Treasury Defines Capital Project Fund Grants

The U.S. Department of the Treasury finally released the rules for the $10 billion Capital Projects Fund that will be distributed to states for broadband. The full rules are here.

This blog is not going to spit back all of the rules. Those have already been outlined well by others. Here is a great summary from Kevin Taglang from the Benton Institute.

States must apply to Treasury for the funds. The amount that each state can receive is here. A lot of the recently released rules tell states how to go about the process of claiming the money. States must make an application by December 27 and have until a year later to file details of the specific grants made within the state.

It’s hard to think that states won’t pursue this money, although a few small states might have problems finding enough eligible projects. I’m going to concentrate below on a few of the Treasury rules that will carry into state grant rules.

States Will Administer Grants. States will make awards to specific projects. Each state will need a grant program that follows the federal rules for this money. Since these new rules are different than the rules governing many existing state grant programs, the states will have to quickly adjust in order to follow these rules for at least this one grant. Some states are going to need legislative changes if current grant rules are established by the legislature.

Communities and States Can Define Eligible Areas. These grants do not use FCC mapping in determining eligibility. A grant area must only be shown to not have reliable 100/20 Mbps broadband in order to be eligible – and this is a very loose test. Treasury provides wide leeway in defining eligible areas, and almost any reasonable form of proof of poor broadband can suffice to prove an area is eligible. Of course, states will have some say in defining eligible areas, and I foresee a huge tug-of-war over this issue between state grant offices, communities, ISPs, and legislators.

Symmetrical Gigabit Speeds. Grant technologies must be able to provide symmetrical 100 Mbps speeds. There is going to cause confusion all over the industry as different grant programs have different speed requirements. This might also require legislative changes in some states. There is a provision that says that speeds can be slower where 100/100 Mbps isn’t practical, so expect a lot of challenges by ISPs trying to fund slower technologies.

Eligible Projects. A project must meet all of the following requirements: A project must be spent on capital assets that will enable work, education, and health monitoring. Projects must address a critical need that results from or was made obvious during the pandemic. Projects must address a critical community need.

Mostly for Infrastructure. Treasury wants a priority for last-mile infrastructure. States can request middle-mile projects, but Treasury must approve. Some money will be allowed for devices, but the state must retain ownership of devices. Money can go for improvement to government facilities that meet all of the eligibility rules.

No Required Matching. Treasury allows states to fund projects 100%, with no matching. But states might require matching in order to spread the grant benefits to more projects.

Some Prior Costs. Costs back to March 1, 2021 can be included in a grant under some circumstances. This might cover costs like a feasibility or engineering study.

Labor Standards. The rules do not mandate paying Davis-Bacon wages, but it encourages projects to pay a living wage.

Projects Completed by End of 2026. Projects must be completed by then, although Treasury has the ability to grant extensions.

Summary. I expect most states will grab the available funding. This funding should result in a state-administered grant program in every state in 2022 since states have to demonstrate having awarded this money by the end of next year. Since states are likely to put their own twist on these rules, keep an eye out for specific state rules. And start getting projects ready!

Leave a Reply