Rule2022-25856
Rural Broadband Loans, Loan/Grant Combinations, and Loan Guarantees
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Published
November 30, 2022
Effective
November 30, 2022
Issuing agencies
Agriculture DepartmentRural Utilities Service
Abstract
The Rural Utilities Service (RUS or Agency), an agency in the United States Department of Agriculture (USDA) Rural Development Mission area, published an interim rule with comment in the Federal Register on March 12, 2020, to amend its regulation for the Rural Broadband Program, previously referred to as the Rural Broadband Access Loan and Loan Guarantee Program, to implement the Agricultural Act of 2018 (the 2018 Farm Bill). Through this action, RUS is adopting the interim rule as it was published and providing responses to the public comments received.
Full Text
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<title>Federal Register, Volume 87 Issue 229 (Wednesday, November 30, 2022)</title>
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[Federal Register Volume 87, Number 229 (Wednesday, November 30, 2022)]
[Rules and Regulations]
[Pages 73443-73446]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25856]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Parts 1738 and 1739
[Docket No. RUS-19-Telecom-0003]
RIN 0572-AC46
Rural Broadband Loans, Loan/Grant Combinations, and Loan
Guarantees
AGENCY: Rural Utilities, USDA.
ACTION: Final rule; confirmation and response to comments.
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SUMMARY: The Rural Utilities Service (RUS or Agency), an agency in the
United States Department of Agriculture (USDA) Rural Development
Mission area, published an interim rule with comment in the Federal
Register on March 12, 2020, to amend its regulation for the Rural
Broadband Program, previously referred to as the Rural Broadband Access
Loan and Loan Guarantee Program, to implement the Agricultural Act of
2018 (the 2018 Farm Bill). Through this action, RUS is adopting the
interim rule as it was published and providing responses to the public
comments received.
DATES: Effective November 30, 2022.
FOR FURTHER INFORMATION CONTACT: Laurel Leverrier, Assistant
Administrator; Telecommunication Program; Rural Development; U.S.
Department of Agriculture; 1400 Independence Avenue SW; Room 4121-S;
Washington, DC 20250; telephone 202-720-3416, email
<a href="/cdn-cgi/l/email-protection#0a666b7f786f6624666f7c6f7878636f784a7f796e6b246d657c"><span class="__cf_email__" data-cfemail="4f232e3a3d2a2361232a392a3d3d262a3d0f3a3c2b2e61282039">[email protected]</span></a>. Persons with disabilities or who require
alternative means for communication should contact the USDA Target
Center at 202-720-2600.
SUPPLEMENTARY INFORMATION: On December 20, 2018, under the Agricultural
Improvement Act of 2018, Public Law 115-334 (2018 Farm Bill), Congress
made significant improvements to the program, most notably by
furnishing grant assistance to reach the most underserved rural areas
lacking broadband access. The Agency published an interim rule with
comment on March 12, 2020 (85 FR 14393), to implement those required
statutory changes.
The 60-day comment period ended on May 11, 2020. Comments were
received from 16 respondents. Respondents included a funding
institution, telecommunications and satellite associations and
providers, businesses, and a private citizen. Four of the 16
respondents did not offer comments that were responsive or conducive to
improving the interim rulemaking. Below are the comments received from
[[Page 73444]]
the 12 remaining respondents and the Agency's responses:
Respondent 1: ``The respondent is a longtime supporter of
government programs that bring better broadband access to all
Americans. Our members support closing the digital divide through
reduced regulatory barriers and opening additional government funding
opportunities for companies to invest in wireless and wireline
deployments of broadband infrastructure. Therefore, the respondent
encourages RUS to consider all forms of broadband deployment (both
wireless and wireline) when evaluating applications for the Rural
Broadband Program funding. By expanding the scope of RUS's program
funding it will allow for the economy to continue to grow, provide a
technology neutral environment to identify the best solutions to have
broadband access to rural communities, and follow Congressional intent
to expand the RUS program to utilize technology that incorporates
television white spaces (TVWS). Therefore, it is important that RUS
activate TVWS in addition to wireline broadband for the United States
to support the present and future of Internet of Things (IoT)
services.''
Agency response: We appreciate your concern. The broadband program
is a technology neutral program and wireless technology along with
wireline technology is eligible for funding consideration as long as
the overall application meets the eligibility requirements of the
program.
Respondent 2: The interim rule should be modified to clarify that
the ``associated loan'' component of the grant could be provided by a
private funding source. Regardless of whether the loan portion of the
grant/loan combination comes from RUS or a private lender, RUS should
consider adding alternative forms of credit support. Since the
statutory and regulatory framework allows RUS the discretion to
determine appropriate security arrangements, respondent believes that a
letter of credit alternative should be permitted for those systems that
have repaid and no longer borrow from the Government (``Non-Government
Borrowers''). The published interim final rule does not explain how RUS
would calculate the fees, and respondent encourages the agency to
elaborate on the expected method of calculating the fees in the final
rule.
