The State and Local Fiscal Recovery Fund (“SLFRF”) is a $350 billion emergency fund to be used by eligible state, local, territorial, and Tribal governments to support the populations hit hardest by the COVID-19 pandemic. 

On May 10, 2021, the U.S. Department of the Treasury (“Treasury Department”) issued its interim final rules (“IFR”), outlining how communities can use SLFRF funding. It will provide much-needed resources for cities and towns across the country to build and maintain broadband infrastructure and adoption programs. However, the proposed rules lack clarity on where funding can support broadband projects. 

The IFR highlights that during the pandemic, broadband became essential for every facet of daily life. The Treasury Department also concedes that higher speeds and greater bandwidth are necessary to ensure that everyone across the nation can live and participate in society. Notably, the proposed rules do not rely on Federal Communications Commission Form 477 data to identify unserved or underserved areas, but instead sets a unique standard for SLFRF support.

Prioritizing underserved and unserved populations, the Treasury Department defines unserved or underserved as a “lack of access to a wireline connection capable of reliably delivering at least minimum speeds of 25 Mbps download and 3 Mbps upload. . .” This invites confusion as the rules do not explain the threshold for “reliable” service. 

Additionally, local officials nationwide agree that the 25/3 Mbps speed standard, adopted by the FCC in 2015, is insufficient to meet residents’ needs. The IFR acknowledges that projects should prioritize 100 Mbps symmetrical speeds, but that is not required. This ambiguity may inhibit communities from investing in areas that lack sufficient service simply because existing data shows that minimum broadband service is available. 

Local officials in various parts of the country have expressed concerns about investing public funds into building new or expanding existing networks based on an increasingly outdated standard. Throughout the pandemic, communities have provided illustrations of why the current benchmark is incapable of meeting household capacity demands, and will not meaningfully help close the digital divides.

At the same time, FCC data, which state and local governments rely on, overstate broadband availability, service speeds, and do not account for price. The Treasury Department’s IFR notes that there are tens of millions of Americans that live in areas where there is no broadband infrastructure capable of delivering minimum broadband speeds. Under the IFR, new projects are expected, but not required, to deliver service that meets 100 Mbps symmetrical speeds. 

Even before the Treasury Department’s guidance was released, local officials raised concerns about paying back funds used for projects that were subsequently identified as inappropriate. CARES Act funding produced similar ambiguities, meaning that some communities embarked on municipal WiFi or fiber deployment projects while others left funding unspent at the end of 2020. Though the CARES Act deadline was ultimately extended, reluctance about whether communities could invest the funds in long-term infrastructure projects put a pause on projects that could have been well underway by the end of the year. 

Here, uncertainty around how new Treasury Department funding can be used may lead some municipalities to forgo SLFRF funded broadband investments in their communities.

Along with announcements about how communities may use the funding, the Treasury Department announced how funding would be allocated to each state. The actual allocation for some local and state governments is less than the Congressional Research Service estimated. For example, Cleveland, Ohio will receive $30 million less than expected, and the State of Wisconsin will receive $700 million less.

Some communities are looking optimistically toward the prospect of the American Jobs Plan. Congress is still vetting the policies that should be included in the plan, but the White House Fact Sheet proposes to invest in local communities’ infrastructure. Additionally, several states have allocated portions of their SLFRF allowances to community initiatives. Each of these funding mechanisms should work in coordination to enable local governments to fully realize their connectivity goals. The IFR, if left as is, may limit many communities’ ability to include broadband in long-term infrastructure planning. 

The SLFRF is intended to help states and localities respond to the myriad of connectivity issues that their communities continue to face. The IFR should employ flexible guidelines that allow communities to identify and address their own broadband access and adoption deficiencies.

Though the rules are immediately effective, the U.S. Department of Treasury will accept public comment on the IFR until July 16, 2021. If you would like to submit a comment, comments can be submitted electronically through the Federal eRulemaking portal: www.regulations.gov. Comments must be captioned with “Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule Comments” and include: 

• Filer Name, 
• organization, 
• Affiliation, 
• Address, 
• Email address, and 
• Telephone number.  

If you have questions about the comment filing process or would like to provide a story on your community’s experience with the SLFRF, please contact Ryan Johnston at ryan@nextcenturycities.org.