Coronavirus State and Local Fiscal Recovery Funds Final Rule Released

On January 6, 2022, the Department of Treasury released the Final Rule for the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), which sets forth the requirements states must abide by when allocating their CSLFRF funds.  States are allowed to use CSLFRF funds to:

  • Replace lost public sector revenue;
  • Respond to the far-reaching public health and negative economic impacts of the pandemic;
  • Provide premium pay for essential workers;
  • Invest in water, sewer, and broadband infrastructure.

States have the ultimate say in how these funds are used, so long as they comply with the guidelines set forth in the Final Rule.

When it comes to broadband, the Final Rule allows states to fund broadband infrastructure projects that are designed to provide service to unserved or underserved households or businesses, defined as those that lack access to a wireline connection capable of reliably delivering minimum speeds of 25 Mbps download and 3 Mbps upload.  These projects must, upon completion, deliver service that reliably meets or exceeds symmetrical upload and downloads speeds of 100 Mbps.  Where 100 Mbps symmetrical service is not possible due to geography, topography, or excessive cost, then the project must be designed to deliver service that reliably meets or exceeds 100 Mbps download speed and between at least 10 Mbps and 100 Mbps upload speeds and be callable to a minimum of 100 Mbps symmetrical.  The specific requirements for utilizing CSLFRF funding for broadband are set forth below.

The Final Rule will be effective April 1, 2022.  States that have already begun to receive CSLFRF funds are required to comply with the Final Rule when utilizing that funding.  Each state was awarded $500 million dollars in an even distribution, and in addition was awarded funding based upon the average number of unemployed individuals in the state.  A breakdown of the total funding awarded to each state can be found here.

CSLFRF Broadband Requirements

Eligible Areas

Recipients are required to invest in projects designed to provide service to households and businesses with an identified need for additional broadband infrastructure investment.  Recipients have flexibility to identify that need, and can use evidence such as lack of access to symmetrical 100 Mbps speeds, lack of affordable access to broadband service, or lack of reliable broadband service.  Recipients are encouraged, however, to focus on those areas that are not currently served by a wireline connection that reliably delivers at least 100/20 speeds.  Recipients may consider any available data to determine what areas should qualify for investment.

Build to Speed Standards

Recipients must use funds to make investments in broadband infrastructure that is designed, upon completion, to reliably meet or exceed symmetrical 100 Mbps speeds.  In cases where that is not practicable because of the excessive cost of the project or geography or topography of the area to be served by the project, eligible projects must be designed to reliably meet or exceed 100 Mbps download speed and between 20 Mbps and 100 Mbps upload speed, scalable to a minimum of symmetrical 100 Mbps speeds.  Recipients are encouraged to prioritize fiber-optic infrastructure whenever feasible.

Recipients are permitted to make investments in “middle-mile” connections that otherwise satisfy the other requirements of the rule. However, recipients are encouraged to focus on projects that will achieve last-mile connections, whether by focusing on directly funding last-mile projects or by ensuring that funded middle-mile projects have commitments in place to support new or improved last-mile service.

Affordability

Recipients of CSLFRF funding are required to either participate in the FCC’s Affordable Connectivity Program (“ACP”) through the lifetime of the program or to provide access to a broad-based affordability program to low-income consumers in the proposed service area that provides benefits to those consumers commensurate with those provided under the ACP.  Recipients are encouraged to consult with their community on the general affordability needs of the target markets in the proposed service area.  Additionally, recipients are encouraged to require that services provided by a broadband infrastructure project include at least one low-cost option offered without data usage caps at speeds that are sufficient for a household with multiple users to simultaneously telework and engage in remote learning. Treasury will require recipients to report speed, pricing, and any data allowance information as part of their mandatory reporting to Treasury.  Recipients may also utilize funds to provide subsidies for broadband, digital literacy, and other related programs assist households and communities impacted by the pandemic.

Public Networks

Treasury encourages recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and cooperatives, given that these networks have less pressure to generate profits and a commitment to serve entire communities.

Duplication of Efforts and Resources

To the extent that recipients are considering deploying broadband to locations where there are existing enforceable federal or state funding commitments for reliable service at speeds of at least 100/20, recipients must ensure that CSLFRF funds are designed to address an identified need for additional broadband investment that is not met by existing federal or state funding commitments.  Recipients must also ensure that CSLFRF funds are not used for costs that will be reimbursed by other federal or state funding streams.

Cybersecurity

Recipients may utilize funds for modernization of cybersecurity for existing and new broadband infrastructure, regardless of their speed delivery standards.  Treasury notes that investments in broadband infrastructure must comply with the 2019 National Defense Authorization Act, which prohibits use of federal financial assistance to procure or obtain certain telecommunications and video surveillance services or equipment that is provided or produced by designated entities, including entities owned or controlled by the People’s Republic of China.

Use of Funds to meet Non-Federal Match under the Infrastructure Investment and Jobs Act

Recipients may utilize CSLFRF funds to meet matching requirements of broadband infrastructure programs managed by other federal agencies under the Infrastructure Investment and Jobs Act.  Recipients that do utilize funding in this manner will still be subject to the requirements set forth herein.

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