Agency response: The requirement to apply for an RUS loan in order
to receive associated grant funding is a statutory requirement and
cannot be modified at this time. Concerning the security arrangements
for an RUS loan, applicants may propose alternate forms of collateral
but should be prepared to enter into security arrangements as detailed
in the regulation.
Respondent 3: ``Please do not forget the micro deserts. Broadband
is available two houses from me but they will not extend to me on my
farm. I rely on a hotspot that doesn't always work, and never gets more
then about 4m BPS download and less than one upload and that's with an
expensive booster. I have to go to town to update my computer. Our cell
signal is not good.''
Agency response: The Agency understands your situation. Applicants
determine the service areas that they are requesting financing for and
the Agency requires that all premises in the proposed funded service
must be capable of receiving the proposed broadband service.
Respondent 4: Programs can only reach their highest potential if
they adhere to the principles for which the respondent has consistently
advocated: a focus on dedicating funding to bring broadband to truly
unserved areas in the most cost-effective way possible, and a
commitment to ensuring a fully transparent process so that all
providers can ensure that scarce funding is not allocated to already
served areas.
Agency response: The Agency will analyze industry trends and set
the broadband eligibility speeds accordingly to ensure that areas with
inadequate broadband service can receive improved broadband service
comparable to broadband service that is being provided in non-rural
areas.
Respondent 5: ``Significantly reduce the environmental reporting
requirements in the application. Remove location and network specifics
regarding Non-funded Service Areas (NFSA) and Unadvanced Prior Loan
Fund (UPLF) areas. Allow non-contiguous boundaries for NFSAs. Points
associated with schools and libraries should be handled differently.
The requirement that 100% of location in PFSA [proposed funded service
area] be unserved should be relaxed when applying for 100% grants.
Requiring a blanket first lien on all assets (when a loan component was
included) eliminated many potential applicants who use other lending
sources. Do not require applicant to provide subscriber penetrations
per serving area. Calculation of depreciation expense on grant funded
assets should be eliminated or should have the ability to be manually
adjusted. Environmental questionnaire (EQ) should be similar to EQ for
RUS Infrastructure loans. Allow adequate time for application
preparation. Definition of Unserved should match the FCC [Federal
Communications Commission] definition. Eliminate requirement to list
fiber sizing on network diagrams. There are also several enhancements
we would like to see with the application portal.''
Agency response: The application process and system have been
designed to ensure that all regulatory/statutory requirements are met
and that the proposed system is both financially and technically
feasible. The information requested is essential in making these
determinations.
Respondent 6: ``Consistent with the intent of the 2018 Farm Bill,
section 1738.101(a)(1) should make it clear that applicants are
eligible for grant funding if they are pairing the grant with a loan
from a third-party, not just a loan from RUS. Similarly, the discussion
of grants for development costs in section 1738.101(d) should include
broadband loans from third parties, not just RUS broadband loans.
<bullet> The definition and discussion of the ``Broadband lending
speed'' should be modified to clarify that the initial Broadband
lending speed under these programs is ``25/3 Mbps fixed terrestrial''
and clarify the discussion of eligible service area to make it clear
that initially any area with anything less than ``25/3 Mbps fixed
terrestrial'' is eligible while prioritizing areas that lack access to
at least 10/1.
<bullet> RUS should emphasize that mobile and satellite service
will not be considered in determining eligibility, that RUS funding
will not be provided to mobile service, but rather for high-capacity
backbone to connect households and premises, and also to support
wireless sites.
<bullet> RUS should clarify that, if there are applications for low
density areas, RUS will exercise its discretion in determining the mix
of grants and loans by using more of the designated funds in the form
of grants and targeting such grant funding to lower density areas.
<bullet> The standards set forth in section 1738.101(b) for
determining density should be based upon household density, not
population density.
<bullet> RUS should allow matching funding, whether in the form of
cash or loan funds, to be spread over the built-out period, rather than
fully expended upfront before grant funding can be used. And loan/grant
combo awardees should be allowed to draw equally from loan and grant
funds rather that expend loan funds before accessing grant funds.
<bullet> For these programs, RUS should continue with the
competitive market analysis used in ReConnect program,
[[Page 73445]]
rather than the heightened requirements contained in the IFR [interim
final rule].
<bullet> RUS should modify the treatment of challenges to
applications by providing the applicant with access to the challenge
and given a chance to respond within 30 days.
<bullet> In cases where issues raised in a challenge can be
addressed by minor modifications to the application, RUS should allow
applicants to do so.
<bullet> We encourage RUS to clearly state in the Application what
the applicant must report and provide regarding its structure to
increase its flexibility regarding partnerships (for example, not
requiring one partner to be designated ``lead applicant'').
