Heather D. Mills, V.P. for Grant & Funding Strategies
Ziggy Rivkin-Fish, V.P. for Broadband Strategy
The U.S. Department of the Treasury has released interim final rules for the Coronavirus State and Local Fiscal Recovery Funds program. Established by the American Rescue Plan Act of 2021 (ARPA), this program will provide $350 billion in emergency funding for eligible state, local, territorial, and Tribal governments, and includes broadband spending as an eligible use.
These funds are separate from the Treasury-managed $10 billion Coronavirus Capital Projects Fund, which is primarily for broadband projects. Treasury will distribute those allocations directly to states, counties, metropolitan cities and other eligible local governments, while smaller non-entitlement local governments will receive funds through their state government.
Treasury has allocated a specific amount of State and Local Fiscal Recovery Funds program funding for each eligible entity. Table 1 provides an overview of the allocations, while information about specific governments’ individual allocations is available on the Treasury’s website.
Table 1: Allocation of Coronavirus State and Local Fiscal Recovery Funds by the U.S. Department of the Treasury
|States & District of Columbia||$195.3|
|Non-Entitlement Units of Local Government||$19.5|
The program will fund broadband deployments and digital equity strategies, and has been designed to enable states and localities “to identify the specific locations within their communities to be served and to otherwise design the project” to fit their needs. Treasury provided interim rules establishing certain minimum requirements on how recipients can use funds for broadband deployments, and it also provides suggestive guidance about the range of digital equity projects that can use program funds. Key guidance includes the following:
- Infrastructure projects must support 100 Mbps symmetrical speeds unless geographical, topographical or fiscal constraints make it impractical. For the purposes of the Fiscal Recovery Funds, Treasury’s approach to broadband infrastructure matches some of the most forward-thinking states’ broadband grant programs. In its interim rules, Treasury expects the funds to be used on broadband deployments that are capable of at least 100/100 Mbps speeds, to address Americans’ modern communications needs. The program also strongly suggests that projects focus on fiber deployments, because fiber has the capability of affordably meeting the steady annual increase in broadband capacity demands faced by our nation’s networks.
The interim rules also outline a scenario in which symmetrical 100 Mbps service may be considered “impractical due to geographical, topographical, or financial constraints,” and in that case, require projects to provide 100/20 Mbps service with the ability to scale to 100 Mbps symmetrical. This appears to be a concession to incumbent cable providers who can cost-effectively extend to unserved locations from their current network footprint and are on a roadmap to symmetric speeds. Most cable companies have implemented DOCSIS 3.1—and while they currently limit upstream to 35 to 50 Mbps, field upgrades would allow them to deliver gigabit speeds upstream and would also put them on a long-term roadmap to DOCSIS 4.0’s 10/6 Gbps capability.
- Projects must address areas that lack 25/3 Mbps. The interim final rules state that projects will be expected to address unserved and underserved areas, defined as those that do not yet have access to speeds of at least 25/3 Mbps. The manner in which this goal is phrased suggests wide latitude in designing projects – as long as they also address unserved locations.
- Projects are encouraged to prioritize affordability as well as local broadband solutions. After noting that the U.S. has some of the most expensive broadband services in the world, the program’s interim rules place special emphasis on ensuring that the resulting broadband service provided over the funded network is affordable. The “Treasury also encourages recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, non-profits, and co-operatives—providers with less pressure to turn profits and with a commitment to serving entire communities.”
- Projects are encouraged to prioritize last-mile connectivity. While Treasury underscores this, states and localities are not precluded from setting their own priorities, and other initiatives that could improve affordability by investing in capacity bottlenecks such as middle-mile or data center builds could be funded.
- Rural Digital Opportunity Fund (RDOF) results likely won’t affect funding eligibility. The interim rules encourage recipients to avoid funding projects that will serve a location with an existing agreement “to build reliable wireline service with minimum speeds of 100 Mbps download and 20 Mbps upload by December 31, 2024.” In other words, fixed wireless and satellite commitments (such as SpaceX) funded with federal funds will not be considered ineligible. And because 2024 represents the third year of RDOF, at which point no RDOF winner will yet be obligated to serve a specific area, RDOF-funded wireline areas are also not considered. Unless a winner made written commitments separately (for example, through a state grant application) for completing a build before this date, planners can largely disregard RDOF when evaluating projects for funding under this specific allocation.
- Infrastructure projects are expected to meet strong labor standards. This includes project labor agreements, community benefit agreements, and wages at or above the prevailing rate with local hire provisions. Treasury notes that it will release additional guidance related to workforce reporting requirements at a later date, but expect fair (high) wage provisions, benefits, and local sourcing as key components.
- Projects can address a wide array of broadband-related concerns. In addition to infrastructure, these State and Local Fiscal Recovery Fund dollars can also be used for an array of other initiatives that respond to the public health and economic impacts of the pandemic. While Treasury leaves the door open for a wide variety of fundable initiatives, it offers the general guidance that recipients should “identify a need or negative impact of the COVID-19 public health emergency and, second, identify how the [proposed] program, service, or other intervention addresses the identified need or impact.”
 “Fact Sheet: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver $350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the COVID-19 Emergency and Bring Back Jobs,” U.S. Department of the Treasury, May 10, 2021, https://home.treasury.gov/system/files/136/SLFRP-Fact-Sheet-FINAL1-508A.pdf.
 “Funding amounts,” U.S. Department of the Treasury, https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds (accessed May 11, 2021).
 “Coronavirus State and Local Fiscal Recovery Funds, Interim Final Rule,” Department of the Treasury, 31 CFR Part 35, RIN 1505-AC77, released May 10, 2021, page 71, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf. Interim Final Rules, “Interim Final Rules.”
 “Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions,” pages 11-12, U.S. Department of the Treasury.
 Interim Final Rules, page 75, U.S. Department of the Treasury.
 “Even in areas where broadband infrastructure exists, broadband access may be out of reach for millions of Americans because it is unaffordable, as the United States has some of the highest broadband prices in the Organisation for Economic Co-operation and Development (OECD).” Interim Final Rules, page 70, U.S. Department of the Treasury.
 Interim Final Rules, pages 76-77, U.S. Department of the Treasury.
 Interim Final Rules, page 76, U.S. Department of the Treasury.
 Interim Final Rules, page 10, U.S. Department of the Treasury.