census Bureau data for 2012 indicate 

that 3,117 firms operated for the entire 

year. Of that number, 3,083 operated 

with fewer than 1,000 employees. 

According to internally developed 

Commission data, 359 companies 

reported that their primary 

telecommunications service activity was 

the provision of interexchange services. 

Of this total, an estimated 317 have 

1,500 or fewer employees. 

Consequently, the Commission 

estimates that the majority of 

interexchange service providers are 

small entities. 

150. Operator Service Providers 

(OSPs). Neither the Commission nor the 

SBA has developed a small business 

size standard specifically for operator 

service providers. The closest applicable 

size standard under SBA rules is for the 

category Wired Telecommunications 

Carriers. Under that size standard, such 

a business is small if it has 1,500 or 

fewer employees. U.S. Census Bureau 

data for 2012 show that there were 3,117 

firms that operated that year. Of this 

total, 3,083 operated with fewer than 

1,000 employees. Thus under this size 

standard, the Commission estimates that 

the majority of firms in this industry are 

small entities. According to Commission 

data, 33 carriers have reported that they 

are engaged in the provision of operator 

services. Of these, an estimated 31 have 

1,500 or fewer employees and 2 have 

more than 1,500 employees. 

Consequently, the Commission 

estimates that the majority of operator 

service providers are small entities. 

151. Local Resellers. The SBA has not 

developed a small business size 

standard specifically for Local Resellers. 

The SBA category of 

Telecommunications Resellers is the 

closest NAICs code category for local 

resellers. The Telecommunications 

Resellers industry comprises 

establishments engaged in purchasing 

access and network capacity from 

owners and operators of 

telecommunications networks and 

reselling wired and wireless 

telecommunications services (except 

satellite) to businesses and households. 

Establishments in this industry resell 

telecommunications; they do not 

operate transmission facilities and 

infrastructure. Mobile virtual network 

operators (MVNOs) are included in this 

industry. Under the SBA’s size 

standard, such a business is small if it 

has 1,500 or fewer employees. U.S. 

Census Bureau data from 2012 show 

that 1,341 firms provided resale services 

during that year. Of that number, all 

operated with fewer than 1,000 

employees. Thus, under this category 

and the associated small business size 

standard, the majority of these resellers 

can be considered small entities. 

According to Commission data, 213 

carriers have reported that they are 

engaged in the provision of local resale 

services. Of these, an estimated 211 

have 1,500 or fewer employees and two 

have more than 1,500 employees. 

Consequently, the Commission 

estimates that the majority of local 

resellers are small entities. 

152. Toll Resellers. The Commission 

has not developed a definition for Toll 

Resellers. The closest NAICS Code 

Category is Telecommunications 

Resellers. The Telecommunications 

Resellers industry comprises 

establishments engaged in purchasing 

access and network capacity from 

owners and operators of 

telecommunications networks and 

reselling wired and wireless 


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telecommunications services (except 

satellite) to businesses and households. 

Establishments in this industry resell 

telecommunications; they do not 

operate transmission facilities and 

infrastructure. MVNOs are included in 

this industry. The SBA has developed a 

small business size standard for the 

category of Telecommunications 

Resellers. Under that size standard, such 

a business is small if it has 1,500 or 

fewer employees. 2012 U.S. Census 

Bureau data show that 1,341 firms 

provided resale services during that 

year. Of that number, 1,341 operated 

with fewer than 1,000 employees. Thus, 

under this category and the associated 

small business size standard, the 

majority of these resellers can be 

considered small entities. According to 

Commission data, 881 carriers have 

reported that they are engaged in the 

provision of toll resale services. Of this 

total, an estimated 857 have 1,500 or 

fewer employees. Consequently, the 

Commission estimates that the majority 

of toll resellers are small entities. 

153. Wired Telecommunications 

Carriers. The U.S. Census Bureau 

defines this industry as ‘‘establishments 

primarily engaged in operating and/or 

providing access to transmission 

facilities and infrastructure that they 

own and/or lease for the transmission of 

voice, data, text, sound, and video using 

wired communications networks. 

