IB Union Calendar No. 281 116th CONGRESS 1st Session H. R. 4998 [Report No. 116–352] IN THE HOUSE OF REPRESENTATIVES November 8, 2019 Mr. Pallone (for himself, Mr. Walden , Ms. Matsui , and Mr. Guthrie ) introduced the following bill; which was referred to the Committee on Energy and Commerce December 16, 2019 Reported with amendments, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed Strike out all after the enacting clause and insert the part printed in italic For text of introduced bill, see copy of bill as introduced on November 8, 2019 A BILL To prohibit certain Federal loans, grants, and subsidies from being used to purchase communications equipment or services posing national security risks, to provide for the establishment of a reimbursement program for the replacement of communications equipment or services posing such risks, and for other purposes.

1. Short title This Act may be cited as the Secure and Trusted Communications Networks Act of 2019 . 2. Determination of communications equipment or services posing national security risks (a) Publication of covered communications equipment or services list Not later than 1 year after the date of the enactment of this Act, the Commission shall publish on its website a list of covered communications equipment or services. (b) Determination by Commission The Commission shall place on the list published under subsection (a) any communications equipment or service, if and only if the Commission determines that such equipment or service— (1) is produced or provided by— (A) Huawei Technologies Co. Limited, Zhongxing Telecommunications Equipment Corporation, or any subsidiary or affiliate of either such entity; (B) any successor to any entity described in subparagraph (A); or (C) any other entity, if the Commission determines, based exclusively on the determinations described in paragraphs (1) through (3) of subsection (c), that such equipment or service produced or provided by such entity poses an unacceptable risk to the national security of the United States or the security and safety of United States persons; and (2) is capable of— (A) routing or redirecting user data traffic or permitting visibility into any user data or packets that such equipment or service transmits or otherwise handles; or (B) causing the network of a provider of advanced communications service to be disrupted remotely. (c) Reliance on certain other determinations In making a determination under subsection (b)(1)(C), the Commission shall rely solely on one or more of the following determinations: (1) A specific determination made by any executive branch interagency body with appropriate national security expertise, including the Federal Acquisition Security Council established under section 1322(a) of title 41, United States Code. (2) A specific determination made by the Department of Commerce pursuant to Executive Order 13873 (84 Fed. Reg. 22689; relating to securing the information and communications technology and services supply chain). (3) The communications equipment or service being covered telecommunications equipment or services, as defined in section 889(f)(3) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( Public Law 115–232 ; 132 Stat. 1918). (d) Updating of list (1) In general The Commission shall periodically update the list published under subsection (a), as necessary to protect national security and to address changes in the determinations described in paragraphs (1) through (3) of subsection (c). (2) Monitoring of determinations The Commission shall monitor the making or reversing of the determinations described in paragraphs (1) through (3) of subsection (c) in order to determine whether to place communications equipment or services on the list published under subsection (a) or to remove communications equipment or services from such list. If a determination described in any such paragraph that provided the basis for a determination by the Commission under subsection (b)(1)(C) with respect to any communications equipment or service is reversed, the Commission shall remove such equipment or service from such list, except that the Commission may not remove such equipment or service from such list if any other determination described in any such paragraph provides a basis for a determination by the Commission under subsection (b)(1)(C) with respect to such equipment or service. (3) Public notification For each 12-month period during which the list published under subsection (a) is not updated, the Commission shall notify the public that no updates were necessary during such period to protect national security or to address changes in the determinations described in paragraphs (1) through (3) of subsection (c). 3. Prohibition on use of certain Federal subsidies (a) In general (1) Prohibition A Federal subsidy that is made available through a program administered by the Commission and that provides funds to be used for the capital expenditures necessary for the provision of advanced communications service may not be used to— (A) purchase, rent, lease, or otherwise obtain any covered communications equipment or service; or (B) maintain any covered communications equipment or service previously purchased, rented, leased, or otherwise obtained. (2) Timing Paragraph (1) shall apply with respect to any covered communications equipment or service beginning on the date that is 60 days after the date on which the Commission places such equipment or service on the list required by section 2(a). In the case of any covered communications equipment or service that is on the initial list published under such section, such equipment or service shall be treated as being placed on the list on the date on which such list is published. (b) Completion of proceeding Not later than 90 days after the date of the enactment of this Act, the Commission shall adopt a Report and Order in the matter of Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs (WC Docket No. 18–89) that implements subsection (a). 