[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Notices]
[Pages 47211-47213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16884]


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FEDERAL COMMUNICATIONS COMMISSION

[WC Docket No. 18-89; FCC 20-99; FRS 16963]


National Security Threats to the Communications Supply Chain 
Through FCC Programs

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) finds it has already substantially complied with the 
Secure and Trusted Communications Networks Act of 2019 (Secure Networks 
Act) with the prohibition adopted in the 2019 Supply Chain Order.

DATES: This Declaratory Ruling is applicable July 17, 2020.

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact Brian Cruikshank, Wireline Competition Bureau, 
[email protected], 202-418-7400 or TTY: 202-418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Declaratory Ruling in WC Docket No. 18-89, FCC 20-99, adopted on July 
16, 2020 and released July 17, 2020. Due to the COVID-19 pandemic, the 
Commission's headquarters will be closed to the general public until 
further notice. The full text of this document is available at the 
following internet address: https://www.fcc.gov/document/implementing-secure-networks-act-0. The Second Further Notice of Proposed Rulemaking 
that was adopted concurrently with this Declaratory Ruling will be 
published elsewhere in the Federal Register.

I. Introduction

    1. America's communications networks have become the indispensable 
infrastructure of our economy and our everyday lives. The COVID-19 
pandemic has demonstrated as never before the importance of these 
networks for employment and economic opportunity, education, health 
care, social and civic engagement, and staying connected with family 
and friends. It is therefore imperative that the Commission safeguards 
this critical infrastructure from potential security threats.
    2. The Commission has taken a number of targeted steps in this 
regard. For example, in November 2019, the Commission prohibited the 
use of public funds from the Commission's Universal Service Fund (USF) 
to purchase or obtain any equipment or services produced or provided by 
companies posing a national security threat to the integrity of 
communications networks or the communications supply chain. The 
Commission also initially designated Huawei Technologies Company 
(Huawei) and ZTE Corporation (ZTE) as covered companies for purposes of 
this rule, and the Commission established a process for designating 
additional covered companies in the future. Additionally, last month, 
the Commission's Public Safety and Homeland Security Bureau (PSHSB) 
issued final designations of Huawei and

[[Page 47212]]

ZTE as covered companies, thereby prohibiting the use of USF funds on 
equipment or services produced or provided by these two suppliers.
    3. The Commission takes further steps to protect the nation's 
communications networks from potential security threats as it 
integrates provisions of the recently enacted Secure and Trusted 
Communications Networks Act of 2019 (Secure Networks Act) into its 
existing supply chain rulemaking proceeding. The Commission adopts a 
Declaratory Ruling finding that, in the 2019 Supply Chain Order, 85 FR 
230, January 3, 2020, it fulfilled its obligation pursuant to section 3 
of the Secure Networks Act to prohibit the use of funds made available 
through a Federal subsidy program administered by the Commission to 
purchase, rent, lease, or otherwise obtain or maintain any covered 
communications equipment or services from certain companies.

