I 118th CONGRESS 1st Session H. R. 3964 IN THE HOUSE OF REPRESENTATIVES June 9, 2023 Mr. Feenstra (for himself, Mrs. Miller-Meeks , Mr. Bost , and Mr. Bowman ) introduced the following bill; which was referred to the Committee on Agriculture , and in addition to the Committee on Energy and Commerce , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To increase access to broadband telecommunications services in rural areas, to increase minimum broadband speeds in rural areas, and to provide grants, loans, and loan guarantees to finance the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in rural areas, and other purposes.

1. Short title This Act may be cited as the Rural Broadband Modernization Act . 2. Rural broadband modernization (a) In general Section 601 of the Rural Electrification Act of 1936 ( 7 U.S.C. 950bb ) is amended to read as follows: 601. Access to broadband telecommunications services in rural areas (a) Purpose The purpose of this section is to provide grants, provide loans, and provide loan guarantees to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in rural areas. (b) Definitions In this section: (1) Broadband service The term broadband service means any technology identified by the Secretary as having the capacity to transmit data to enable a subscriber to the service to originate and receive high-quality voice, data, graphics, and video. (2) Rural area (A) In general The term rural area means any area other than— (i) an area described in clause (i) or (ii) of section 343(a)(13)(A) of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1991(a)(13)(A) ); and (ii) in the case of a grant or direct loan, a city, town, or incorporated area that has a population of greater than 20,000 inhabitants. (B) Urban area growth The Secretary may, by regulation only, consider an area described in section 343(a)(13)(F)(i)(I) of such Act to not be a rural area for purposes of this section. (C) Exclusion of certain populations The term does not include any population described in subparagraph (H) or (I) of section 343(a)(13) of such Act ( 7 U.S.C. 1991(a)(13) ). (c) Grants, loans, and loan guarantees (1) In general The Secretary shall make grants, shall make loans, and shall guarantee loans to eligible entities described in subsection (d) to provide funds for the construction, improvement, or acquisition of facilities and equipment for the provision of broadband service in rural areas that, at a minimum, delivers 100 Mbps (or such greater rate as the Secretary may establish) symmetrical throughput for each rural household in the proposed service area. (2) Applications The Secretary shall establish an application process for grants under this section that— (A) permits a single application for a grant and a loan under title I, II, or this title that is associated with the grant; (B) provides a single decision to award such a grant and loan; and (C) ensures timely consideration of applications by approving or denying applications within 30 days after submission. (3) Priority (A) In general In making grants, making loans, and guaranteeing loans under paragraph (1), the Secretary shall— (i) give the highest priority to applications for projects to provide broadband service to unserved rural communities that do not have any residential broadband service of at least— (I) a 25-Mbps downstream transmission capacity; and (II) a 3-Mbps upstream transmission capacity; (ii) give priority to applications for projects to provide the maximum level of broadband service to the greatest proportion of rural households in the proposed service area identified in the application; (iii) give priority to eligible entities that have provided broadband service or utility service in rural areas for at least 5 years in the State for which an award is sought; (iv) provide equal consideration to all eligible entities, based on organizational form; and (v) with respect to 2 or more applications that are given the same priority under clause (i), give priority to an application that requests less grant funding than loan funding. (B) Other After giving priority to the applications described in clauses (i) through (iii) of subparagraph (A), the Secretary shall give priority to applications— (i) for projects to provide broadband service to rural communities— (I) with a population of less than 10,000 permanent residents; (II) that are experiencing outmigration and have adopted a strategic community investment plan under section 379H(d) of the Consoldiated Farm and Rural Development Act that includes considerations for improving and expanding broadband service; (III) with a high percentage of low income families or persons (as defined in section 501(b) of the Housing Act of 1949 ( 42 U.S.C. 1471(b) )); (IV) that are isolated from other significant population centers; or (V) that provide rapid and expanded deployment of fixed and mobile broadband on cropland and ranchland within a service territory for use in various applications of precision agriculture; and (ii) that were developed with the participation of, and will receive a substantial portion of the funding for the project from, 2 or more stakeholders, including— (I) State, local, and tribal governments; (II) nonprofit institutions; that provide community development or assistance services; (III) community anchor institutions, such as— (aa) public libraries; (bb) elementary schools and secondary schools (as defined in section 8101 of the Elementary and Secondary Education Act of 1965 ( 20 U.S.C. 7801 )); (cc) institutions of higher education; and (dd) health care facilities; (IV) private entities; and (V) philanthropic organizations. (4) Grant amounts (A) Maximum Except as provided in subparagraph (B), the amount of any grant made under this section shall not exceed 75 percent of the total project cost. (B) Secretarial authority to adjust (i) In general The Secretary may make grants of 100 percent of the development costs of the project for which the grant is provided to an eligible entity if the Secretary determines that the project serves an area of rural households where the population density is fewer than 7 households per square mile. (ii) Definition of development costs In this paragraph, the term development costs means costs of— (I) construction, including labor and materials; (II) project applications; and (III) other development activities, as determined by the Secretary. (iii) Density determinations In