4. Secure and Trusted Communications Networks Reimbursement Program (a) In general The Commission shall establish a reimbursement program, to be known as the Secure and Trusted Communications Networks Reimbursement Program , to make reimbursements to providers of advanced communications service to replace covered communications equipment or services. (b) Eligibility The Commission may not make a reimbursement under the Program to a provider of advanced communications service unless the provider— (1) has 2,000,000 or fewer customers; and (2) makes all of the certifications required by subsection (d)(5). (c) Use of funds (1) In general A recipient of a reimbursement under the Program shall use reimbursement funds solely for the purposes of— (A) permanently removing covered communications equipment or services purchased, rented, leased, or otherwise obtained before— (i) in the case of any covered communications equipment or services that are on the initial list published under section 2(a), August 14, 2018; or (ii) in the case of any covered communications equipment or services that are not on the initial list published under section 2(a), the date that is 60 days after the date on which the Commission places such equipment or services on the list required by such section; (B) replacing the covered communications equipment or services removed as described in subparagraph (A) with communications equipment or services that are not covered communications equipment or services; and (C) disposing of the covered communications equipment or services removed as described in subparagraph (A) in accordance with the requirements under subsection (d)(8). (2) Limitations A recipient of a reimbursement under the Program may not— (A) use reimbursement funds to remove, replace, or dispose of any covered communications equipment or service purchased, rented, leased, or otherwise obtained on or after— (i) in the case of any covered communications equipment or service that is on the initial list published under section 2(a), August 14, 2018; or (ii) in the case of any covered communications equipment or service that is not on the initial list published under section 2(a), the date that is 60 days after the date on which the Commission places such equipment or service on the list required by such section; or (B) purchase, rent, lease, or otherwise obtain any covered communications equipment or service, using reimbursement funds or any other funds (including funds derived from private sources). (d) Implementation (1) Regulations Not later than 270 days after the date of the enactment of this Act, the Commission shall promulgate regulations to implement the Program. (2) Suggested replacements (A) Development of list The Commission shall develop a list of suggested replacements of both physical and virtual communications equipment, application and management software, and services. (B) Neutrality The list developed under subparagraph (A) shall be technology neutral and may not advantage the use of reimbursement funds for capital expenditures over operational expenditures, to the extent that the Commission determines that communications services can serve as an adequate substitute for the installation of communications equipment. (3) Application process (A) In general The Commission shall develop an application process and related forms and materials for the Program. (B) Cost estimate (i) Initial estimate The Commission shall require an applicant to provide an initial reimbursement cost estimate at the time of application, with supporting materials substantiating the costs. (ii) Updates During and after the application review process, the Commission may require an applicant to— (I) update the initial reimbursement cost estimate submitted under clause (i); and (II) submit additional supporting materials substantiating an updated cost estimate submitted under subclause (I). (C) Mitigation of burden In developing the application process under this paragraph, the Commission shall take reasonable steps to mitigate the administrative burdens and costs associated with the application process, while taking into account the need to avoid waste, fraud, and abuse in the Program. (4) Application review process (A) Deadline (i) In general Except as provided in clause (ii) and subparagraph (B), the Commission shall approve or deny an application for a reimbursement under the Program not later than 90 days after the date of the submission of the application. (ii) Additional time needed by Commission If the Commission determines that, because an excessive number of applications have been filed at one time, the Commission needs additional time for employees of the Commission to process the applications, the Commission may extend the deadline described in clause (i) for not more than 45 days. (B) Opportunity for applicant to cure deficiency If the Commission determines that an application is materially