Transmission facilities may be based on 

a single technology or a combination of 

technologies. Establishments in this 

industry use the wired 

telecommunications network facilities 

that they operate to provide a variety of 

services, such as wired telephony 

services, including voice over internet 

protocol (VoIP) services; wired (cable) 

audio and video programming 

distribution; and wired broadband 

internet services. By exception, 

establishments providing satellite 

television distribution services using 

facilities and infrastructure that they 

operate are included in this industry.’’ 

The SBA has developed a small 

business size standard for Wired 

Telecommunications Carriers, which 

consists of all such companies having 

1,500 or fewer employees. U.S. Census 

data for 2012 show that there were 3,117 

firms that operated that year. Of this 

total, 3,083 operated with fewer than 

1,000 employees. Thus, under this size 

standard, the majority of firms in this 

industry can be considered small. 

154. Wireless Telecommunications 

Carriers (except Satellite). This industry 

comprises establishments engaged in 

operating and maintaining switching 

and transmission facilities to provide 

communications via the airwaves. 

Establishments in this industry have 

spectrum licenses and provide services 

using that spectrum, such as cellular 

services, paging services, wireless 

internet access, and wireless video 

services. The appropriate size standard 

under SBA rules is that such a business 

is small if it has 1,500 or fewer 

employees. For this industry, U.S. 

Census Bureau data for 2012 show that 

there were 967 firms that operated for 

the entire year. Of this total, 955 firms 

employed fewer than 1,000 employees 

and 12 firms employed of 1,000 

employees or more. Thus under this 

category and the associated size 

standard, the Commission estimates that 

the majority of Wireless 

Telecommunications Carriers (except 

Satellite) are small entities. 

155. The Commission’s own data— 

available in its Universal Licensing 

System—indicate that, as of August 31, 

2018, there are 265 Cellular licensees 

that will be affected by its actions. The 

Commission does not know how many 

of these licensees are small, as the 

Commission does not collect that 

information for these types of entities. 

Similarly, according to internally 

developed Commission data, 413 

carriers reported that they were engaged 

in the provision of wireless telephony, 

including cellular service, Personal 

Communications Service (PCS), and 

Specialized Mobile Radio (SMR) 

Telephony services. Of this total, an 

estimated 261 have 1,500 or fewer 

employees, and 152 have more than 

1,500 employees. Thus, using available 

data, the Commission estimates that the 

majority of wireless firms can be 

considered small. 

156. Wireless Telephony. Wireless 

telephony includes cellular, personal 

communications services, and 

specialized mobile radio telephony 

carriers. The closest applicable SBA 

category is Wireless 

Telecommunications Carriers (except 

Satellite). Under the SBA small business 

size standard, a business is small if it 

has 1,500 or fewer employees. For this 

industry, U.S. Census Bureau data for 

2012 show that there were 967 firms 

that operated for the entire year. Of this 

total, 955 firms had fewer than 1,000 

employees and 12 firms had 1,000 

employees or more. Thus under this 

category and the associated size 

standard, the Commission estimates that 

a majority of these entities can be 

considered small. According to 

Commission data, 413 carriers reported 

that they were engaged in wireless 

telephony. Of these, an estimated 261 

have 1,500 or fewer employees and 152 

have more than 1,500 employees. 

Therefore, more than half of these 

entities can be considered small. 

157. Satellite Telecommunications. 

This category comprises firms 

‘‘primarily engaged in providing 

telecommunications services to other 

establishments in the 

telecommunications and broadcasting 

industries by forwarding and receiving 

communications signals via a system of 

satellites or reselling satellite 

telecommunications.’’ Satellite 

telecommunications service providers 

include satellite and earth station 

operators. The category has a small 

business size standard of $35 million or 

less in average annual receipts, under 

SBA rules. For this category, U.S. 

Census Bureau data for 2012 show that 

there were a total of 333 firms that 

operated for the entire year. Of this 

total, 299 firms had annual receipts of 

less than $25 million. Consequently, the 

Commission estimates that the majority 

of satellite telecommunications 

providers are small entities. 

