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Friday, March 23, 2012

Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service

Lennard G. Kruger
Specialist in Science and Technology Policy

Given the large potential impact broadband access may have on the economic development of rural America, concern has been raised over a “digital divide” between rural and urban or suburban areas with respect to broadband deployment. While there are many examples of rural communities with state of the art telecommunications facilities, recent surveys and studies have indicated that, in general, rural areas tend to lag behind urban and suburban areas in broadband deployment.

Citing the lagging deployment of broadband in many rural areas, Congress and the Administration acted in 2001 and 2002 to initiate pilot broadband loan and grant programs within the Rural Utilities Service (RUS) at the U.S. Department of Agriculture (USDA). Subsequently, Section 6103 of the Farm Security and Rural Investment Act of 2002 (P.L. 107-171) amended the Rural Electrification Act of 1936 to authorize a loan and loan guarantee program to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in eligible rural communities. The RUS/USDA houses two assistance programs exclusively dedicated to financing broadband deployment: the Rural Broadband Access Loan and Loan Guarantee Program and the Community Connect Grant Program.

For the broadband loan program, the Administration’s FY2013 budget proposal requested $8.915 million to subsidize a loan level of $94.139 million. The Administration requested $13.379 million for broadband grants in FY2013.

The 110th Congress considered reauthorization and modification of the loan and loan guarantee program as part of the 2008 Farm Bill. The Food, Conservation, and Energy Act of 2008 became law on June 18, 2008 (P.L. 110-246). Title VI (Rural Development) contains authorizing language for the broadband loan program.

During 2009 and 2010, the Rural Broadband Access Loan and Loan Guarantee Program (also referred to as the Farm Bill Broadband Loan Program) was on hiatus as RUS implemented the Broadband Initiatives Program (BIP) established under the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). At the same time, final regulations implementing the broadband loan program as reauthorized by the 2008 Farm Bill were refined to reflect, in part, RUS experience in implementing BIP. Subsequently, on March 14, 2011, an Interim Rule and Notice was published in the Federal Register setting forth the rules and regulations for the broadband loan program as reauthorized by P.L. 110-246.

As reauthorized by the 2008 Farm Bill, the Rural Broadband Access Loan and Loan Guarantee Program is currently authorized through FY2012. Therefore, it is expected that the 112th Congress may consider reauthorization of the broadband loan program in the 2012 Farm Bill. As part of this consideration, Congress may focus on how effectively and cost efficiently the RUS broadband programs are addressing the lack of adequate broadband service in underserved rural communities.

Date of Report: March 7, 2012
Number of Pages: 29
Order Number: RL33816
Price: $29.95

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