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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).
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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.