[House Report 116-352]
[From the U.S. Government Publishing Office]


116th Congress }                                            { Report
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                            { 116-352

======================================================================

 
         SECURE AND TRUSTED COMMUNICATIONS NETWORKS ACT OF 2019

                                _______
                                

 December 16, 2019.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Pallone, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4998]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4998) 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, having considered the same, 
report favorably thereon with amendments and recommend that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................8
 II. Background and Need for Legislation..............................8
III. Committee Hearings...............................................9
 IV. Committee Consideration.........................................10
  V. Committee Votes.................................................10
 VI. Oversight Findings..............................................10
VII. New Budget Authority, Entitlement Authority, and Tax Expenditure10
VIII.Federal Mandates Statement......................................11

 IX. Statement of General Performance Goals and Objectives...........11
  X. Duplication of Federal Programs.................................11
 XI. Committee Cost Estimate.........................................11
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits.....11
XIII.Advisory Committee Statement....................................11

XIV. Applicability to Legislative Branch.............................11
 XV. Section-by-Section Analysis of the Legislation..................11
XVI. Changes in Existing Law Made by the Bill, as reported...........16

    The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Secure and Trusted Communications 
Networks Act of 2019''.

SEC. 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).

SEC. 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).

SEC. 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.

SEC. 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.

SEC. 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).

SEC. 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.

                         I. PURPOSE AND SUMMARY

    H.R. 4998, the ``Secure and Trusted Communications Networks 
Act of 2019'', was introduced on November 8, 2019, by Reps. 
Pallone (D-NJ), Walden (R-OR), Matsui (D-CA), and Guthrie (R-
KY), and referred to the Committee on Energy and Commerce. H.R. 
4998 would take a series of actions aimed at improving the 
security of communications networks in the United States. Among 
other things, H.R. 4998 would require the Federal 
Communications Commission (FCC or Commission) to develop and 
maintain a list of communications equipment and services that 
pose an unacceptable risk to national security and prohibit the 
use of Federal funds administered by the FCC to purchase, rent, 
lease, or otherwise obtain such equipment and services. The 
legislation also establishes the Secure and Trusted 
Communications Reimbursement Program to assist 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.

                II. BACKGROUND AND NEED FOR LEGISLATION

    United States communications service providers rely heavily 
on equipment and services manufactured and provided by foreign 
companies. The increasingly globalized market for 
communications equipment and services has opened the door to 
cheaper goods for consumers but poses new challenges for the 
United States, particularly for ensuring the security of the 
telecommunications supply chain.
    Given the pivotal role that private communications networks 
serve in connecting U.S. critical infrastructure functions, 
American networks are appealing targets for foreign 
adversaries. The United States, therefore, has a clear interest 
in mitigating threats posed by vulnerable communications 
equipment and services.
    In particular, the United States identified individual 
Chinese telecommunications firms, including Huawei Technologies 
Co. Ltd (Huawei) and its affiliates, as posing significant 
threats to U.S. commercial and security interests.\1\ Their 
susceptibility to state influence over business operations 
results in China having ``the means, opportunity, and motive to 
use telecommunications companies for malicious purposes,'' such 
as espionage and cyberattacks.\2\ In April 2018, the U.S.-China 
Economic and Security Review Commission found that the Chinese 
Government had ``invested significant state capital and 
influence'' on state-owned enterprises to strategically place 
these companies in the U.S. communications supply chain.\3\
---------------------------------------------------------------------------
    \1\Department of Commerce, Department of Commerce Announces the 
Addition of Huawei Technologies Co. Ltd. to the Entity List (May 15, 
2019) (press release).
    \2\House Permanent Select Committee on Intelligence, Investigative 
Report on the US National Security Issues Posed by Chinese 
Telecommunications Companies Huawei and ZTE, 112th Cong. (Oct. 8, 
2012).
    \3\U.S.-China Economic Security Review Commission, Supply Chain 
Vulnerabilities from China in US Federal Information and Communications 
Technology (Apr. 2018).
---------------------------------------------------------------------------
    Large communications companies with sophisticated network 
security operations and significant capital generally have 
avoided installing and using Huawei and other suspect foreign 
equipment in their networks.\4\ Moreover, Federal agencies have 
actively reached out to large carriers to express concerns when 
carriers have considered purchasing suspect equipment.\5\ In 
contrast, some smaller carriers with more limited resources and 
less sophisticated security operations have purchased and 
installed Huawei, and other suspect foreign equipment, in their 
networks either because the equipment was less expensive or 
they were unaware of the security risk, or both.\6\
---------------------------------------------------------------------------
    \4\See, e.g., Paul Mozur, AT&T Drops Huawei's New Smartphone Amid 
Security Worries, the New York Times (Jan. 9, 2018) (www.nytimes.com/
2018/01/09/business/att-huawei-mate-smartphone.html).
    \5\See, e.g., Todd Shields, Locke Says Sprint's Chief Was Called 
About Huawei Bid Concerns, Bloomberg (Dec. 7, 2010) (www.bloomberg.com/
news/articles/2010-12-07/commerce-s-locke-says-sprint-s-chief-was-
called-about-huawei-bid-concerns).
    \6\See, e.g., Cecilia Kang, Huawei Ban Threatens Wireless Service 
in Rural Areas, the New York Times (May 25, 2019) (www.nytimes.com/
2019/05/25/technology/huawei-rural-wireless-service.html).
---------------------------------------------------------------------------

