The Treasury Department has issued its Final Rule regarding the use of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) established under the American Rescue Plan Act (ARPA). The Final Rule significantly expands ARPA recipients’ flexibility to use the funds for broadband infrastructure projects.

Under the Interim Final Rule, eligible broadband infrastructure investments were limited to projects “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 at least minimum speeds of
25 Mbps download and 3 Mbps upload.”  (See March 15, 2021 Blog Post here)

The Final Rule entirely abandons the “unserved or underserved” requirement. “The final rule expands eligible areas for investment by requiring recipients to invest in projects designed to provide service to households and businesses with an identified need for additional broadband infrastructure investment, which would include but not be limited to a lack of broadband service reliably delivering certain speeds.” (at 296, emphasis added). In addition, “examples of need include lack of access to a connection that reliably meets or exceeds symmetrical 100 Mbps download and upload speeds, lack of affordable access to broadband service, or lack of reliable broadband service.” (at 302)

In making a determination of “need,” “recipients may choose to consider any available data, including but not limited to documentation of existing broadband internet service performance, federal and/or state collected broadband data, user speed test results, interviews with community members and business owners, reports from community organizations, and any other information they deem relevant.” (at 338)

Additional notable aspects of the Final Rule:

• The Final Rule “continues to encourage recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and cooperatives.” (at 298)

• The Final Rule retains the Interim Rule’s requirement that eligible projects be designed to reliably provide at least 100 Mbps symmetrical service. In areas where it is not practical to do so due to excessive cost or geography or topography of the area to be served, a project may be designed to provide 100/20 Mbps service, scalable to 100 Mbps symmetrical.

• The Final Rule adds a requirement that ARPA-funded broadband service providers participate in the FCC’s Affordable Connectivity Program or provide access to a commensurate affordability program. (at 308)

• Nonduplication of support: The Final Rule does not prohibit the use of ARPA funds in areas for which there are already “existing enforceable federal or state funding commitments for reliable service at speeds of at least [100/20 Mbps],” but “recipients must ensure that SLFRF funds are designed to address an identified need for additional broadband investment that is not met by existing federal or state funding commitments.”

• Cybersecurity: Modernization of cybersecurity for existing and new broadband infrastructure is an eligible use for ARPA broadband infrastructure funds. (at 312)

The effective date of this Final Rule is April 1, 2022.