deficient (including by lacking an adequate cost estimate or adequate supporting materials), the Commission shall provide the applicant a 15-day period to cure the defect before denying the application. If such period would extend beyond the deadline under subparagraph (A) for approving or denying the application, such deadline shall be extended through the end of such period. (C) Effect of denial Denial of an application for a reimbursement under the Program shall not preclude the applicant from resubmitting the application or submitting a new application for a reimbursement under the Program at a later date. (5) Certifications An applicant for a reimbursement under the Program shall, in the application of the applicant, certify to the Commission that— (A) as of the date of the submission of the application, the applicant— (i) has developed a plan for— (I) the permanent removal and replacement of any covered communications equipment or services that are in the communications network of the applicant as of such date; and (II) the disposal of the equipment or services removed as described in subclause (I) in accordance with the requirements under paragraph (8); and (ii) has developed a specific timeline (subject to paragraph (7)) for the permanent removal, replacement, and disposal of the covered communications equipment or services identified under clause (i), which timeline shall be submitted to the Commission as part of the application; and (B) beginning on the date of the approval of the application, the applicant— (i) will not purchase, rent, lease, or otherwise obtain covered communications equipment or services, using reimbursement funds or any other funds (including funds derived from private sources); and (ii) in developing and tailoring the risk management practices of the applicant, will consult and consider the standards, guidelines, and best practices set forth in the cybersecurity framework developed by the National Institute of Standards and Technology. (6) Distribution of reimbursement funds (A) In general The Commission shall make reasonable efforts to ensure that reimbursement funds are distributed equitably among all applicants for reimbursements under the Program according to the needs of the applicants, as identified by the applications of the applicants. (B) Notification If, at any time during the implementation of the Program, the Commission determines that the funds made available to the Commission to carry out the Program will not be sufficient to fully fund all approved applications for reimbursements under the Program, the Commission shall immediately notify— (i) the Committee on Energy and Commerce and the Committee on Appropriations of the House of Representatives; and (ii) the Committee on Commerce, Science, and Transportation and the Committee on Appropriations of the Senate. (7) Removal, replacement, and disposal term (A) Deadline The permanent removal, replacement, and disposal of any covered communications equipment or services identified under paragraph (5)(A)(i) shall be completed not later than 1 year after the date on which the Commission distributes reimbursement funds to the recipient. (B) General extension The Commission may grant an extension of the deadline described in subparagraph (A) for 6 months to all recipients of reimbursements under the Program if the Commission— (i) finds that the supply of replacement communications equipment or services needed by the recipients to achieve the purposes of the Program is inadequate to meet the needs of the recipients; and (ii) provides notice and a detailed justification for granting the extension to— (I) the Committee on Energy and Commerce of the House of Representatives; and (II) the Committee on Commerce, Science, and Transportation of the Senate. (C) Individual extension (i) Petition A recipient of a reimbursement under the Program may petition the Commission for an extension for such recipient of the deadline described in subparagraph (A) or, if the Commission has granted an extension of such deadline under subparagraph (B), such deadline as so extended. (ii) Grant The Commission may grant a petition filed under clause (i) by extending, for the recipient that filed the petition, the deadline described in subparagraph (A) or, if the Commission has granted an extension of such deadline under subparagraph (B), such deadline as so extended, for a period of not more than 6 months if the Commission finds that, due to no fault of such recipient, such recipient is unable to complete the permanent removal, replacement, and disposal described in subparagraph (A). (8) Disposal of covered communications equipment or services The Commission shall include in the regulations promulgated under paragraph (1) requirements for the disposal by a recipient of a reimbursement under the Program of covered communications equipment or services identified under paragraph (5)(A)(i) and removed from the network of the recipient in order to prevent such equipment or services from being used in the networks of providers of advanced communications service. (9) Status updates (A) In general Not less frequently than once every 90 days beginning on the date on which the Commission approves an application for a reimbursement under the Program, the recipient of the reimbursement shall submit to the Commission a status update on the work of the recipient to permanently remove, replace, and dispose of the covered communications equipment or