This is the seventh installment of our multi-part series of Client Alerts that focus on discrete sections of the Infrastructure, Investment & Jobs Act of 2021 (IIJA) that became law on November 15, 2021. Today we return to the topic of broadband, introduced earlier in Part III: Build Better Broadband!
On Friday, May 13, 2022, the Biden Administration announced a newly branded “Internet for All” initiative and released essential details about three major new broadband grant programs established with federal funding provided in the Infrastructure Investment and Jobs Act (IIJA), a.k.a the “Bipartisan Infrastructure Law.” This announcement kicks off multiple complex application processes with quick-turn around deadlines throughout the summer and into the early Fall. Interested parties will be wise to gather their applications teams and plan their strategy without delay.
As previously discussed in our overview of the broadband provisions of the IIJA (see The Infrastructure, Investment & Jobs Act of 2021: What's In It For You? (Part III: Build Better Broadband!): Potomac Law), the IIJA appropriated $42.5 Billion in funding for last mile broadband infrastructure deployment under the Broadband Equity, Access and Deployment (BEAD) Program, a $1 Billion Enabling Middle Mile Broadband Infrastructure Program, and a $1.5 Billion State Digital Equity Capacity Grant (SDEGC) Program. These grant programs are broadly intended to substantially close, after many prior piecemeal efforts, the “digital divide” gap for remaining “unserved” or “underserved” Americans who lack access to high speed Internet, typically in rural or other high cost areas. Following a comment period in February that generated hundreds of responses, the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce released May 13, 2022 notices of funding opportunity (NOFOs) for each of these programs.
This alert is not intended to be a complete summary of all aspects of these Programs, all ranking criteria or minimum qualifications, or the complete requirements of each NOFO, but only to summarize and highlight some of the key provisions. For further details, please consult the NOFO directly and contact the author(s) or your Potomac Law Group legal contact.
Middle Mile Grant (MMG) Program: eligibility criteria and deadlines
The purpose of funding middle mile infrastructure is to reduce the cost of connecting unserved and underserved locations to the backbone of the Internet, and to promote broadband network resiliency by creating alternative network connection paths “designed to prevent single points of failure on a broadband network.” MMG NOFO at 5. Broadband providers, utilities, electric co-operatives, regional planning entities, non-profits, states and their political subdivisions, Tribal governments, and other entities are eligible to apply directly to NTIA for grants for fiber-optic technology deployment under the MMG Program.
The single stage competitive application process for grants will be relatively quick, with applications due September 30, 2022. According to the NOFO, NTIA expects to complete its review and selection of successful applicants and to process awards by February 16, 2023, with awards beginning as early as March 1, 2023. The expected funding range under this program is $5 Million to $100 Million; however, with a $1 Billion capped budget, it is unlikely that many projects will exceed $50 Million under this program unless a minority of States receive concentrated MMG project funding. More likely than not, this funding will go to larger, more rural states lacking extensive, redundant middle mile infrastructure. Grants cannot exceed 70 percent of total project cost (excepting grants made to Tribal Governments and Native entities, for which the 70 percent funding cap may be waived).
Projects must meet a 5 year buildout schedule for successful middle mile grant applications. Significantly, the program includes a requirement that successful applicants must include direct interconnection facilities to community anchor institutions located within 1,000 feet of the middle mile infrastructure, at symmetric speeds of at least 1 Gigabit per second for both uploads and downloads.
For required content and form of applications, see the MMG NOFO.
The State Digital Equity Capacity Grant (SDECG) Program
States, the District of Columbia and U.S. territories are exclusively eligible for funding under the SDECG Program, which will fund annual formula-based grants for five years to these governments to support digital equity projects and the implementation of digital equity plans, with the aim of increasing adoption and providing digital literacy training for groups these projects are designed most to help: communities of color, rural communities, and older Americans. See Internet For All Digital Equity Act Programs “Application Information” at: https://www.internetforall.gov/program/digital-equity-act-programs. There is no cost sharing requirement.
SDECG grant applications from States, the District of Columbia, and Puerto Rico are due in two months, or by July 12, 2022. Other U.S. territories, Indian tribes, Alaska native entities, and native Hawaiian organizations interested in the program should also submit letters of intent by July 12. NTIA expects to complete its review, selection of successful applicants, and award processing by September 15, 2022, and to begin making awards as early as September 29, 2022.
