Congress disapproved of the Department of Agriculture's (USDA) favoritism for municipal broadband in a nonbinding directive attached to the Consolidated Appropriations Act of 2022 passed last week. That nonbinding directive, which appears within a Joint Explanatory Statement, "encourages the Secretary to eliminate or revise the awarding of extra points…" to municipal broadband networks applying for ReConnect program deployment subsidies.
If followed, this nonbinding directive would improve the likelihood that ReConnect funds flow to states based on true need for broadband service rather than states' conformity to unrelated policy objectives. ReConnect is a multi-billion broadband deployment grant and loan program managed by USDA that generally targets unserved rural areas. Congress tasked ReConnect with distributing $3.15 billion in broadband subsidies over the next few years between the Infrastructure Investment and Jobs Act (IIJA) and appropriations made in 2021.
In response to this cash influx, USDA published "Evaluation Criteria" guidance last year explaining how it will review applications for ReConnect deployment subsidies. This guidance amounts to a points-based system that awards applicants with greater chances of success for meeting standards contained within.
As Free State Foundation Senior Fellow Andrew Long explained in a Perspectives from FSF Scholars, the portion of the Evaluation Criteria awarding 15 extra points for applications submitted by municipal broadband providers exceeds USDA's authority. This criterion intrudes into the FCC's jurisdiction to set communications policy "in the face of conflicting congressional intent" and should be repealed. And USDA didn't adhere to Administrative Procedure Act notice and comment requirements while adopting the municipal favoritism criterion, which foreclosed potential for public comment on whether USDA has authority to adopt such a criterion in the first place.
Further, the municipal favoritism criterion biases ReConnect funds to flow to states that lack prohibitions on municipal broadband, irrespective of actual need for broadband infrastructure, because only municipal applicants within those states will be eligible for these 15 extra points. This is an ill-advised policy choice. As Andrew Long explained in another Perspectives from FSF Scholars, municipal networks are often economic failures that cannot achieve financial viability, explaining why many states prohibit them. So biasing ReConnect funds in favor of municipal networks will reduce ReConnect's effectiveness for narrowing the digital divide.
Now, in the Consolidated Appropriations Act of 2022, Congress appears to agree. This law added nearly $550 million additional funds to ReConnect and other smaller broadband programs at USDA, and it included a nonbinding directive that disavows the Evaluation Criteria's municipal favoritism:
"In addition, the agreement encourages the Secretary to eliminate or revise the awarding of extra points under the ReConnect program to applicants from States without restrictions on broadband delivery by utilities service providers in order to ensure this criterion is not a determining factor for funding awards."
This disavowal should be unsurprising because Congress rejected similar municipal favoritism in the IIJA. Of course, nonbinding directives are, indeed, nonbinding, and amount to legislative history, which is disfavored and cannot substitute for the plain text of the law. But Congress's disavowal of municipal broadband favoritism is at least notable because no law authorizes the Department of Agriculture authority to set Communications Policy in the first place.
Also, a separate nonbinding directive in the Consolidated Appropriations Act of 2022's Joint Explanatory Statement encourages the Secretary of Agriculture to follow notice and comment rulemaking for "all program administration and activities" regarding ReConnect.
It will be interesting to see if the Secretary of
Agriculture heeds Congress's wise advice to stop favoring often failed
municipal networks for subsidized support.
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