[Federal Register Volume 84, Number 239 (Thursday, December 12, 2019)]
[Notices]
[Pages 67913-67924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26522]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

[Docket: USDA-2017-0002-0001]


ReConnect Pilot Program

AGENCY: Rural Utilities Service, Department of Agriculture.

ACTION: Funding Opportunity Announcement (FOA) and solicitation of 
applications for second round of the ReConnect Program.

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SUMMARY: The Rural Utilities Service (RUS), a Rural Development agency 
of the United States Department of Agriculture (USDA), hereinafter 
referred to as the Agency, announces its general policy and application 
procedures for its second round of funding under the broadband pilot 
program. This pilot program was established pursuant to the 
Consolidated Appropriations Act, 2018. The Agency is announcing the 
application window for this second round of funding and requesting 
comments on the program.

DATES: 
    Applications: Beginning on January 31, 2020, applications can be 
submitted through the RUS on-line application portal until 6:00 p.m. 
Eastern on March 16, 2020.
    Comments: Comments due by March 16, 2020.

ADDRESSES: Application Submission: Apply at https://reconnect.usda.gov. 
Electronic applications will allow for the expeditious review of an 
Applicant's proposal. As a result, all Applicants must file their 
application electronically at the above website.
    Comments: For proper delivery, all feedback or comments should 
specify ``Identifying Regulatory Reform Initiatives.''
    Electronic Submission. You may submit comments electronically 
through the Federal eRulemaking Portal: http://www.regulations.gov 
using Docket ID: USDA-2017-0002-0001. USDA strongly encourages 
commenters to submit comments electronically. Electronic submission of 
comments allows you maximum time to prepare and submit a comment and 
ensures timely receipt by USDA. Follow the instructions provided on 
that site to submit comments electronically.
    Mail, Hand delivery, or Courier. Paper, disk, or CD-ROM submissions 
should be submitted to [email protected], Office of Budget and 
Program Analysis, USDA, Jamie L. Whitten Building, Room 101-A, 1400 
Independence Ave. SW, Washington, DC 20250.

FOR FURTHER INFORMATION CONTACT: For general inquiries, contact Chad 
Parker, Assistant Administrator Telecommunications Program, Rural 
Utilities Service, U.S. Department of Agriculture (USDA), email: 
[email protected], telephone (202) 720-9554. You may obtain 
additional information regarding applications at https://reconnect.usda.gov.

SUPPLEMENTARY INFORMATION: 

Background

    On March 23, 2018, Congress passed the Consolidated Appropriations 
Act, 2018 (the Act), which established a new broadband loan and grant 
pilot program, now called the Rural eConnectivity Pilot Program 
(ReConnect Program). The Act originally appropriated budget authority 
of $600 million to be used on an expedited basis. For fiscal year (FY) 
2019, Congress funded an additional $550 million for the pilot. The 
ReConnect Program provides loans, grants, and loan/grant combinations 
to facilitate broadband deployment in rural areas. In facilitating the 
expansion of broadband services and infrastructure, the pilot will fuel 
long-term rural economic development and opportunities in rural 
America. One of those opportunities is precision agriculture. The use 
of this technology requires a robust broadband connection. The awards 
made under this program will bring high speed broadband to the farms 
which will allow them to increase productivity.

Applications

    Please note that the application process is designed so that an 
applicant must demonstrate financial and technical feasibility of the 
project and the entire operation of the applicant. Applicants that do 
not demonstrate financial or technical feasibility will not be 
considered for an award.
    Apply at https://reconnect.usda.gov from January 31, 2020, until 
6:00 p.m. Eastern on March 16, 2020. Electronic applications will allow 
for the expeditious review of an Applicant's proposal. As a result, all 
Applicants must file their application electronically at the above 
website.