services identified under paragraph (5)(A)(i). (B) Public posting Not earlier than 30 days after the date on which the Commission receives a status update under subparagraph (A), the Commission shall make such status update public on the website of the Commission. (C) Reports to Congress Not less frequently than once every 180 days beginning on the date on which the Commission first makes funds available to a recipient of a reimbursement under the Program, the Commission shall prepare and submit to the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report on— (i) the implementation of the Program by the Commission; and (ii) the work by recipients of reimbursements under the Program to permanently remove, replace, and dispose of covered communications equipment or services identified under paragraph (5)(A)(i). (e) Measures to avoid waste, fraud, and abuse (1) In general The Commission shall take all necessary steps to avoid waste, fraud, and abuse with respect to the Program. (2) Spending reports The Commission shall require recipients of reimbursements under the Program to submit to the Commission on a regular basis reports regarding how reimbursement funds have been spent, including detailed accounting of the covered communications equipment or services permanently removed and disposed of, and the replacement equipment or services purchased, rented, leased, or otherwise obtained, using reimbursement funds. (3) Audits, reviews, and field investigations The Commission shall conduct— (A) regular audits and reviews of reimbursements under the Program to confirm that recipients of such reimbursements are complying with this Act; and (B) random field investigations to ensure that recipients of reimbursements under the Program are performing the work such recipients are required to perform under the commitments made in the applications of such recipients for reimbursements under the Program, including the permanent removal, replacement, and disposal of the covered communications equipment or services identified under subsection (d)(5)(A)(i). (4) Final certification (A) In general The Commission shall require a recipient of a reimbursement under the Program to submit to the Commission, in a form and at an appropriate time to be determined by the Commission, a certification stating that the recipient— (i) has fully complied with (or is in the process of complying with) all terms and conditions of the Program; (ii) has fully complied with (or is in the process of complying with) the commitments made in the application of the recipient for the reimbursement; (iii) has permanently removed from the communications network of the recipient, replaced, and disposed of (or is in the process of permanently removing, replacing, and disposing of) all covered communications equipment or services that were in the network of the recipient as of the date of the submission of the application of the recipient for the reimbursement; and (iv) has fully complied with (or is in the process of complying with) the timeline submitted by the recipient under subparagraph (A)(ii) of paragraph (5) of subsection (d) and the other requirements of such paragraph. (B) Updated certification If, at the time when a recipient of a reimbursement under the Program submits a certification under subparagraph (A), the recipient has not fully complied as described in clause (i), (ii), or (iv) of such subparagraph or has not completed the permanent removal, replacement, and disposal described in clause (iii) of such subparagraph, the Commission shall require the recipient to file an updated certification when the recipient has fully complied as described in such clause (i), (ii), or (iv) or completed such permanent removal, replacement, and disposal. (f) Effect of removal of equipment or service from list (1) In general If, after the date on which a recipient of a reimbursement under the Program submits the application for the reimbursement, any covered communications equipment or service that is in the network of the recipient as of such date is removed from the list published under section 2(a), the recipient may— (A) return to the Commission any reimbursement funds received for the removal, replacement, and disposal of such equipment or service and be released from any requirement under this section to remove, replace, or dispose of such equipment or service; or (B) retain any reimbursement funds received for the removal, replacement, and disposal of such equipment or service and remain subject to the requirements of this section to remove, replace, and dispose of such equipment or service as if such equipment or service continued to be on the list published under section 2(a). (2) Assurances In the case of an assurance relating to the removal, replacement, or disposal of any equipment or service with respect to which the recipient returns to the Commission reimbursement funds under paragraph (1)(A), such assurance may be satisfied by making an assurance that such funds have been returned. (g) Rule of construction regarding timing of reimbursement Nothing in this section shall be construed to prohibit the Commission from making a reimbursement under the Program to a provider of advanced communications service before the provider incurs the cost of the permanent removal, replacement, and disposal of the covered communications equipment or service for which the application of the provider has been approved under this section. (h) Education efforts The Commission shall engage in education efforts with providers of advanced communications service to— (1) encourage such providers to participate in the Program; and (2) assist such providers in submitting applications for the Program. (i) Separate from Federal universal service programs The Program shall be separate from any Federal universal service program established under section 254 of the Communications Act of 1934 ( 47 U.S.C. 254 ). (j) Authorization of Appropriations There is authorized to be appropriated to the Commission $1,000,000,000 for fiscal year 2020 to carry out the Program. Such amount is authorized to remain available through fiscal year 2029. Not more than $5,000,000 of the amounts appropriated under this subsection may be used for the administrative costs of carrying out the Program. 