                        III. COMMITTEE HEARINGS

    For the purposes of section 103(i) of H. Res. 6 of the 
116th Congress, the following hearing was used to develop or 
consider H.R. 4998:
    The Subcommittee on Communications and Technology held a 
legislative hearing on September 27, 2019, entitled 
``Legislating to Secure America's Wireless Future.'' The 
Subcommittee received testimony from the following witnesses:
           John Nettles, President, Pine Belt Wireless;
           Harold Feld, Senior Vice President, Public 
        Knowledge;
           Dean R. Brenner, Senior Vice President, 
        Spectrum Strategy and Tech Policy, Qualcomm 
        Incorporated; and
           Bobbie Stempfley, Managing Director, CERT 
        Division, Software Engineering Institute, Carnegie 
        Mellon University.

                      IV. COMMITTEE CONSIDERATION

    H.R. 4998, the ``Secure and Trusted Communications Networks 
Act of 2019'', was introduced on November 8, 2019, by Reps. 
Pallone (D-NJ), Walden (R-OR), Matsui (D-CA), and Guthrie (R-
KY), and referred to the Committee on Energy and Commerce. The 
bill was subsequently referred to the Subcommittee on 
Communications and Technology on November 12, 2019. Following a 
legislative hearing, the Subcommittee met in open markup 
session on November 14, 2019, pursuant to notice, to consider 
H.R. 4998. Mr. Pallone and Mr. Walden offered an amendment to 
the bill, which was agreed to by a voice vote. Subsequently, 
the Subcommittee on Communications and Technology agreed to a 
motion by Mr. Doyle, Chairman of the subcommittee, to forward 
favorably H.R. 4998, amended, to the full Committee, by a voice 
vote.
    On November 20, 2019, the full Committee met in open markup 
session, pursuant to notice, to consider H.R. 4998, as amended 
(committee print). During consideration of the bill, an 
amendment offered by Mr. Walden and Mr. Pallone was agreed to 
by a voice vote Subsequently, the Committee on Energy and 
Commerce agreed to a motion by Mr. Pallone, Chairman of the 
committee, to order favorably reported H.R. 4998, amended, to 
the House, by a voice vote, a quorum being present.

                           V. COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list each record vote 
on the motion to report legislation and amendments thereto. The 
Committee advises that there were no record votes taken on H.R. 
4998, including the motion on final passage to order the bill 
reported to the House.

                         VI. OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1) 
of rule X of the Rules of the House of Representatives, the 
oversight findings and recommendations of the Committee are 
reflected in the descriptive portion of the report.

 VII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to 3(c)(2) of rule XIII of the Rules of the House 
of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.
    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.

                    VIII. FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

       IX. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to 
prohibit the use of vulnerable communications equipment or 
services and establish a program to reimburse eligible carriers 
for the costs of replacing such vulnerable equipment or 
services with trusted, comparable communications equipment or 
services.

                   X. DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 4998 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

                      XI. COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

    XII. EARMARKS, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 4998 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                   XIII. ADVISORY COMMITTEE STATEMENT

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                XIV. APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

           XV. SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 designates that the short title may be cited as 
the ``Secure and Trusted Communications Networks Act of 2019''.

Sec. 2. Determination of communications equipment of services posing 
        national security risks

    Section 2 requires the FCC to publish and maintain on its 
website a list of covered communications equipment or services.
    In making determinations as to what equipment and services 
are covered communications equipment and services for purposes 
of the list, the Commission must rely on either a specific 
determination made by any executive branch interagency body 
with appropriate national security expertise, a specific 
determination made by the Department of Commerce pursuant to 
Executive Order 13873, or a designation of communications 
equipment or services as 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).
    The Committee expects that the FCC will monitor these 
sources, both for purposes of adding covered equipment and 
services to the list and removing equipment and services that 
are no longer considered covered equipment or services by the 
source cited in making the original determination.
    In the event that the original source reverses a 
designation for certain equipment or services (from covered to 
not covered), however, but a different source identified by the 
legislation maintains that such equipment or services are 
covered equipment or services, the Commission may not remove 
such equipment or service from its list until each or all 
sources reverse the designation.
    The Commission is also required under this section to 
notify the public on an annual basis if no changes to the list 
were necessary in the preceding 12-month period.

