What types of broadband improvement projects are potentially eligible for ARP funding?

On January 6, 2022, the U.S. Department of the Treasury (“Treasury”) issued its Final Rule on the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”). The Final Rule encourages recipients to consider the general affordability of broadband infrastructure projects and incorporate “at least one low-cost option offered without data usage caps and at speeds that are sufficient for a household with multiple users to simultaneously telework and engage in remote learning.”[1] This measure allows the focus of broadband projects to prioritize supporting underserved communities that have been disproportionately impacted by the pandemic.[2]

Further terms for the eligible use of funds for broadband infrastructure are defined in the Final Rule.[3] Treasury considers a necessary investment in broadband infrastructure to be one that is  “responsive to an identified need to achieve or maintain an adequate minimum level of service.”[4] Treasury considers a necessary investment in infrastructure – including broadband – to be one that will “establish or improve broadband service to underserved populations to reach an adequate level to permit a household to work or attend school, and that are unlikely to be met with private sources of funds,”[5] and also is:

1. responsive to an identified need to achieve or maintain an adequate minimum level of service, which may include a reasonable projection of increased need, whether due to population growth or otherwise and
2. a cost-effective means for meeting that need, taking into account available alternatives.[6]

Eligibility of use for broadband infrastructure is further addressed in the CSLFRF Fact Sheet as of May 10, 2021.[7] More specifically, Treasury notes that funds may be used to “help remedy [ ] shortfalls […] in broadband infrastructure”[8] in “unserved or underserved” areas.[9]

However, Treasury has also clarified its expectations regarding the target population for infrastructure or broadband projects—not all such projects will be considered eligible for CSLFRF. For instance, uses of funds intended to generally grow the economy and therefore enhance opportunities for workers and businesses would not be an eligible use, because such assistance is not reasonably designed to impact individuals or classes that have been identified as having experienced a negative economic impact.[10]

Further, municipalities that invest in broadband infrastructure projects should ensure that “water, sewer, and broadband projects use strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions, not only to promote effective and efficient delivery of high-quality infrastructure projects but also to support the economic recovery through strong employment opportunities for workers.”[11] Treasury recommends that municipalities consider fiber optic infrastructure projects where possible.[12] Municipalities may also use funds for related programs, such as modernization of cybersecurity for existing and new broadband networks.[13]

The Final Rule “further supports the expansion of affordable access to broadband service for households by requiring that recipients use a provider that participates in a qualifying affordability plan,”[14] such as the Federal Communications Commission’s (“FCC”) Affordable Connectivity Program (“ACP”).[15]

The Final Rule provides specific technical attributes and requirements for eligible broadband projects, stating that:

…eligible projects be designed to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds. As was the case under the interim final rule, in cases where it 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 may be designed to reliably meet or exceed 100 Mbps download speed and between at least 20 Mbps and 100 Mbps upload speed and be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed.[16]

Treasury encourages recipients to consider using CSLFRF money for infrastructure or broadband projects that focus on projects geared toward establishing or improving service connectivity to individual households. Specifically, Treasury states:

while recipients are permitted to make investments in “middle-mile” connections that otherwise satisfy the requirements of the final rule, Treasury continues to encourage recipients to focus on projects that will achieve last-mile connections—whether by focusing directly on funding last-mile projects or by ensuring that funded middle-mile projects have commitments in place to support new and/or improved last-mile service.[17]

Treasury also provides flexibility for recipients on broadband infrastructure eligibility, specifically for “recipients to determine eligible areas to be served, middle-mile projects, pre-project development costs, broadband connections to schools or libraries, and the applicability of the National Environmental Policy Act (NEPA) and the Davis-Bacon Act.”[18]

Additional information may be provided when Treasury issues new Frequently Asked Questions (“FAQ”) specific to the Final Rule. [19] In addition, Treasury encourages municipalities to consider the guidance issued in the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule.[20]

Last Updated: January 26, 2022