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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Rules and Regulations 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 Commissions 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 Congresss 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
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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 Commissions 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 4c 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 Commissions 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
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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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