Sec. 3. Prohibition on use of certain Federal subsidies

    Section 3 prohibits the use of Federal subsidies made 
available through programs administered by the Commission from 
being used to purchase, rent, lease, or otherwise obtain any 
covered communications equipment or service, or to maintain any 
covered communications equipment or service previously 
purchased, rented, leased, or otherwise obtained.
    For equipment or services placed on the list required by 
section 2 at the time of its initial publication, the 
prohibition on Federal subsidies is intended to take effect on 
the date of its publication on the list. For any equipment or 
services placed on the list after the initial publication of 
the list, the prohibition on Federal subsidies is effective on 
the date that is 60 days after the date such equipment or 
service is added to the list.

Sec. 4. Secure and Trusted Communications Networks Reimbursement 
        Program

    Section 4 requires the FCC to promulgate regulations not 
later than 270 days after the date of enactment to establish 
the ``Secure and Trusted Communications Networks Reimbursement 
Program'' (Program) to reimburse providers of advanced 
communications service with 2 million or fewer subscribers for 
the costs associated with removing and replacing covered 
equipment from networks.
    Providers receiving reimbursements under the Program may 
use funds only for purposes of permanently removing, replacing, 
and disposing of covered communications equipment and services 
that were purchased, rented, leased, or otherwise obtained by 
the provider before August 14, 2018, if the covered equipment 
or service is included on the initial list developed under 
section 2. At a minimum, the Committee expects the initial 
publication of the list to include equipment and services 
produced or provided by Huawei Technologies Co. Limited 
(Huawei), Zhongxing Telecommunications Equipment Corporation 
(ZTE), and any subsidiary or affiliate of either entity.
    For instances in which a provider has purchased, rented, 
leased, or otherwise obtained equipment and services that are 
not included on the initial publication of the list, but are 
deemed to be covered equipment or services at a later date, the 
provider is eligible to receive reimbursement funds to remove 
and replace covered equipment and services that were purchased, 
rented, leased, or otherwise obtained not later than 60 days 
after the Commission adds such equipment to the list.
    This section also requires the Commission to develop a list 
of suggested replacements for both physical and virtual 
communications equipment, application and management software, 
and services to mitigate the burden on providers to find 
suitable alternatives to covered equipment and services. The 
Committee expects the Commission, when implementing regulations 
described under this section, to preclude network upgrades that 
go beyond the replacement of covered communications equipment 
or services from eligibility; however, the Committee expects 
there to be a transition from 3G to 4G or even 5G-ready 
equipment in instances where equipment being replaced was 
initially deployed several years ago.
    The Commission is required to develop processes to 
facilitate intake and review of applications for reimbursement 
under the Program. In developing the relevant forms and 
materials, the Commission must require providers to submit an 
initial estimate for reimbursement costs at the time the 
application is submitted. The Committee expects this 
information will assist the Commission in meeting its 
requirement to ensure that funds are distributed equitably 
amongst applicants. The Commission may also require applicants 
to submit updated cost estimates and supporting documentation, 
including invoices, as the Commission deems necessary.
    The Commission is required under this section to approve or 
deny applications no more than 90 days after the date of 
submission to the FCC. The Commission may choose to extend this 
deadline for not more than 45 days, if an excessive number of 
applications are filed at one time. If for any reason the 
Commission determines an application to be deficient, the 
Commission is required to allow applicants a 15-day period to 
cure deficiencies in the application. The Committee expects the 
Commission to work closely with applicants to identify 
deficiencies and what further documentation or addendums are 
needed to cure such deficiencies. Providers whose applications 
are denied are not precluded from re-submitting applications or 
submitting new applications for reimbursement.
    Applicants for reimbursement under the Program are required 
to certify to the Commission, at the time of application, that 
the applicant has developed a plan for the permanent removal, 
replacement, and disposal of covered equipment and services 
from their networks and certify that the applicant has 
developed a specific timeline for permanently removing, 
replacing, and disposing of covered equipment and services. 
Applicants are required to submit this timeline to the 
Commission as part of the application. Additionally, applicants 
whose applications are approved by the Commission must certify 
that, as of the date of the approval of the application, the 
applicant will not use reimbursement funds, or any other funds, 
to purchase, rent, lease, or otherwise obtain covered equipment 
or services.
    This section requires the Commission to make reasonable 
efforts to ensure that reimbursement funds are distributed 
equitably among all applicants for reimbursement under the 
Program. If at any time the Commission determines that the 
funds made available to the Commission will be insufficient to 
carry out the Program, the Committee expects the Commission to 
immediately notify the Committee on Energy and Commerce and the 
Committee on Appropriations of the House of Representatives, 
and the Committee on Commerce, Science, and Transportation and 
the Committee on Appropriations of the Senate.
    Any applicant receiving reimbursement funds under the 
Program is required to complete the permanent removal, 
replacement, and disposal of covered equipment and services 
from their networks not later than one year after the date on 
which the Commission distributes funds to the applicant. If the 
Commission finds that applicants are at risk of not meeting the 
deadline due to shortages in the supply of replacement 
equipment and services, the Commission may extend the deadline 
for all applicants for a period of six months. The Commission 
may also grant, on a case-by-case basis, individual extensions 
of an applicant's deadline for not more than six months, if the 
Commission finds that, due to no fault of the applicant, the 
applicant is unable to complete the requirements under the 
deadline. The Committee expects the Commission to not find it 
the fault of a recipient of the program if such recipient has a 
shortage of a qualified workers, either employees or contracted 
third-parties, to complete the removal of covered equipment and 
replacement of new equipment under the timeframe established in 
the Act.
    This section also requires the Commission to include 
requirements for proper disposal of covered equipment and 
services in the regulations promulgated under paragraph (1) of 
this section.
    Recipients of reimbursement funds are required to submit 
status updates to the Commission not less frequently than once 
every 90 days, beginning on the date of the approval of an 
application, and continuing until the recipient's work to 
permanently remove, replace, and dispose of covered equipment 
and services is complete.
    The Commission is required to submit reports to Congress on 
the implementation of the Program, and the status of work being 
done by recipients of reimbursement funds under the Program, 
not less frequently than once every 180 days.
    The Committee expects the Commission to take all 
appropriate steps to combat waste, fraud, and abuse in the 
Program. These steps shall include, but are not limited to, 
requiring recipients to submit detailed spending reports and 
documentation of invoices, and conducting routine audits and 
random field investigations of recipients to ensure compliance 
with Program requirements and this Act.
    The Commission shall require recipients of reimbursement 
funds to submit a final certification that the recipient has 
complied with, or is in the process of complying with, all 
Program requirements as established by this Act and Commission 
regulations resulting from this Act. If the recipient is still 
in the process of complying with Program requirements at the 
time of final certification, the Commission shall require the 
recipient to submit an updated certification to the Commission 
upon completing such requirements.
    The Commission is required to engage in education efforts 
with communications providers to encourage their participation 
in the Program and to assist providers' understanding of and 
complying with Program requirements.
    This section establishes that the Secure and Trusted 
Communications Networks Reimbursement Program shall be separate 
from any Federal universal service program.
    This section authorizes $1,000,000,000 to be appropriated 
for fiscal year 2020 to carry out the Program. The Commission 
may not use more than $5,000,000 of the appropriated amount for 
administrative costs associated with carrying out the program.