It is NTIA’s stated expectation that states and territories applying as Eligible Entities for broadband deployment grant funding under the BEAD Program (discussed below) will also be applying for SDECG Program grants, as the two programs should be viewed by Eligible Entities “holistically as complementary efforts aimed at a singular, unified objective of closing the digital divide.” BEAD NOFO at 10. In fact, an Eligible Entity’s Five-Year Action Plan under the BEAD NOFO will be required to incorporate the Eligible Entity’s “State Digital Equity Plan,” since every Five-Year Action Plan must address digital equity. Id.
The BEAD Program
By far the largest tranche of congressional funding for the expansion of broadband under the IIJA, and the biggest prize for states, unserved/underserved localities and broadband providers, is the signature $42.5 Billion BEAD Program, slated to deliver last mile broadband to the millions of remaining unserved and underserved locations in the U.S. Not surprisingly, given the massive amount of funding involved and the complexity of ensuring that this significant funding achieves Congress’ aim of providing high speed Internet access to all Americans who lack it, the program structure calls for unprecedented federal and state government broadband planning and coordination. The unusual federal/state construct for awarding grants under the BEAD Program features a two-stage grant and subgrant process in which states and territories will be the central players applying for and receiving grant funding to cover the aggregate cost of broadband deployment to unserved and underserved locations within their jurisdiction, and then in the next phase, these recipients will award subgrants to applicants selected to build out broadband to those locations.
As a preliminary step prior to the State and territory receiving its full BEAD funding allocation, it must first request $5 Million of “Initial Planning Funds” from its Minimum Initial Allocation ($100 Million per State) to help underwrite its work in connection with the BEAD Program. Many States do not have a reliable state broadband map, let alone a dedicated State Broadband Office. They need to hire and train staff to oversee these broadband programs, engage in broadband planning, research unserved and underserved locations and determine barriers to adoption, engage in local coordination and other activities, and eventually to conduct a competitive subgrantee selection process. The identification of all unserved and underserved locations nationwide will be dependent on Broadband DATA maps eventually being made public by the FCC, for which the FCC has been engaged in data collection, vendor selection and maps preparation over the past 2+ years. The 98 page Notice of Funding Opportunity for the BEAD Program is available at the following link:
https://internetforall.gov/program/broadband-equity-access-and-deployment-bead-program.
BEAD project funding will require at least 2 years of implementation before subgrants are awarded for specific projects. Much of the initial effort and investment will be by Eligible Entities: States and State Broadband Offices preparing letters of intent, requesting Initial Planning Funds from NTIA to be drawn from each Entity’s Minimum Initial Allocation, preparing Five-Year Action Plans, and preparing Initial Proposals for the competitive process to select subgrantees to construct broadband projects, which must be made available for public comment. That timing will also be dependent on key federal and state government deliverable deadlines being met.
BEAD Program Process Sequencing
The complex sequencing of the BEAD Program is as follows:
- Letter of Intent (due from Eligible Entity states by July 18, 2022)
- Request for Initial Planning Funds (up to $5 Million can be requested, including for creation and staffing of dedicated broadband office; due by August 15, 2022)
- Five-Year Action Plan from States (due within 270 days --by mid-2023-- of receipt of Initial Planning Funds; NTIA to publish an optional template for states and other Eligible Entities to use)
- Program Fund Allocation and Notice of Available Amounts (after Broadband DATA Maps are published by FCC identifying unserved/underserved locations) (per NTIA’s BEAD Overview timeline, expected to be in the 1st Qtr of 2023).
- Initial Proposal by Eligible Entities (1st draft of Final Proposal for grant funding; due 180 days from issuance of Notice of Available Amounts). By the NTIA’s BEAD Overview timeline, it is estimated this will likely be due from states by 3rd or 4th Quarter 2023.
- Challenge Process (to be managed by Eligible Entities) challenging a determination in the Initial Proposal about whether a particular location or community anchor institution within the Eligible Entity’s jurisdiction is unserved/underserved and eligible for grant funds.
- Subgrantee Selection Process (following approval of Initial Proposal, a competitive subgrantee selection process may proceed, with Eligible Entity having one year to conduct additional local coordination, complete the selection process, and submit a Final Proposal to NTIA).
- 20 Percent Funding Release (before submission and approval of the Final Proposal, Eligible Entities may release not less than 20 Percent of their total grant funds to competitively selected subgrantees).
- Final Proposal and Release of Remaining Funds (up to 1 year for Eligible Entities to complete subgrantee selection, 20% funding release and acceptance of Final Proposal). There will be a 4 year implementation deadline for subgrantee projects from 2024-2028.
How much time will this all take?