determining population density under this section, the Secretary shall prescribe a calculation method which— (I) utilizes publicly available data; and (II) includes only those areas in which the applicant is able to meet the service requirements under this section, as determined by the Secretary. (5) Fees In the case of loan guarantees issued or modified under this section, the Secretary shall charge and collect from the lender fees in such amounts as to reduce the costs of subsidies for guaranteed loans, except that the amount of the fees shall be determined so as to not act as a bar to participation in the programs and to not be inconsistent with current practices in the marketplace. (d) Eligibility (1) Eligible entities (A) In general To be eligible to obtain a grant, loan, or loan guarantee under this section, an entity shall— (i) demonstrate the ability to furnish or improve service in order to meet the broadband buildout requirements established under subsection (e)(3) in all or part of an unserved rural area; (ii) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require; and (iii) agree to complete buildout of the broadband infrastructure described in the application by not later than 5 years after the initial date on which the application is approved and the initial funds pursuant to that award are received by the applicant. (B) Limitation The Secretary may not provide to an eligible entity that provides telecommunications or broadband service to at least 20 percent of the households in the United States, funds under this section for a fiscal year in excess of 15 percent of the funds made available under subsection (j) for the fiscal year. (2) Eligible projects (A) Grant To be eligible for a grant under this section, a project shall— (i) be carried out in a proposed service territory in which not less than 90 percent of the households are unserved by terrestrial wireline or licensed wireless broadband service speeds of at least 100 Mbps downstream transmission capacity and 20 Mbps upstream transmission capacity, or such higher speed thresholds as the Secretary may determine constitute an unserved rural area pursuant to subsection (e)(2); and (ii) not concurrently receive any other broadband grant administered by the Rural Utilities Service, the Department of the Treasury, the National Telecommunications and Information Administration, or a State grant program. (B) Loan or loan guarantee A borrower may use a loan or loan guarantee provided under this section to carry out a project in a proposed service territory only if, as of the date on which the application for the loan or loan guarantee is submitted, not less than 50 percent of the locations in the proposed service territory are unserved or have service levels below the minimum acceptable level of fixed terrestrial broadband service, whether wireline or licensed wireless, established under subsection (e). (3) Equity and market survey requirements (A) In general The Secretary may require an entity to provide matching funds under this section in an amount not to exceed 10 percent of the amount of the grant, loan, or loan guarantee requested in the application of the entity, unless the Secretary determines that a higher percentage is required for financial feasibility. (B) Market survey (i) In general The Secretary may require an entity that proposes to have a subscriber projection of more than 20 percent of the broadband service market in a rural area to submit to the Secretary a market survey. (ii) Less than 20 percent The Secretary may not require an entity that proposes to have a subscriber projection of less than 20 percent of the broadband service market in a rural area to submit a market survey under clause (i). (iii) Information Information submitted under this subparagraph shall be— (I) certified by the affected community, city, county, or designee; or (II) demonstrated on— (aa) the broadband map of the affected State if the map contains address-level data; or (bb) the National Broadband Map if address-level data is unavailable. (4) State and local governments and indian tribes Subject to paragraph (1), a State or local government (including any agency, subdivision, or instrumentality thereof (including consortia thereof)) and an Indian tribe shall be eligible for assistance under this section to provide broadband services to a rural area. (5) Technical assistance and training (A) In general The Secretary may provide to any eligible entity described in paragraph (1) of this subsection that is applying for assistance under this section for a project described in subsection (c)(3)(A)(i) technical assistance and training— (i) to prepare reports and surveys necessary to request grants, loans, and loan guarantees under this section for broadband deployment; (ii) to improve management, including financial management, relating to the proposed broadband deployment; (iii) to prepare applications for grants, loans, and loan guarantees under this section; or (iv) to assist with other areas of need identified by the Secretary. (B) Funding Not less than 3 percent and not more than 5 percent of the amounts appropriated to carry out this section for a fiscal year shall be used for technical assistance and training under this paragraph. (e) Broadband service (1) In general Subject to paragraph (2), for purposes of this section, the minimum acceptable level of broadband service for a rural area to be deemed served for purposes of this section shall be via terrestrial wireline or licensed wireless networks with at least— (A) a 100-Mbps downstream transmission capacity; and (B) a 20-Mbps upstream transmission capacity. (2) Adjustments At least once every 2 years and more frequently as the Secretary deems necessary and appropriate, the Secretary shall review, and may adjust through notice published in the Federal Register— (A) the minimum acceptable level of broadband service established under paragraph (1) for an area to be deemed unserved and thus eligible for an award under this section; and (B) the broadband buildout requirements under paragraph (3), to ensure that high quality, cost-effective broadband service is provided to rural areas. (3) Broadband buildout requirements (A) In general The term broadband buildout requirement means the level of broadband service an applicant receiving assistance under this section must agree, at the time the application is finalized, to provide for the