5. Hold harmless In the case of a person who is a winner of the Connect America Fund Phase II auction, has not yet been authorized to receive Connect America Fund Phase II support, and demonstrates an inability to reasonably meet the build-out and service obligations of such person under Connect America Fund Phase II without using equipment or services prohibited under this Act, such person may withdraw the application of such person for Connect America Fund Phase II support without being found in default or subject to forfeiture. The Commission may set a deadline to make such a withdrawal that is not earlier than the date that is 60 days after the date of the enactment of this Act. 6. Enforcement (a) Violations A violation of this Act or a regulation promulgated under this Act shall be treated as a violation of the Communications Act of 1934 ( 47 U.S.C. 151 et seq.) or a regulation promulgated under such Act, respectively. The Commission shall enforce this Act and the regulations promulgated under this Act in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Communications Act of 1934 were incorporated into and made a part of this Act. (b) Additional penalties (1) In general Except as provided in paragraph (2), in addition to penalties under the Communications Act of 1934, a recipient of a reimbursement under the Program found to have violated section 4, the regulations promulgated under such section, or the commitments made by the recipient in the application for the reimbursement— (A) shall repay to the Commission all reimbursement funds provided to the recipient under the Program; (B) shall be barred from further participation in the Program; (C) shall be referred to all appropriate law enforcement agencies or officials for further action under applicable criminal and civil laws; and (D) may be barred by the Commission 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 ( 47 U.S.C. 254 ). (2) Notice and opportunity to cure The penalties described in paragraph (1) shall not apply to a recipient of a reimbursement under the Program unless— (A) the Commission provides the recipient with notice of the violation; and (B) the recipient fails to cure the violation within 180 days after the Commission provides such notice. (c) Recovery of funds The Commission shall immediately take action to recover all reimbursement funds awarded to a recipient of a reimbursement under the Program in any case in which such recipient is required to repay reimbursement funds under subsection (b)(1)(A). 7. Definitions In this Act: (1) Advanced communications service The term advanced communications service has the meaning given the term advanced telecommunications capability in section 706 of the Telecommunications Act of 1996 ( 47 U.S.C. 1302 ). (2) Commission The term Commission means the Federal Communications Commission. (3) Covered communications equipment or service The term covered communications equipment or service means any communications equipment or service that is on the list published by the Commission under section 2(a). (4) Customers The term customers means, with respect to a provider of advanced communications service— (A) the customers of such provider; and (B) the customers of any affiliate (as defined in section 3 of the Communications Act of 1934 ( 47 U.S.C. 153 )) of such provider. (5) Executive branch interagency body The term executive branch interagency body means an interagency body established in the executive branch. (6) Person The term person means an individual or entity. (7) Program The term Program means the Secure and Trusted Communications Networks Reimbursement Program established under section 4(a). (8) Provider of advanced communications service The term provider of advanced communications service means a person who provides advanced communications service to United States customers. (9) Recipient The term recipient means any provider of advanced communications service the application of which for a reimbursement under the Program has been approved by the Commission, regardless of whether the provider has received reimbursement funds. (10) Reimbursement funds The term reimbursement funds means any reimbursement received under the Program.

Amend the title so as to read: A bill to prohibit certain Federal subsidies from being used to purchase communications equipment or services posing national security risks, to provide for the establishment of a reimbursement program for the replacement of communications equipment or services posing such risks, and for other purposes. .

December 16, 2019 Reported with amendments, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed