Treasury Department Clarifies Rules For Using Coronavirus Fiscal Recovery Funds For Broadband Infrastructure
June 17, 2021 – The U.S. Department of The Treasury has released a list of Frequently Asked Questions that help clarify the requirements for using Fiscal Recovery Funds for broadband infrastructure.[1]
Of note, the new information addresses questions related to eligible broadband projects, use of funds for cybersecurity, the definition of unserved or underserved households and businesses, use of funds for middle mile broadband projects, and broadband speed thresholds.
The American Rescue Plan Act of 2021 (ARPA) provides $350 billion dollars in emergency funding for state, local, territorial, and Tribal governments to support their response to the impacts of the COVID–19 pandemic.[2] The money will be distributed through the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund.[3] Under both of these programs, funding may be used to “make necessary investments in water, sewer, or broadband infrastructure.”
In May 2021, the Treasury Department published an interim final rule which sets out the requirements for the Coronavirus State and Local Fiscal Recovery Funds.[4] Treasury is accepting comments on the rule until July 16, 2021. Generally, the interim final rule spells out the requirements for using funding for broadband infrastructure:
The interim final rule provides that eligible investments in broadband are those that are designed to provide services meeting adequate speeds and are provided to unserved and underserved households and businesses.[5] The interim final rule provides award recipients with flexibility to identify the specific locations within their communities to be served and to otherwise design the project.[6]
Under the interim final rule, eligible projects are expected to be designed to deliver, upon project completion, service that reliably meets or exceeds symmetrical upload and download speeds of 100 Mbps.[7] There may be instances in which it would not be practicable for a project to deliver such service speeds because of the geography, topography, or excessive costs associated with such a project. In these instances, the affected project would be expected to be designed to deliver, upon project completion, service that reliably meets or exceeds 100 Mbps download and between at least 20 Mbps and 100 Mbps upload speeds and be scalable to a minimum of 100 Mbps symmetrical for download and upload speeds.[8]
Under the interim final rule, eligible projects are expected to focus on locations that are unserved or underserved. The interim final rule treats users as being unserved or underserved if they lack access to a wireline connection capable of reliably delivering at least minimum speeds of 25 Mbps download and 3 Mbps upload as households and businesses lacking this level of access are generally not viewed as being able to originate and receive high-quality voice, data, graphics, and video telecommunications.[9]
In selecting an area to be served by a project, recipients are encouraged to avoid investing in locations that have existing agreements to build reliable wireline service with minimum speeds of 100 Mbps download and 20 Mbps upload by December 31, 2024, in order to avoid duplication of efforts and resources.[10]
Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions – As Of June 17, 2021
The Treasury Department’s Frequently Asked Questions – as of June 17, 2021 – help clarify the requirements for using Fiscal Recovery Funds for broadband infrastructure. They include the following questions and answers and new information related to using Fiscal Recovery Funds for broadband infrastructure:
FAQ 6.5. What types of broadband projects are eligible? The Interim Final Rule requires eligible projects to reliably deliver minimum speeds of 100 Mbps download and 100 Mbps upload. In cases where it is impracticable due to geography, topography, or financial cost to meet those standards, projects must reliably deliver at least 100 Mbps download speed, at least 20 Mbps upload speed, and be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed. Projects must also be designed to serve unserved or underserved households and businesses, defined as those that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed.
FAQ 6.6. For broadband investments, may recipients use funds for related programs such as cybersecurity or digital literacy training? Yes. Recipients may use funds to provide assistance to households facing negative economic impacts due to Covid-19, including digital literacy training and other programs that promote access to the Internet. Recipients may also use funds for modernization of cybersecurity, including hardware, software, and protection of critical infrastructure, as part of provision of government services up to the amount of revenue lost due to the public health emergency.
FAQ 6.7. How do I know if a water, sewer, or broadband project is an eligible use of funds? Do I need pre-approval? [added June 8th] Recipients do not need approval from Treasury to determine whether an investment in a water, sewer, or broadband project is eligible under CSFRF/CLFRF. Each recipient should review the Interim Final Rule (IFR), along with the preamble to the Interim Final Rule, in order to make its own assessment of whether its intended project meets the eligibility criteria in the IFR. A recipient that makes its own determination that a project meets the eligibility criteria as outlined in the IFR may pursue the project as a CSFRF/CLFRF project without pre-approval from Treasury. Local government recipients similarly do not need state approval to determine that a project is eligible under CSFRF/CLFRF. However, recipients should be cognizant of other federal or state laws or regulations that may apply to construction projects independent of CSFRF/CLFRF funding conditions and that may require pre-approval. For water and sewer projects, the IFR refers to the EPA Drinking Water and Clean Water State Revolving Funds (SRFs) for the categories of projects and activities that are eligible for funding. Recipients should look at the relevant federal statutes, regulations, and guidance issued by the EPA to determine whether a water or sewer project is eligible. Of note, the IFR does not incorporate any other requirements contained in the federal statutes governing the SRFs or any conditions or requirements that individual states may place on their use of SRFs.
