Trump Administrations Unveils Details of Infrastructure Incentives, Including Spending on Rural Broadband

WASHINGTON, February 12, 2018 – President Donald Trump on Monday unveiled details of his plan to spur $1.5 trillion in new investment to revitalize the nation’s crumbling infrastructure with a combination of $200 billion worth of matching funds and block grants to be funded from to-be-determined budget savings.

“We’re going to get the roads in great shape,” Trump said. ” Washington no longer will be a roadblock to progress.”

The specifics of the plan, detailed in a 55-page legislative outline, largely match the details of a widely-reported document outlining the proposal’s “principles,” which outline initiatives to reduce the time it takes to complete the federal permitting process for infrastructure projects, and sets out several different programs under which the $200 billion in funding.

The $200 billion in funding is being paid for through budgetary savings rather than from a dedicated funding stream like increasing the gas tax, which funds the federal highway trust fund. The funds will be distributed to states and localities, in keeping with the Trump administration’s desire for local control of infrastructure spending.

Plan includes an ‘Infrastructure Incentives Program’

Broadband projects will be eligible for the plan’s “Infrastructure Incentives Program.” –This portion of the fund will account for $100 billion in spending, or half of the promised $200 billion. It will be made through matching funds to be distributed to states and localities.

The administration’s thinking has been that state and local officials, rather than the federal government, best understand their communities’ infrastructure needs.

According to the White House outline, the program “would provide for targeted Federal investments, encourage innovation, streamline project delivery, and help transform the way infrastructure is designed, built and maintained” by distributing matching grants to the jurisdictions to which the grants are awarded under agreements in which the applying jurisdictions would lay out “express project milestones.”

Distribution of the funds would be conditioned on whether or not the progress of those projects meet the agreed-upon milestones within identified time frames.

Wide class of infrastructure projects would be eligible under the program

A wide-ranging class of infrastructure projects would be eligible for grants under the incentives program, for which applications would be solicited every six months, and under which funds would be distributed by the United States Department of Transportation (DOT), United States Army Corps of Engineers (USACE), and Environmental Protection Agency (EPA).

Eligible projects would include work on “surface transportation and airports, passenger rail, ports and waterways, flood control, water supply, hydropower, water resources, drinking water facilities, wastewater facilities, stormwater facilities, and brownfield and superfund sites.”

Projects already underway would also be eligible if they began during a three-year “look-back period,” which would be defined as “the time preceding the project sponsor’s completed application during which the new revenue generation was implemented.”

Broadband projects will be eligible for funding under two other parts of the plan

Broadband projects will be eligible for funding under two other parts of the Trump plan, specifically the Rural Infrastructure and Transformative Projects programs.

Broadband projects can be funded through the plan’s Rural Infrastructure Program – to which $50 billion will be allocated – will direct funds to rural states. The funds will be distributed through a statutory “rural formula” which will be calculated “based on rural lane miles and rural population adjusted to reflect policy objectives.” The formula will set out a statutory minimum and maximum amount of funds to which each rural state will be entitled.

During the White House infrastructure roundtable, Trump took a moment to acknowledge the need for infrastructure improvements in rural America, and lamented that in years past, “the rural folks have been left out.”

The vast majority of the $50 billion – 80 percent of it – will be distributed in the form of block grants to be controlled by the governors of recipient states, who will have discretion as to the kinds of projects the grants will go toward. Still, they will have to consult with designated federal agencies depending on the kinds of projects they choose to fund and state directors of rural development.

The remaining 20 percent will be allocated to Rural Performance Grants within eligible asset classes, according to specified criteria to be determined.

Tribal government programs, and ‘transformation projects,’ will also be eligible for funding

Tribal governments will be able to receive a portion of the funds which will be specifically set aside for them and distributed by the Secretaries of Transportation and the Interior through the Tribal Transportation Program. A process will be created in consultation with the various sovereign tribal governments. The needs of U.S. territories such as Puerto Rico, Guam and the U.S. Virgin Islands. will be addressed through dedicated funding as well.

The Transformative Projects program – for which $20 billion will be allocated – is also envisioned as a funding source for broadband projects, and will provide both funding and technical assistance for “bold, innovative, and transformative infrastructure projects that could dramatically improve infrastructure,” according to the White House.

The plan defines “transformative projects” as those for that will have the effect of “significantly improving performance, from the perspective of availability, safety, reliability, frequency and service speed; substantially reducing user costs for services; introducing new types of services; and improving services based on other related metrics.”

This program, the White House outline claims, would “fundamentally transform the way infrastructure is delivered or operated” by funding projects that are “ambitious, exploratory and ground-breaking project ideas that have significantly more risk than standard infrastructure projects, but offer a much larger reward profile.”

The $20 billion in funds will available under three separate tracks – demonstration projects, project planning and capital construction — be awarded by a selection committee to be composed of representatives of relevant federal agencies and chaired by the Secretary of Commerce after applications for funding are reviewed by interagency evaluation panels “comprised of individuals from the applicable [f]ederal agencies.”

Awardees would enter a partnership agreement with the federal government, which would specify the terms and conditions of the awards.

In addition to funding, applicants for the Transformative Project Program can also seek technical assistance from the federal government.

Not the first foray into broadband for rural America

The programs announced Monday are not the Trump administration’s first foray into making broadband more available to Americans living in rural areas, the importance of which has been previously acknowledged by the president himself.

In January 2018, Trump addressed the American Farm Bureau convention in Nashville, Tennessee, and signed two executive actions meant to facilitate rural broadband deployment Another previously-announced rural broadband initiative announced by the Trump administration intended to explore the use of federally-owned “dark fiber” – fiber that has been laid but is not currently in use – in order to interconnect and provide service to underserved communities.

Positive reaction to the Trump administration plan from FCC Chairman Ajit Pai

The open-ended nature of the Trump plan – which accounts for the lack of dedicated funding for broadband projects – is a marked departure from the approach taken in his predecessor’s major infrastructure legislation, the 2009 American Investment and Recovery Act.

Envisioned by the Obama administration as an economic stimulus to jump-start the nation’s economy after the 2008 financial crisis, the Recovery Act took several steps to increase broadband deployment in both urban and rural areas, and in doing so, close the digital divide, through the expenditure of $7.2 billion in loans and grants by the Departments of Commerce and Agriculture.

While the Trump infrastructure plan in theory makes a combined $60 billion available which could be used for broadband projects, none of the funds are set aside for such projects.

FCC Chairman Ajit Pai praised the plan in a statement Monday, calling it “a welcome and strong call to action.”

“Too often, regulatory barriers make it harder and more expensive to build out broadband than it needs to be – to the detriment of American consumers,” Pai said. “I stand ready to work with the administration and Congress to turn this plan into a reality as we continue to bridge the digital divide and extend 5G digital opportunity to all Americans.”

Different approaches to broadband infrastructure from Obama and Trump

Even though the Trump plan appears to give short shrift to broadband projects when compared with his predecessor’s, a White House official told BroadbandBreakfast.com that the lack of specificity is a feature rather than a bug in keeping with the president’s desire to put the maximum amount of control in the hands of state and local officials.

The president’s plan makes a point to shift away from dictating from Washington what communities must spend federal infrastructure dollars on,” the official said. “So while there will be dedicated funding for rural areas in the package, it is not specifically required to be used for broadband.”

The official again stressed that the decision to not specifically direct any funding under the plan to increase broadband deployment doesn’t indicate a lack of interest on the part of the Trump administration. “We envision there being no limit to how much of the rural funding can be spent on broadband,” the official said.

(Photo of rural road by Max Pixel used with permission.)