II. Declaratory Ruling

    4. In the 2019 Supply Chain Order, the Commission prohibited the 
use of universal service support for equipment and services produced or 
provided by companies designated as a national security threat. The 
Commission finds that its prohibition, codified in section 54.9 of the 
Commission's rules, is consistent with and substantially implements 
subsection 3(a) of the Secure Networks Act, which prohibits the use of 
federal funds on certain communications equipment and services. 
Accordingly, the Commission further finds that it has satisfied the 
requirements of section 3(b) in the Secure Networks Act and it needs 
not revisit or otherwise modify our prior action in the 2019 Supply 
Chain Order.
    5. Introduced prior to the adoption of the 2019 Supply Chain Order 
and subsequently enacted on March 12, 2020, section 3(a) of the Secure 
Networks Act prohibits ``[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'' from being used either 
to ``purchase, rent, lease or otherwise obtain any covered 
communications equipment or service; or maintain any covered 
communications equipment or service . . . .'' The prohibition applies 
``60 days after the date the Commission places such equipment or 
service on the list'' required by section 2(a) of the statute.
    6. In section 3(b), Congress directed the Commission to adopt a 
Report and Order to implement this prohibition within 180 days 
following the Secure Networks Act's enactment. Section 3(b) further 
states, ``If the Commission has, before the date of the enactment of 
this Act, taken action that in whole or in part implements subsection 
(a), the Commission is not required to revisit such action, but only to 
the extent such action is consistent with this section.'' The 
Commission interprets the language in section 3(b) to mean that if it 
has, prior to the enactment of the Secure Networks Act, already adopted 
a prohibition on the use of Federal funds that substantially tracks the 
statutory prohibition, then the Commission is deemed to have satisfied 
the 180-day deadline contained in section 3(b) and need not revisit its 
prior action. To avail itself of this exception to the statutory 
deadline, however, the Commission's previously adopted prohibition must 
be ``consistent'' with, i.e., compatible with, and must not conflict 
with, the requirements of section 3(a).
    7. In the 2019 Supply Chain Order, the Commission prohibited the 
use of universal service support to ``maintain, improve, modify, 
operate, manage, or otherwise support any equipment or services 
produced or provided by a company posing a national security threat to 
the integrity of the communications networks or the communications 
supply chain.'' The Commission also initially designated two companies, 
Huawei and ZTE, as companies posing a national security threat. PSHSB 
recently issued final designations of these entities, thereby 
prohibiting the use of USF funds to maintain, improve, modify, operate, 
manage, or otherwise support equipment or services produced or provided 
by Huawei and ZTE effective June 30, 2020.
    8. The Commission's prohibition in the 2019 Supply Chain Order is 
consistent with and substantially implements the prohibition required 
by section 3(a) of the Secure Networks Act. The Commission starts by 
noting that it administers two ongoing programs that provide a 
``Federal subsidy'': the USF, a Federal subsidy program that subsidizes 
the cost of obtaining communications equipment and/or services for 
carriers serving high-cost areas, schools and libraries, rural health 
care providers, and low-income households, and the Interstate 
Telecommunications Relay Service Fund, a Federal subsidy program that 
subsidizes the cost of relay services for individuals who are deaf, 
hard of hearing, deaf/blind, or have a speech impediment. Given that 
the USF, unlike the Interstate Telecommunications Relay Service Fund, 
``provides funds to be used for the capital expenditures necessary for 
the provision of advanced communications service,'' we believe Congress 
clearly intended the section 3 prohibition to apply to the USF.
    9. The Commission also finds the scope of communications equipment 
and services covered by the Commission's prohibition encompasses the 
scope of the Secure Networks Act's section 3 prohibition. The 
Commission's prohibition broadly covers ``any equipment or services 
produced by any company posing a national security threat.'' In 
comparison, the prohibition in section 3 of the Secure Networks Act 
applies to ``any covered communications equipment or service.'' Covered 
communications equipment or service is limited to that which is capable 
of certain functions and capabilities or otherwise poses a security 
threat. Although the Commission's prohibition goes further than the 
requirements of the Secure Networks Act, it does not conflict with the 
statutory requirements of section 3(a). Accordingly, by complying with 
the Commission's broader prohibition, USF support recipients will be in 
compliance with the Secure Networks Act prohibition. Section 3(a) of 
the Secure Networks Act also specifies that the ban takes effect 60 
days after the Commission places the equipment or service on the list 
required by section 2 of the statute. The Commission believes that rule 
54.9 substantially implements this section 3 requirement by providing a 
notice period for interested parties (which, if opposed, the Commission 
would expect to last at least 60 days) and stating that the ban takes 
effect only when initial designations of covered companies are 
finalized. However, to the extent there are differences between the 
Commission's rules and section 3 of the Secure Networks Act, it seeks 
comment on additional changes to its rules.
    10. With the Commission's adoption of the prohibition in the 2019 
Supply Chain Order, the Commission has substantially implemented the 
section 3 statutory mandate to adopt a prohibition on covered 
communications equipment or services. As such, the Commission avails 
ourselves of the proviso, set forth in section 3(b), not to revisit its 
prior action implementing the mandate. Nevertheless, in the 
concurrently adopted Further Notice, the Commission seeks comment on 
additional changes to its rules pursuant to section 3 of the Secure 
Networks Act.

III. Ordering Clause

    11. It is further Ordered that, pursuant to Section 3 of the Secure 
Networks Act,

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47 U.S.C. 1602 and the authority contained in Sections 1, 4(i), 201(b), 
214, 254, 303(r), and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i), 155(b), 155(c), 201(b), 214, 254, 
303(r), and 403, and Sections 1.2 and 54.9 of the Commission's rules, 
47 CFR 1.2 and 54.9, the Declaratory Ruling in WC Docket No. 18-89 is 
adopted.
    12. It is further Ordered that the Declaratory Ruling is effective 
upon release.

    Federal Communications Commission.
Marlene Dortch,
Secretary.

[FR Doc. 2020-16884 Filed 8-3-20; 8:45 am]
BILLING CODE 6712-01-P