158. All Other Telecommunications. 

The ‘‘All Other Telecommunications’’ 

category is comprised of establishments 

primarily engaged in providing 

specialized telecommunications 

services, such as satellite tracking, 

communications telemetry, and radar 

station operation. This industry also 

includes establishments primarily 

engaged in providing satellite terminal 

stations and associated facilities 

connected with one or more terrestrial 

systems and capable of transmitting 

telecommunications to, and receiving 

telecommunications from, satellite 

systems. Establishments providing 

internet services or voice over internet 

protocol (VoIP) services via clientsupplied telecommunications 

connections are also included in this 

industry. The SBA has developed a 

small business size standard for ‘‘All 

Other Telecommunications,’’ which 

consists of all such firms with annual 

receipts of $35 million or less. For this 

category, U.S. Census Bureau data for 

2012 show that there were 1,442 firms 

that operated for the entire year. Of 

those firms, a total of 1,400 had annual 

receipts less than $25 million and 15 

firms had annual receipts of $25 million 

to $49, 999,999. Thus, the Commission 

estimates that the majority of ‘‘All Other 

Telecommunications’’ firms potentially 

affected by its action can be considered 

small. 

b. Internet Service Providers 

159. Internet Service Providers 

(Broadband). Broadband internet 

service providers include wired (e.g., 

cable, DSL) and VoIP service providers 

using their own operated wired 


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telecommunications infrastructure fall 

in the category of Wired 

Telecommunication Carriers. Wired 

Telecommunications Carriers are 

comprised of establishments primarily 

engaged in operating and/or providing 

access to transmission facilities and 

infrastructure that they own and/or 

lease for the transmission of voice, data, 

text, sound, and video using wired 

telecommunications networks. 

Transmission facilities may be based on 

a single technology or a combination of 

technologies. The SBA size standard for 

this category classifies a business as 

small if it has 1,500 or fewer employees. 

U.S. Census Bureau data for 2012 show 

that there were 3,117 firms that operated 

that year. Of this total, 3,083 operated 

with fewer than 1,000 employees. 

Consequently, under this size standard 

the majority of firms in this industry can 

be considered small. 

160. Internet Service Providers (NonBroadband). internet access service 

providers such as Dial-up internet 

service providers, VoIP service 

providers using client-supplied 

telecommunications connections and 

internet service providers using clientsupplied telecommunications 

connections (e.g., dial-up ISPs) fall in 

the category of All Other 

Telecommunications. The SBA has 

developed a small business size 

standard for All Other 

Telecommunications which consists of 

all such firms with gross annual receipts 

of $35 million or less. For this category, 

U.S. Census Bureau data for 2012 show 

that there were 1,442 firms that operated 

for the entire year. Of these firms, a total 

of 1,400 had gross annual receipts of 

less than $25 million. Consequently, 

under this size standard a majority of 

firms in this industry can be considered 

small. 

c. Vendors and Equipment 

Manufacturers 

161. Vendors of Infrastructure 

Development or ‘‘Network Buildout.’’ 

The Commission has not developed a 

small business size standard specifically 

directed toward manufacturers of 

network facilities. There are two 

applicable SBA categories in which 

manufacturers of network facilities 

could fall and each have different size 

standards under the SBA rules. The 

SBA categories are ‘‘Radio and 

Television Broadcasting and Wireless 

Communications Equipment’’ with a 

size standard of 1,250 employees or less 

and ‘‘Other Communications Equipment 

Manufacturing’’ with a size standard of 

750 employees or less.’’ U.S. Census 

Bureau data for 2012 shows that for 

Radio and Television Broadcasting and 

Wireless Communications Equipment 

firms 841 establishments operated for 

the entire year. Of that number, 828 

establishments operated with fewer than 

1,000 employees, and 7 establishments 

operated with between 1,000 and 2,499 

employees. For Other Communications 

Equipment Manufacturing, U.S. Census 

Bureau data for 2012, show that 383 

establishments operated for the year. Of 

that number 379 operated with fewer 

than 500 employees and 4 had 500 to 

999 employees. Based on this data, the 

Commission concludes that the majority 

of Vendors of Infrastructure 

Development or ‘‘Network Buildout’’ are 

small. 

