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

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48. Congresss intent was clear that the CAA should replace the Commissions 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 CAAs 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 smaller 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
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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 CAAs 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 Congresss 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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