Sec. 5. Hold harmless

    Section 5 clarifies that any winner of the Connect America 
Fund Phase II auction, who is unable to meet build-out 
obligations due to prohibitions on covered equipment and 
services in this Act, may withdraw their application for 
Connect America Fund Phase II support without being found in 
default or forfeiture.

Sec. 6. Enforcement

    Section 6 requires the Commission to enforce this Act and 
the regulations promulgated under this Act consistent with all 
applicable terms and provisions of the Communications Act of 
1934.
    This section also establishes additional penalties for 
recipients of funding under the Program if the Commission finds 
the recipient to have violated section 4 of this Act, the 
regulations promulgated under this Act, or commitments made by 
the recipient in their application or certifications to the 
Commission. Recipients of funding under the Program who violate 
the terms of the Program shall be required to repay all 
reimbursement funds to the Commission, barred from further 
participation in the Program, and referred to all appropriate 
law enforcement agencies or officials as appropriate. The 
Commission may also choose to bar violators from other 
Commission programs, including Federal universal service 
support programs.
    The Commission is required to provide recipients found in 
violation of Program requirements an opportunity to cure 
violations within 180 days of the Commission providing such 
notice. If the recipient fails to cure such violations, the 
Commission is required to take action to recover all 
reimbursement funds awarded to the recipient under the Program 
that are subject to repayment.

Sec. 7. Definitions

    Section 7 provides definitions for the terms ``advanced 
communications service'', ``Commission'', ``covered 
communications equipment or service'', ``customers'', 
``executive branch interagency body'', ``person'', ``Program'', 
``provider of advanced communications service'', ``recipient'', 
and ``reimbursement funds''.

       XVI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    There are no changes to existing law made by the bill H.R. 
4998.