It will be at least 18 months from the release of the Notice of Available Amounts/FCC publication of the Broadband DATA maps before Final Proposals are approved and the bulk (80%) of grant funding is released (though 20% of funding will be released after Subgrantees are selected by States before Eligible Entity Final Proposals are approved). The date of release of FCC Broadband DATA maps is still unclear. However, reading between the lines of the NOFO sequencing calling for Initial Proposals by late 2023, FCC Broadband DATA Maps and individual state notices of funding amounts are more likely to be published no earlier than the 4th Quarter of 2022 or 1Q 2023, following the August 15, 2022 deadline for requests for initial proposals from the States.
How much funding will each State receive under BEAD?
Each State, the District of Columbia, and Puerto Rico is entitled to a Minimum Initial Allocation of $100 Million, and U.S. Territories $25 Million each, or about $5.4 Billion of aggregate initial allocations. Larger qualifying states with more unserved/underserved locations per capita will likely receive much more than the Minimum Initial Allocation from a much larger $37 Billion pot of Remaining Funds Allocation after the initial allocations, based on their total number of unserved/underserved locations as determined by the NTIA’s Notice of Available Amounts to each Eligible Entity. Among those states are likely to be many that are eligible for a considerable portion of the $4.2 Billion of funding reserved for high cost area locations. High cost areas are defined as unserved locations where the cost of building out broadband service is higher than the average cost to build out broadband due to remote location, limited population, high poverty levels and other factors to be identified by the Ass’t. Secretary.
Does BEAD have a Non-Federal Matching Funds Requirement?
Yes. Except in high cost areas (which may include many areas in such states as Alaska), each eligible entity shall require matching funds of not less than 25%. In-kind contributions (such as waiver of fees associated with rights of way access or pole attachments) can be used to satisfy some of the matching funds requirement. Eligible Entities, if they are able and willing to do so from their own funds, can cover the match requirement or may apply to NTIA for a discretionary partial or full match waiver based on “special circumstances” that exist where a waiver would “serve the public interest and effectuate the purposes of the BEAD Program.” BEAD NOFO at 22. Generally, Federal funding may not be used to satisfy a matching funds requirement, with the exception that matching funds MAY come from CARES Act, Consolidated Appropriations Act or American Rescue Plan Act of 2021 funds if awarded to an Eligible Entity or subgrantee. Of course, many applications, such as under the Consolidated Appropriations Act, are still under review by NTIA.
Will Certain Broadband Deployment Technologies Be Given Priority and Higher Scoring?
The projects that will be considered “Priority Broadband Projects” and which will receive prioritization and highest scoring in selection of last mile broadband deployment projects are ones that use end-to-end fiber-optic architecture to support 5G deployment and successor wireless and other advanced broadband technologies.
What Minimum Service Standards will be required by Subgrantees?
Subgrants must offer a minimum broadband service level of 100/20 Mbps service; 95% latency less than or equal to 100 ms round trip time; and outages for no more than 48 hours per year unless a force majeure event.
What Are the Requirements for Subgrantees to be Awarded Subgrants?
Subgrantees must satisfy minimum financial capability requirements consisting of self-certification, submit a letter of credit (under terms similar to those for winning bidders under the pending FCC-administered Auction 904 Rural Digital Opportunity Fund reverse auction) and audited financial statements. They must also provide documentation satisfactorily demonstrating their managerial capability, technical capability, compliance with laws, and operational capability to construct broadband networks.
Will there be a Required Low-Cost Broadband Service Option?
Yes. $30 or less for non-Tribal Lands; $75 or less on Tribal Lands (inclusive of taxes, fees, and surcharges).
Will States be Required to Coordinate with all political subdivisions and Tribal Governments in executing their duties as Eligible Entities?
Eligible Entities must coordinate with all political subdivisions and Tribal Governments throughout the planning and development process. For example, as to unserved/underserved locations in Tribal areas, this requires, at a minimum, a “formal Tribal consultation process” established by each Eligible Entity, that includes “Tribal Governments [and] Alaska Native entities….” BEAD NOFO at 53.
Even with the benefit of BEAD Program Initial Planning Funds, many rural States (some of whom lack existing broadband offices or broadband grant programs, or even a state broadband map) will find themselves ill-equipped and resource-constrained to implement the significant structural requirements of the BEAD Program such as establishing and administering a Five Year Action Plan, preparing an Initial Proposal with an RFP process, a challenge process, and evaluating and awarding grants to subgrantee applicants according to the requirements of the NTIA BEAD Program NOFO. But given the large onetime federal grant funding opportunity available to States, particularly under the BEAD and State Digital Equity Programs, States will need to procure professional help preparing their NTIA submissions to ensure that they qualify for this essential grant funding to bring broadband to their unserved and underserved residents.
