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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations
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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 nations 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 CAAs amendments to the Secure Networks Act changed the scope of equipment and services eligible for reimbursement from the Reimbursement Program. Specifically, the CAAs 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 2a 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 Commissions 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.

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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 4c 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 2c of the Secure Networks Act.
Third, the equipment and services must be capable of satisfying the criteria in section 2b2AC 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 Commissions 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 CAAs 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 4c of the Secure Networks Act, as amended, to limit equipment and services eligible for
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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 4c 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 Commissions rules that are also included on the Covered List. The Commission interprets the CAAs 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 Commissions 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 Commissions rules whose communications equipment is also on the Covered List.
14. The record generally supports its interpretation of the CAA amendments to section 4c of the Secure Networks Act. As the Rural Wireless Association, Inc. RWA states, the CAAs
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