FAQ 6.8. For broadband infrastructure investments, what does the requirement that infrastructure “be designed to” provide service to unserved or underserved households and businesses mean? [added on June 17th] Designing infrastructure investments to provide service to unserved or underserved households or businesses means prioritizing deployment of infrastructure that will bring service to households or businesses that are not currently serviced by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed. To meet this requirement, states and localities should use funds to deploy broadband infrastructure projects whose objective is to provide service to unserved or underserved households or businesses. These unserved or underserved households or businesses do not need to be the only ones in the service area funded by the project.
FAQ 6.9. For broadband infrastructure to provide service to “unserved or underserved households or businesses,” must every house or business in the service area be unserved or underserved? [added on June 17th] No. It suffices that an objective of the project is to provide service to unserved or underserved households or businesses. Doing so may involve a holistic approach that provides service to a wider area in order, for example, to make the ongoing service of unserved or underserved households or businesses within the service area economical. Unserved or underserved households or businesses need not be the only households or businesses in the service area receiving funds.
FAQ 6.10. May recipients use payments from the Funds for “middle mile” broadband projects? [added on June 17th] Yes. Under the Interim Final Rule, recipients may use payments from the Funds for “middle-mile projects,” but Treasury encourages recipients to focus on projects that will achieve last-mile connections—whether by focusing on funding last-mile projects or by ensuring that funded middle-mile projects have potential or partnered last-mile networks that could or would leverage the middle-mile network.
FAQ 6.11. For broadband infrastructure investments, what does the requirement to “reliably” meet or exceed a broadband speed threshold mean? [added June 17th] In the Interim Final Rule, the term “reliably” is used in two places: to identify areas that are eligible to be the subject of broadband infrastructure investments and to identify expectations for acceptable service levels for broadband investments funded by the Coronavirus State and Local Fiscal Recovery Funds. In particular:
The IFR defines “unserved or underserved households or businesses” to mean one or more households or businesses that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speeds and 3 Mbps of upload speeds.
The IFR provides that a recipient may use Coronavirus State and Local Fiscal Recovery Funds to make investments in broadband infrastructure that are designed to provide service to unserved or underserved households or businesses and that are designed to, upon completion: (i) reliably meet or exceed symmetrical 100 Mbps download speed and upload speeds; or (ii) in limited cases, reliably meet or exceed 100 Mbps download speed and between 20 Mbps and 100 Mbps upload speed and be scalable to a minimum of 100 Mbps download and upload speeds.
The use of “reliably” in the IFR provides recipients with significant discretion to assess whether the households and businesses in the area to be served by a project have access to wireline broadband service that can actually and consistently meet the specified thresholds of at least 25Mbps/3Mbps—i.e., to consider the actual experience of current wireline broadband customers that subscribe to services at or above the 25 Mbps/3 Mbps threshold. Whether there is a provider serving the area that advertises or otherwise claims to offer speeds that meet the 25 Mbps download and 3 Mbps upload speed thresholds is not dispositive.
When making these assessments, recipients may choose to consider any available data, including but not limited to documentation of existing service performance, federal and/or state-collected broadband data, user speed test results, interviews with residents and business owners, and any other information they deem relevant. In evaluating such data, recipients may take into account a variety of factors, including whether users actually receive service at or above the speed thresholds at all hours of the day, whether factors other than speed such as latency or jitter, or deterioration of the existing connections make the user experience unreliable, and whether the existing service is being delivered by legacy technologies, such as copper telephone lines (typically using Digital Subscriber Line technology) or early versions of cable system technology (DOCSIS 2.0 or earlier).
The IFR also provides recipients with significant discretion as to how they will assess whether the project itself has been designed to provide households and businesses with broadband services that meet, or even exceed, the speed thresholds provided in the rule.
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[1] U.S. Department of The Treasury, Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, AS OF JUNE 17, 2021, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.
[2] American Rescue Plan Act of 2021, Public Law 117–2, https://www.congress.gov/bill/117th-congress/house-bill/1319/text.
[3] ARPA Section 602 and 603.
[4] Department Of The Treasury, Coronavirus State and Local Fiscal Recovery Funds, Interim final rule, 86 Fed. Reg. 26,786 (May 17, 2021), https://www.govinfo.gov/content/pkg/FR-2021-05-17/pdf/2021-10283.pdf.
[5] 86 Fed. Reg. 26,804 (May 17, 2021).
[6] Id.
[7] Id.
[8] Id.
[9] 86 Fed. Reg. 26,805 (May 17, 2021).
[10] 86 Fed. Reg. 26,806 (May 17, 2021).