Comments

    For the first round of funding, the United States Department of 
Agriculture (USDA) determined that it was in the public interest to 
move forward with developing procedures for the ReConnect Program 
within a Funding Opportunity Announcement (FOA), as is common with a 
pilot, instead of rulemaking. Such a method would also meet the 
statutory mandate of expediting program delivery. Notwithstanding the 
lack of rulemaking, however, before USDA finalized and published the 
FOA, it requested informal comments from the public on a wide range of 
issues to be considered by the agency in the ReConnect Program. See 
Notice of Inquiry and Request for Comments, 83 FR 35609 (July 27, 
2018). Once the FOA was published, the application windows were open 
between April 23, 2019 and July 12, 2019.
    Thereafter, the Agency received input from applicants that 
participated in the first funding round on issues which included, but 
were not limited to: (1) The availability of data; (2) frequency of 
collection; (3) clarity of instructions; (4) data elements to be 
recorded, disclosed, or reported; (5) access to forms; and (6) 
accessibility for troubleshooting. Based on that input, the Agency made 
further changes to the program, which are discussed below.
    Additionally, with this FOA, the agency is now requesting that the 
public again provide feedback on the program, as was done with the July 
27th Notice of Inquiry. Specifically, the public is requested to submit 
comments that would inform any future rounds of ReConnect funding, if 
any, or comments on issues that should be addressed in any future 
broadband program. Additionally, and consistent with the Department's 
Regulatory Reform Initiatives, the public is requested to submit 
comments related to program

[[Page 67914]]

implementation, suggestions on decreasing the public burden, etc., 
through the USDA request for information published on July 17, 2017 (82 
FR 32649). See ADDRESSES for information about how to comment.

    Authority:  This solicitation is issued pursuant to the 
Consolidated Appropriations Act, 2018, Public Law 115-141, the 
Consolidated Appropriations Act, 2019, Public Law 116-6, and the 
Rural Electrification Act of 1936, 7 U.S.C. 901 et seq.

Overview

    Federal Agency: Rural Utilities Service, USDA.
    Funding Opportunity Title: Rural eConnectivity Pilot Program 
(ReConnect Program).
    Announcement Type: Funding Opportunity Announcement (FOA) and 
solicitation of applications.
    Catalog of Federal Domestic Assistance (CFDA) Number: Rural 
eConnectivity Pilot Program (ReConnect Program)--10.752.

Items in Supplementary Information

I. Overview
II. Summary of Changes
III. Definitions
IV. Substantially Underserved Trust Areas
V. Funding Opportunity Description
VI. Eligibility Information
VII. Application and Submission Information
VIII. Application Evaluation Criteria
IX. Notice of Proposed Funded Service Areas
X. Evaluation and Processing Procedures
XI. Award Administration Information
XII. Other Information

I. Overview

    On March 23, 2018, Congress passed the Consolidated Appropriations 
Act, 2018 (the FY2018 Appropriations), which established a broadband 
loan and grant pilot program, the Rural eConnectivity Pilot Program 
(hereinafter the ReConnect Program). One of the essential goals of the 
ReConnect Program is to expand broadband service to rural areas without 
sufficient access to broadband, defined as 10 megabits per second 
(Mbps) downstream and 1 Mbps upstream. For this purpose, Congress 
provided RUS with $600 million and expanded its existing authority to 
make loans and grants. Additionally, the FY2018 Appropriations 
specifically authorized technical assistance to assist the Agency in 
expanding needed service to the most rural communities where 90 percent 
of the households are without sufficient access to broadband service. 
Once again, on January 3, 2019, Congress appropriated (the FY2019 
Appropriations) an additional $550 million to continue the ReConnect 
Program. To promote broadband in rural America, RUS encourages state 
and local jurisdictions to waive any fees associated with granting 
rights-of-ways and to assist applicants and awardees with satisfying 
any environmental requirements such as approval from the State 
Historical Preservation Office.