duration of any project-related agreement between the applicant and the Secretary. (B) Minimum requirement The broadband buildout requirement shall, at a minimum, deliver 100 Mbps symmetrical throughout for each rural household in the proposed service area. The Secretary may increase this minimum requirement for the performance broadband service in considering new applications. (C) Substitute service standards for unique service territories If an applicant shows that it would be cost prohibitive to meet the broadband buildout requirements established under this paragraph for the entirety of a proposed service territory due to the unique characteristics of the proposed service territory, the Secretary and the applicant may agree to utilize substitute standards for any unserved portion of the project that should continue to consider the best technology available to meet the needs of the residents in the unserved area. (f) Technological neutrality For purposes of determining whether to provide assistance for a project under this section, the Secretary shall use criteria that are technologically neutral and criteria that ensures the technology can meet program broadband buildout requirements and the evolving needs of rural households and businesses, including precision agriculture. (g) Terms and conditions for loans and loan guarantees (1) In general Notwithstanding any other provision of law, a loan or loan guarantee under this section shall— (A) bear interest at an annual rate of, as determined by the Secretary— (i) in the case of a direct loan, a rate equivalent to— (I) the cost of borrowing to the Department of the Treasury for obligations of comparable maturity; or (II) 4 percent; and (ii) in the case of a guaranteed loan, the current applicable market rate for a loan of comparable maturity; and (B) have a term of such length, not exceeding 35 years, as the borrower may request, if the Secretary determines that the loan is adequately secured. (2) Recurring revenue The Secretary shall consider the recurring revenues of the entity at the time of application in determining an adequate level of credit support. (h) Adequacy of security (1) In general The Secretary shall ensure that the type and amount of, and method of security used to secure, any loan or loan guarantee under this section is commensurate to the risk involved with the loan or loan guarantee, particularly in any case in which the loan or loan guarantee is issued to a financially strong and stable entity, as determined by the Secretary. (2) Determination of amount and method of security In determining the amount of, and method of security used to secure, a loan or loan guarantee under this section, the Secretary shall consider reducing the security in a rural area that does not have broadband service. (i) Payment assistance for certain loan and grant recipients (1) Use of grant funds The Secretary may use the funds appropriated for a grant under this title for the cost (as defined by section 502 of the Congressional Budget Act of 1974) of providing assistance under paragraph (2) of this subsection. (2) Payment assistance When providing a grant under this title, the Secretary, at the sole discretion of the Secretary, may make— (A) a subsidized loan, which shall bear a reduced interest rate at such a rate as the Secretary determines appropriate to meet the objectives of the program; or (B) a payment assistance loan, which shall— (i) require no interest and principal payments while the borrower is— (I) in material compliance with the loan agreement; and (II) meeting the milestones and objectives of the project agreed to under paragraph (3); and (ii) require such nominal periodic payments as the Secretary determines to be appropriate. (3) Agreement on milestones and objectives With respect to payment assistance provided under paragraph (2), before entering into the agreement under which the payment assistance will be provided, the applicant and the Secretary shall agree to milestones and objectives of the project. (4) Amendment of milestones and objectives The Secretary and the applicant may jointly agree to amend the milestones and objectives agreed to under paragraph (3). (5) Considerations In deciding to utilize the payment assistance authority under paragraph (2), the Secretary shall consider whether or not the payment assistance will— (A) improve the compliance of the grantee with any commitments made through the grant agreement; (B) promote the completion of the broadband project; (C) protect taxpayer resources; and (D) support the integrity of the broadband programs administered by the Secretary. (6) Limitations on payment assistance The Secretary may not make a payment assistance loan under paragraph (2)(B) to an entity receiving a grant under this section that is a recipient of a loan under title I or II that is associated with the grant. (j) Funding (1) Limitations on authorization of appropriations There is authorized to be appropriated to the Secretary to carry out this section not more than $500,000,000 for each of fiscal years 2024 through 2028, to remain available until expended. (2) Allocation of funds (A) In general From amounts made available for each fiscal year under this subsection, the Secretary shall— (i) establish a national reserve for loans and loan guarantees to eligible entities in States under this section; and (ii) allocate amounts in the reserve to each State for each fiscal year for loans and loan guarantees to eligible entities in the State. (B) Amount The amount of an allocation made to a State for a fiscal year under subparagraph (A) shall bear the same ratio to the amount of allocations made for all States for the fiscal year as— (i) the number of communities with a population of 2,500 or fewer inhabitants in the State; bears to (ii) the number of communities with a population of 2,500 or fewer inhabitants in all States. (C) Unobligated amounts Any amounts in the reserve established for a State for a fiscal year under subparagraph (B) that are not obligated by April 1 of the fiscal year shall be available to the Secretary to make loans and loan guarantees under this section to eligible entities in any State, as determined by the Secretary. (k) Termination of authority No grant, or loan, or loan guarantee may be made under this section after September 30, 2028. . (b) Effective date The amendment made by subsection (a) shall take effect on October 1, 2023.