Treasury Department Expands ARPA Funding Eligibility for Broadband Development

Wednesday, January 12, 2022

On January 6, 2022, the Treasury Department issued its final rule on the American Rescue Plan Act State and Local Fiscal Recovery Funds (“SLFRF”) program and it contained good news for municipalities considering broadband infrastructure investments. In response to concerns raised by broadband advocates and recipients, Treasury has significantly broadened the scope of eligible broadband infrastructure projects, granted recipients more discretion in the use of funds received, and acknowledged the importance of affordable broadband access.

Under the interim final rule issued by Treasury in May 2021, recipients could only use SLFRF funds for broadband infrastructure projects in unserved or underserved areas (those with broadband speeds of less than 25 Mbps download and 3 Mbps upload). Additionally, the interim rule discouraged investment in areas with existing broadband infrastructure projects. Though these requirements were based on reasonable evidence about broadband use and needs, they prevented municipalities from deploying SLFRF funds for many worthy projects. Treasury has loosened many of these restrictions in the final rule.

First and foremost, the final rule permits SLFRF-funded projects in any area with an “identified need” for broadband infrastructure investment. Recipients now have broad discretion to identify areas with need and the final rule indicates that areas without a wireline connection reliably delivering 100/20 Mbps speeds or without affordable or stable broadband service are considered to have an identified need. The increased minimum speed will allow municipalities to utilize SLFRF funds in much broader areas and to strengthen broadband infrastructure in those that already met the speed standard of the interim final rule. The updated speed standard in the final rule exceed those employed by ConnectME and other grant makers and may allow municipalities to further leverage SLFRF and other state funding for their broadband infrastructure projects.

Additionally, the final rule acknowledges that, for many people, affordability, rather than lack of service, is the primary obstacle to broadband access. In addition to making lack of affordable broadband service an identified need, Treasury will now require recipients to ensure that any service provider using SLFRF-funded broadband infrastructure offers affordable service and provides at least one low-cost option without data caps and with speeds that enable modern broadband usage.

Lastly, the Final Rule has loosened the prohibition on using SLFRF funds in areas that are already receiving federal funding for broadband infrastructure projects. Treasury will now permit recipients to use SLFRF funds in existing project areas, provided the SLFRF funds are addressing an identified need that will not be remedied by the other project.

Together, these changes have opened the door for municipal broadband infrastructure investments and development. Please contact us if you would like any additional information or guidance on the Final Rule’s impact on your planned or proposed project.