II. Summary of Changes

    The first funding round of the Reconnect Program is considered a 
success with the Agency receiving one hundred and forty-six (146) 
submitted applications for a total of over $1.4 billion. After a 
careful review of the lessons learned during the first round of 
funding, several changes are being instituted for second funding round. 
Those changes include, but are not limited to, the following:
    1. The application window for the three categories of funding will 
be from January 31, 2020 through March 16, 2020.
    2. Definitions have been added for healthcare and educational 
facilities and the name for critical community facilities has been 
changed to essential community facilities.
    3. For 100 percent grants, 90 percent of the proposed funded 
service area cannot have sufficient access to broadband, as opposed to 
100 percent under round one.
    4. The requirement for two years of unqualified, comparative, 
audited financial statements has been changed to unqualified, 
comparative, audited financial statements for the previous year from 
the date the application has been submitted.
    5. The requirement that applicants must submit certifications from 
the appropriate state or tribal broadband office has been changed to a 
voluntary request.
    6. Pre-application expenses that were incurred for round one, but 
benefit an application for round two, may be funded up to the 5 percent 
of the total award in round 2.
    7. Under certain conditions a subsidiary can use the unqualified, 
comparative, audited statements to meet certain eligibility 
requirements.
    8. The scoring criteria for farms has been changed. Applicants will 
receive 1 point for every 10 farms served up to a maximum of 20 points. 
Farms will be counted using 2017 Census of Agriculture data.
    9. Tribal leaders can submit documentation supporting scoring 
points for the number of healthcare, educational and essential 
community facilities.
    10. The time period incumbent service providers will be able to 
challenge if sufficient service is present in an applicant's proposed 
funded service area is being increased from 30 days to 45 days.

III. Definitions

    The terms and conditions provided in this FOA are applicable to and 
for purposes of this FOA only. Unless otherwise provided in the award 
documents, all financial terms not defined herein shall have the 
meaning as defined by Generally Accepted Accounting Principles.
    Administrator means the RUS Administrator, or the Administrator's 
designee.
    Applicant means an entity requesting funding under this FOA.
    Application means the Applicant's request for federal funding, 
which may be approved in whole or part by RUS.
    Award documents mean, as applicable, all associated grant 
agreements, loan agreements, or loan/grant agreements.
    Award means a grant, loan, or loan/grant combination made under 
this FOA.
    Awardee means a grantee, borrower, or borrower/grantee that has 
applied and been awarded federal assistance under this FOA.
    Broadband loan means, for purposes of this FOA, a loan that has 
been approved or is currently under review by RUS after the beginning 
of Fiscal Year 2000 in the Telecommunications Infrastructure Program, 
Farm Bill Broadband Program, Broadband Initiatives Program or the 
ReConnect Program. Loans that were approved and then subsequently fully 
de-obligated are not included in this definition.
    Broadband service means any technology 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.
    Business means a commercial or mercantile activity engaged in as a 
means of livelihood. For purposes of this FOA, farms will not be 
counted as businesses for scoring purposes.
    CALEA means the Communications Assistance for Law Enforcement Act, 
47 U.S.C. 1001 et seq.
    Composite economic life means the weighted (by dollar amount of 
each class of facility) average economic life of all classes of 
facilities necessary to complete construction of the broadband 
facilities in the proposed funded service area.
    Current ratio means the current assets divided by the current 
liabilities.
    Debt service coverage ratio (DSCR) means (Total Net Income or 
Margins + Interest Expense Allowance for Funds

[[Page 67915]]