162. Telephone Apparatus 

Manufacturing. This industry comprises 

establishments primarily engaged in 

manufacturing wire telephone and data 

communications equipment. These 

products may be stand-alone or boardlevel components of a larger system. 

Examples of products made by these 

establishments are central office 

switching equipment, cordless and wire 

telephones (except cellular), PBX 

equipment, telephone answering 

machines, LAN modems, multi-user 

modems, and other data 

communications equipment, such as 

bridges, routers, and gateways. The SBA 

has developed a small business size 

standard for Telephone Apparatus 

Manufacturing, which consists of all 

such companies having 1,250 or fewer 

employees. U.S. Census Bureau data for 

2012 show that there were 266 

establishments that operated that year. 

Of this total, 262 operated with fewer 

than 1,000 employees. Thus, under this 

size standard, the majority of firms in 

this industry can be considered small. 

163. Radio and Television 

Broadcasting and Wireless 

Communications Equipment 

Manufacturing. This industry comprises 

establishments primarily engaged in 

manufacturing radio and television 

broadcast and wireless communications 

equipment. Examples of products made 

by these establishments are: 

Transmitting and receiving antennas, 

cable television equipment, GPS 

equipment, pagers, cellular phones, 

mobile communications equipment, and 

radio and television studio and 

broadcasting equipment. The SBA has 

established a small business size 

standard for this industry of 1,250 or 

fewer employees. U.S. Census Bureau 

data for 2012 show that 841 

establishments operated in this industry 

in that year. Of that number, 828 

establishments operated with fewer than 

1,000 employees, 7 establishments 

operated with between 1,000 and 2,499 

employees and 6 establishments 

operated with 2,500 or more employees. 

Based on this data, the Commission 

concludes that a majority of 

manufacturers in this industry are 

small. 

164. Other Communications 

Equipment Manufacturing. This 

industry comprises establishments 

primarily engaged in manufacturing 

communications equipment (except 

telephone apparatus, and radio and 

television broadcast, and wireless 

communications equipment). Examples 

of such manufacturing include fire 

detection and alarm systems 

manufacturing, Intercom systems and 

equipment manufacturing, and signals 

(e.g., highway, pedestrian, railway, 

traffic) manufacturing. The SBA has 

established a size standard for this 

industry as all such firms having 750 or 

fewer employees. U.S. Census Bureau 

data for 2012 shows that 383 

establishments operated in that year. Of 

that number, 379 operated with fewer 

than 500 employees and 4 had 500 to 

999 employees. Based on this data, the 

Commission concludes that the majority 

of Other Communications Equipment 

Manufacturers are small. 

E. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements for Small Entities 

165. Requirement to Remove and 

Replace Covered Equipment and 

Services. The Third Report and Order 

increases the pool or participants in the 

Reimbursement Program from those 

providers of advanced communications 

services with two million or fewer 

customers to those with 10 million or 

fewer customers, but does not change 

any reporting requirements adopted in 

previous Commission orders. 

F. Steps Taken To Minimize the 

Significant Economic Impact on Small 

Entities, and Significant Alternatives 

Considered 

166. The RFA requires an agency to 

describe the steps the agency has taken 

to minimize the significant economic 

impact on small entities of the final 

rule, consistent with the stated 

objectives of the applicable statutes, 

including a statement of the factual, 

policy, and legal reasons in support of 

the final rule, and why any significant 

alternatives to the rule considered by 

the agency and which affect the impact 

on small entities were rejected. 

167. All of the rules in the Third 

Report and Order are adopted pursuant 

to statutory obligation under the CAA. 

