Stringent Oversight Necessary to Avoid Broadband Funding Duplication | Citizens Against Government Waste

Stringent Oversight Necessary to Avoid Broadband Funding Duplication

The WasteWatcher

As Congress continues to consider legislation that would spend more money on everything, members are forgetting that they are already spending a lot of money on everything.  For example, the inclusion of broadband funding in the infrastructure package ignores the existing funding to deploy broadband in unserved communities across the country.  Broadband access is a laudable objective but spending more money for the same purpose is highly likely to result in duplicative and wasteful spending. 

One of the currently available broadband access programs is the U.S. Department of Agriculture’s (USDA) Rural eConnectivity (ReConnect) pilot program through the Rural Utilities Service (RUS), which provides funding through loans or grants to help ease the cost of construction, improvements, or acquisition of facilities necessary to provide broadband deployment in rural areas of the country that “do not have sufficient access to broadband.”  ReConnect loans and grants can be used to provide broadband service using fixed terrestrial technology, including fixed wireless.

CAGW has long had concerns over the effectiveness and capabilities of the entire RUS and has cited it in the organization’s annual Prime Cuts report, including the October 2021 edition.   CAGW is also concerned about the ability of RUS to ensure that ReConnect funding is not wasted given the waste and mismanagement of the $3.5 billion funding in the 2009 stimulus package. 

Congress initially set up the ReConnect fund as a pilot project and funded it with $350 million annually, with the stated goal of providing incentives to deploy broadband in hard-to-reach communities.  However, at the time the bill was enacted, applicants were required to request both a loan and a grant, which discourages other providers from applying for the program, limiting the potential to reach areas that are unserved.  At that time, CAGW called for Congress to “rein in wasteful and potentially duplicative spending on broadband infrastructure, build into any new program stringent oversight processes, and ensure that proper safeguards are in place before giving RUS more money to dole out.”

In fiscal year (FY) 2019, Congress provided an additional $550 million for the ReConnect pilot program.  On July 16, 2021, the House Agriculture Committee approved H.R. 4374, the Broadband Internet Connections for Rural America Act, which would replace the RUS’s existing broadband grant, loan, and loan guarantee programs with the ReConnect Rural Broadband Program, making the pilot program a permanent program.  The RUS’s existing broadband program is currently funded at $350 million annually through FY 2023.  If enacted, the ReConnect Rural Broadband Program will be funded at $4.5 billion per year from FY 2022 through FY 2030, an increase of more than 128 percent.

When the USDA’s RUS program issued its regulations on February 26, 2021 [See 7 CFR §1740.11(C)(2))], the agency attempted to ensure that duplicative funding would not take place and it could not be used to overbuild existing broadband service by including a prohibition of loans or grants being issued to “Service areas that have received federal grant funds, or funds from the Federal Communications Commission, to provide broadband service will be restricted from funding, if such funding is principally to construct facilities throughout the service area that provide broadband service at the threshold level of service.  If additional service areas are restricted from funding, these areas will be identified in the funding opportunity announcement that opens an application window.”

In the round of proposals for funding through the ReConnect Funding Opportunity (RFO) issued on October 25, 2021, RUS added a new twist to the program by deciding to allow recipients of the Rural Digital Opportunities Fund (RDOF) to apply for grants and loans from the ReConnect fund.  The reasoning behind the RUS’ decision is that RDOF funding could be used at the same time as ReConnect funds because the RFO indicates that RDOF funds both operational and capital expenses, while ReConnect only funds capital expenses.  But since both programs can be used for capital expenses, there is a concern that recipients could dip into both pools of funding for capital expenses, which could result in fewer unserved areas receiving funds from the federal government for buildout.

In an apparent effort to avoid the duplication of funds for the same purpose, the eligibility provisions state, “RUS will also require all ReConnect awardees receiving or under consideration for RDOF funding to submit a statement certifying that the funds requested from ReConnect have not been and will not be reimbursed by the RDOF award.  That is, funds must be used only for complementary purposes and not for duplicative ones, and therefore funding recipients cannot claim that both RDOF and ReConnect funds were used to pay for the same labor or materials used to deploy broadband to specific locations or to procure the same unit of network equipment.  Recipients that receive both RDOF and ReConnect funding must keep separate accounts to track the sources and uses of each funding source as needed to support the certification statement submitted with its ReConnect application.”

However, given RUS’s risky and wasteful history of broadband funding, stringent oversight is essential to ensure that there is no duplication of funding for the same purposes, so that funding is available for unserved areas of the country that truly need internet access.

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