<bullet> Regarding fidelity bond coverage of 15% of the loan or
loan/grant amount, RUS should permit a letter of credit in lieu of a
fidelity bond and should allow either mechanism to be reduced as the
awardee meets or exceeds build-out milestones or obligations.
<bullet> We also ask RUS to clarify the effective date of IFR and
clarify that the RUS letter to the applicant on fund availability is
the event that marks the beginning of the five-year build-out period.
<bullet> Finally, we ask RUS to explain how lender fees for loan
guarantees would be calculated and how RUS would use the proceeds from
those fees.''
Agency response: Pairing grant funding with an RUS loan is a
statutory requirement and cannot be modified at this time.
The broadband lending speed is designed to change with the ever-
increasing bandwidth requirements that the public requires. The Agency
will evaluate the broadband lending spend each time that a funding
announcement is published and set this requirement accordingly.
The broadband program is technology neutral and any technology that
can meet the broadband lending speed is eligible for consideration.
The amount of grant funds and the associated density calculations
that can be applied for are statutory requirements and cannot be
changed at this time.
The agency will consider the recommendation to spread out matching
requirements over the construction period but at this time, the
requirement will remain that matching funds be expended first.
Through the Public Notice Response process, the Agency will conduct
on-site review of the proposed service area to determine if adequate
broadband exists. If an area of the proposed funded service area is
found to be ineligible, the Agency will work with applicants to modify
the proposed service area accordingly.
Once an offer of an award is extended to an applicant, the 5-year
construction period starts once all closing conditions are satisfied
and funds become available to the awardee.
At this time, the Agency has not determined how fees associated
with a loan guarantee will be calculated. Once this process has been
fully determined, the Agency will conduct outreach explaining the
process.
Respondent 7: As demonstrated by respondent's successful
deployments in rural America and around the world, excluding satellite
from the definition of broadband is arbitrary and would unjustly
penalize operators that use satellite in whole or in part to provide
the same services as exclusively terrestrial operators, with no
perceivable difference in customers' experiences. In contrast, enabling
the inclusion of satellite connectivity in RUS's rural broadband
funding programs would empower applicants to bring service to the most
rural areas of the United States using a combination of satellite and
terrestrial deployments. Respondent urges RUS to adopt technology-
neutral standards without an arbitrary definition of broadband to
ensure that applicants for RUS funding have the option to integrate
cost-effective and high-performance satellite broadband technologies
into their networks. At the very least, RUS should clarify that its
definition of broadband only applies to last mile connectivity and does
not seek to limit other non-terrestrial network components used to
reach remote rural areas.
Agency response: To ensure that all rural areas have sufficient
bandwidth, the Agency will evaluate the eligibility and construction
requirements every time a funding announcement is published. The
bandwidth for both eligibility and construction will be set to ensure
that all rural Americans have access to sufficient bandwidth.
Applicants must ensure that all households in the proposed funded
service area can receive the minimum bandwidth requirements at the same
time.
Respondent 8: The rule proposed by RUS excludes satellite Broadband
from aspects of its grant programs, while the 2018 Farm Bill did not
exclude satellite operators who otherwise meet the requirements of RUS'
assistance programs from participating in these programs. Satellite
broadband services should not be excluded from the determination of
whether proposed project areas are already served. Accordingly, RUS
should clarify that satellite providers are eligible to participate in
these important programs and adopt technology neutral criteria. Wrongly
excluding satellite--or even failing to remove this ambiguity--will
greatly undermine RUS's ability to achieve its goals of increasing
economic opportunity in rural America by supporting broadband
infrastructure deployments that will provide affordable, high-quality
connectivity to rural communities.
Agency response: To ensure that that all rural areas have
sufficient bandwidth, the Agency will evaluate the eligibility and
construction requirements every time a funding announcement is
published. The bandwidth for both eligibility and construction will be
set to ensure that all rural Americans have access to sufficient
bandwidth. Applicants must ensure that all households in the proposed
funded service area can receive the minimum bandwidth requirements at
the same time.
Respondent 9: With its Starlink satellite system, respondent seeks
to provide high-speed broadband worldwide, and specifically to remote
and rural areas that are the most unserved. Although respondent has
made no decision to participate in any program administered by RUS or
any other Federal or state broadband program, respondent opposes any
proposals that would arbitrarily exclude next-generation satellite
systems from the definition of broadband. Broadband should be defined
by the quality of service provided, not by the mechanism which provides
it.
Agency response: The Agency will continue to monitor the
developments in satellite technology and may consider modifying the
restrictions on satellite provided broadband for future funding rounds.
Respondent 10: Respondent unequivocally supports the position
stated in respondent 7's letter against the proposed rule changing the
definition of broadband to exclude satellite. In a state where zero
school districts have the FCC recommended 1 Mbps per student capacity
and 20% of Alaska residents have no broadband access other than
satellite, Alaska would be irreparably harmed if the Department were to
adopt the proposed rules that exclude satellite.