However, where the Commission has 

discretion in its interpretation or 

implementation of the CAA provisions, 

or adopts rules pursuant to alternative 


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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 47021 

statutory authority, the scope of the 

rules is narrowly tailored so as to lessen 

the impact on small entities. The rules 

adopted in the Third Report and Order 

appropriately consider the burdens on 

smaller providers against the 

Commission’s goal of protecting its 

communications networks and 

communications supply chain from 

communications equipment and 

services that pose a national security 

threat, while facilitating the transition to 

safer and more secure alternatives. 

G. Report to Congress 

168. The Commission will send a 

copy of the Third Report and Order, 

including this FRFA, in a report to be 

sent to Congress pursuant to the 

Congressional Review Act. In addition, 

the Commission will send a copy of the 

Third Report and Order, including this 

FRFA, to the Chief Counsel for 

Advocacy of the SBA. A copy of the 

Third Report and Order and FRFA (or 

summaries thereof) will also be 

published in the Federal Register. 

169. Congressional Review Act. The 

Commission has determined, and the 

Administrator of the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 

concurs, that this rule is major under 

the Congressional Review Act, 5 U.S.C. 

804(2). The Commission will send a 

copy of this Third Report and Order to 

Congress and the Government 

Accountability Office pursuant to 5 

U.S.C. 801(a)(1)(A). 

IV. Ordering Clauses 

170. 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, 503, 

sections 2, 3, 4, 5, 7 and 9 of the Secure 

Networks Act, 47 U.S.C. 1601, 1602, 

1603, 1604, 1606, and 1608, Division N, 

Title IX, sections 901 and 906 of the 

Consolidated Appropriations Act, 2021, 

and sections 1.1 and 1.412 of the 

Commission’s rules, 47 CFR 1.1 and 

1.412, this Third Report and Order is 

adopted. 

171. It is further ordered that Parts 1 

and 54 of the Commission’s rules are 

amended as set forth below. 

172. It is further ordered that, 

pursuant to sections 1.4(b)(1) and 

1.103(a) of the Commission’s rules, 47 

CFR 1.4(b)(1), 1.103(a), this Third 

Report and Order shall be effective 

October 22, 2021. 

173. It is further ordered that the 

Commission shall send a copy of this 

Third Report and Order to Congress and 

to the Government Accountability 

Office pursuant to the Congressional 

Review Act, see 5 U.S.C. 801(a)(1)(A). 

174. It is further ordered that the 

Commission’s Consumer and 

Governmental Affairs, Bureau, 

Reference Information Center, shall 

send a copy of this Third Report and 

Order, including the Final Regulatory 

Flexibility Analysis, to the Chief 

Counsel for Advocacy of the Small 

Business Administration. 

List of Subjects 

47 CFR Part 1 

Administrative practice and 

procedure, Communications, 

Communications equipment, Internet, 

Telecommunications. 

47 CFR Part 54 

Communications common carriers, 

Internet, Libraries, Reporting and 

recordkeeping requirements, Schools, 

Telecommunications. 

Federal Communications Commission. 

Marlene Dortch, 

Secretary. 

Final Rules 

For the reasons set forth above, part 

1 of title 47 of the Code of Federal 

Regulations is amended as follows: 

PART 1—PRACTICE AND 

PROCEDURE 

■ 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 note, unless otherwise noted. 

■ 2. Section 1.50004 is amended by: 

■ a. Revising paragraphs (a) 

introductory text, (a)(1), (a)(2) (f) 

introductory text, (i)(1)(i), and (ii), and 

adding paragraph (q) to read as follows: 

§ 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: 

TABLE 1 TO PARAGRAPH (f) 

Prioritization 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 part 27, subpart M of title 47, Code of Federal Regulations, or any successor regulation and health care providers and libraries providing advanced communications service. 


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47022 Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 

TABLE 1 TO PARAGRAPH (f)—Continued 

Prioritization schedule 

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, the term 

‘‘provider of advanced communications 

services’’ is defined as: 

(1) A person who provides advanced 

communications service to United 

States customers; and includes: 

(A) Accredited public or private noncommercial educational institutions, 

providing their own facilities-based 

educational broadband service, as 

defined in 47 CFR part 27, subpart M, 

or any successor regulation; and 

(B) Health care providers and libraries 

providing advanced communications 

service. 

(2) [Reserved]. 

PART 54—UNIVERSAL SERVICE 

■ 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, 1302, and 1601–1609, unless otherwise 

noted. 

■ 4. Section 54.11 is amended by 

revising paragraphs (b), (c), and (d) to 

read as follows: 

* * * * * 

(b) For the purposes of this section, 

covered communications equipment or 

services means any communications 

equipment or service that is on the 

Covered List maintained pursuant to 

§ 1.50002 of this chapter, and: 

(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’). 

(c) The certification referenced in 

paragraph (a) of this section is required 

starting one year after the date the 

Commission releases a Public Notice 

announcing that applications are 

accepted for filing in the corresponding 

filing window of the Reimbursement 

Program per § 1.50004(b) for the 

removal, replacement, and disposal of 

associated covered communications 

equipment and services. 

(d) Reimbursement Program 

recipients, as defined in § 1.50001(h) of 

this chapter, are not subject to 

paragraph (a) of this section until after 

the expiration of their corresponding 

removal, replacement, and disposal 

term per § 1.50004(h) of this chapter for 

associated covered communications 

equipment and services. 

* * * * * 

[FR Doc. 2021–17279 Filed 8–20–21; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Parts 224 

[Docket No. 210817–0163; RTID 0648– 

XR117] 

Endangered and Threatened Wildlife 

and Plants; Technical Corrections for 

the Bryde’s Whale (Gulf of Mexico 

Subspecies) 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Direct final rule. 

SUMMARY: We, the NMFS, announce the 

revised taxonomy and common name of 

Balaenoptera edeni (unnamed 

subspecies; Bryde’s Whale—Gulf of 

Mexico subspecies) under the 

Endangered Species Act of 1973, as 

amended (ESA). We are revising the 

Enumeration of endangered marine and 

anadromous species for Bryde’s 

Whale—Gulf of Mexico subspecies, to 

reflect the scientifically accepted 

taxonomy and nomenclature of this 

species. We revise the common name to 

Rice’s whale, the scientific name to 

Balaenoptera ricei, and the description 

of the listed entity to entire species. The 

changes to the taxonomic classification 

and nomenclature do not affect the 

species’ listing status under the ESA or 

any protections and requirements 

arising from its listing. 

DATES: This rule is effective October 22, 

2021 without further action, unless 

significant adverse comment is received 

by September 22, 2021. If significant 

adverse comments are received, the 

NMFS will publish a timely withdrawal 

of the rule in the Federal Register. 

ADDRESSES: You may submit comments, 

information, or data on this document, 

identified by NOAA–NMFS–2021–0078, 

by any of the following methods: 

• Electronic Submissions: Submit all 

electronic public comments via the 

Federal e-Rulemaking Portal. Go to 

https://www.regulations.gov and enter 

NOAA–NMFS–2021–0078 in the Search 

box. Click on the ‘‘Comment’’ icon, 

complete the required fields, and enter 

or attach your comments. 

• Mail: Submit written comments to 

Marine Mammal Branch Chief, 

Protected Resources Division, Southeast 

Regional Office, NMFS Protected 

Resources Division, 263 13th Avenue 

South, St. Petersburg, FL 33701. 

Instructions: Comments sent by any 

other method, to any other address or 

individual, or received after the end of 

the comment period may not be 

considered by us. All comments 

received are a part of the public record 

and will generally be posted for public 

viewing on www.regulations.gov 

without change. All personal identifying 

information (e.g., name, address, etc.), 

confidential business information, or 

otherwise sensitive information 

submitted voluntarily by the sender will 

be publicly accessible. We will accept 

anonymous comments (enter ‘‘N/A’’ in 

the required fields if you wish to remain 

anonymous), although submitting 

comments anonymously will prevent us 

from contacting you if we have 

difficulty retrieving your submission. 

Attachments to electronic comments 

will be accepted in Microsoft Word, 

Excel, or Adobe PDF file formats only. 


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