Agency response: To ensure that that all rural areas have
sufficient bandwidth, the Agency will evaluate the eligibility and
construction requirements every time a funding announcement is
published. The bandwidth for both eligibility and construction will be
set to ensure that
[[Page 73446]]
all rural Americans have access to sufficient bandwidth. Applicants
must ensure that all households in the proposed funded service area can
receive the minimum bandwidth requirements at the same time.
Respondent 11: Respondent supports the interim funding rule and
provides the following comments to improve upon the rules, as
summarized below:
<bullet> Applicants should be allowed to pair their grants with
loans from third parties, not just loans from RUS.
<bullet> ``Broadband lending speed'' should be modified to clarify
that the initial broadband lending speed under these programs is ``25/3
Mbps fixed terrestrial'' and clarify the discussion of ``eligible
service area'' to make it clear that initially any area with anything
less than ``25/3 Mbps fixed terrestrial'' is eligible while
prioritizing areas that lack access to at least 10/1.
<bullet> Mobile and satellite services should not be considered for
purposes of determining eligible areas, nor should mobile broadband be
included for purposes of ``Broadband lending speeds'' that may receive
RUS funding.
<bullet> RUS should allow matching funding, whether in the form of
cash or loan funds, to spread over the built-out period, rather than
fully expended upfront before grant funding can be used.
<bullet> RUS should not require applicants to provide a competitive
analysis of the market, because such analysis is not provided within
the statute nor is such analysis necessary for purposes of carrying out
the other provisions in the statute.
<bullet> RUS should allow applicants an opportunity to respond to
challenges from existing service providers claiming to serve areas
within the applicants' proposed funded service area; and should permit
applicants to modify their application to respond to challenges. In any
event, RUS should not exempt from disclosure the information that is
presented in support of an existing service provider's claim. This one-
way, opaque process invites abuse by existing service providers and
prevents applicants from defending their proposals.
Agency response: Pairing grant funding with an RUS loan is a
statutory requirement and cannot be modified at this time.
The broadband lending speed is designed to change with the ever-
increasing bandwidth requirements that the public requires. The Agency
will evaluate the broadband lending speed each time that a funding
announcement is published and set this requirement accordingly.
The broadband program is technology neutral and any technology that
can meet the broadband lending speed is eligible for consideration.
The amount of grant funds and the associated density calculations
that can be applied for are statutory requirements and cannot be
changed at this time.
The Agency will consider the recommendation to spread out matching
requirements over the construction period but at this time, the
requirement will remain that matching funds be expended first.
Through the Public Notice Response process, the Agency will conduct
on-site review of the proposed service area to determine if adequate
broadband exists. If an area of the proposed funded service area is
found to be ineligible, the Agency will work with applicants to modify
the proposed service area accordingly.
Once an offer of an award is extended to an applicant, the 5-year
construction period starts once all closing conditions are satisfied
and funds become available to the awardee.
Respondent 12: ``Regardless of the specific needs of a locality,
strong last-mile wireless broadband connectivity is a necessity for
countless internet of things use cases the RUS seeks to advance, such
as smart agriculture deployments, and should be prioritized in Rural
Broadband Program awards. RUS Enabled by new rules adopted by the
Federal Communications Commission, new wireless technology that
utilizes television white spaces (TVWS) has the demonstrated ability to
exceed Rural Broadband Program thresholds in RUS' interim final rule,
providing extended last-mile wireless connectivity that supports higher
throughput. We strongly encourage RUS to ensure that the updated Rural
Broadband Program's rules support applications utilizing TVWS
technology deployments that will increase and improve broadband access
to rural communities, consistent with Congress' intent in the
Agricultural Act of 2018.''
Agency response: Fixed wireless broadband is an eligible technology
as long as it can deliver the required broadband service to every
household in the proposed service area at the same time.
The Agency evaluated the responsive comments and based on analysis
and response to comments, we are adopting the interim rule without
change.
List of Subjects
7 CFR Part 1738
Loan programs--communications, Rural areas, Telecommunications,
Telephone.
7 CFR Part 1739
Grant programs--communications, Rural areas, Telecommunications,
Telephone.
PART 1738--RURAL BROADBAND LOANS, LOAN/GRANT COMBINATIONS, AND LOAN
GUARANTEES
PART 1739--BROADBAND GRANT PROGRAM
0
Accordingly, the interim rule amending 7 CFR parts 1738 and 1739, which
was published at 85 FR 14393 on March 12, 2020, is adopted as final
without change.
Andrew Berke,
Administrator, Rural Utilities Service.
[FR Doc. 2022-25856 Filed 11-29-22; 8:45 am]
BILLING CODE 3410-15-P
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