Used during Construction + Depreciation + Amortization)/(Interest on 
Funded Debt + Other Interest + Principal Payment on Debt and Capital 
Leases).
    Economic life means the estimated useful service life of an asset 
as determined by RUS.
    Educational facilities mean any public or private educational 
institution that offers a program of college, professional, 
preparatory, high school, middle school, junior high school, 
elementary, or kindergarten instruction, or any combination of those 
facilities. Daycare centers, museums, and libraries are also included.
    Eligible service area means any proposed funded service area where 
90 percent of the households to be served do not have sufficient access 
to broadband. For eligibility purposes, if an applicant is applying for 
multiple proposed funded service areas, each service area will be 
evaluated on a stand-alone basis.
    Essential community facilities means public facilities that provide 
community services essential for supporting the safety, health, and 
well-being of residents, including, but not limited to, emergency 
response and other public safety activities.
    Equity means total assets minus total liabilities as reflected on 
the Applicant's balance sheet.
    Farm means any place from which $1,000 or more of agricultural 
products were sold or would normally be sold during the year.
    Forecast period means the five-year period of projections in an 
application, which shall be used by RUS to determine financial and 
technical feasibility of the application.
    GAAP means accounting principles generally accepted in the United 
States of America.
    Grant means any federal assistance in the form of a grant made 
under this FOA.
    Grant agreement means the grant contract and security agreement 
between RUS and the Awardee securing the Grant awarded under this FOA, 
including any amendments thereto, available for review at https://reconnect.usda.gov.
    Healthcare facilities means any facility where healthcare is 
provided, including but not limited to, clinics, hospitals, nursing 
homes, pharmacies, and urgent care facilities.
    Loan means any federal assistance in the form of a loan made under 
this FOA.
    Loan agreement means the loan contract and security agreement 
between RUS and the Awardee securing the Loan, including all amendments 
thereto, available for review at https://reconnect.usda.gov.
    Loan/grant means any federal assistance in the form of a loan/grant 
combination made under this FOA.
    Loan/grant agreement means the loan/grant contract and security 
agreement between RUS and the Awardee securing the Loan/grant, 
including all amendments thereto available at https://reconnect.usda.gov.
    Non-funded service area means any area in which the applicant 
offers broadband service or intends to offer broadband service during 
the forecast period but is not a part of its proposed funded service 
area.
    Pre-application expenses means any reasonable expenses, as 
determined by RUS, incurred after the release of this FOA to prepare an 
Application or to respond to RUS inquiries about the Application.
    Premises means households, farms and businesses.
    Project means all of the work to be performed to bring broadband 
service to all premises in the proposed funded service area under the 
Application, including construction, the purchase and installation of 
equipment, and professional services including engineering and 
accountant/consultant fees, whether funded by federal assistance, 
matching, or other funds.
    Proposed funded service area (PFSA) means the area (whether all or 
part of an existing or new service area) where the applicant is 
requesting funds to provide broadband service. Multiple service areas 
will be treated as separate standalone service areas for the purpose of 
determining how much of the proposed funded service area does not have 
sufficient access to broadband. Each service area must meet the minimum 
requirements for the appropriate funding category to be an eligible 
area.
    RE Act means the ``Rural Electrification Act of 1936,'' as amended 
(7 U.S.C. 901 et seq.).
    Rural area means any area which is not located within: (1) A city, 
town, or incorporated area that has a population of greater than 20,000 
inhabitants; or (2) an urbanized area contiguous and adjacent to a city 
or town that has a population of greater than 50,000 inhabitants.
    RUS Accounting Requirements shall mean compliance with U.S. GAAP, 
acceptable to RUS, the system of accounting prescribed by RUS Bulletin 
1770B-1, and the Uniform Administrative Requirements, Cost Principles, 
and Audit Requirements for Federal Awards, found at 2 CFR part 200. For 
all Awardees the term ``grant recipient'' in 2 CFR 200 shall also be 
read to encompass ``loan recipient'' and ``loan/grant recipient'', such 
that 2 CFR 200 shall be applicable to all Awardees under this FOA.
    Sufficient access to broadband means any rural area in which 
household have fixed, terrestrial broadband service delivering at least 
10 Mbps downstream and 1 Mbps upstream. Mobile and satellite services 
will not be considered in making the determination of sufficient access 
to broadband.
    Tangible equity means a measure of a company's capital, which is 
used by financial institutions to evaluate potential losses by 
eliminating intangible assets, goodwill and preferred stock from total 
equity.
    Tangible equity to total assets means tangible equity divided by 
total assets.
    Times interest earned ratio (TIER) means (Total Net Income or 
Margins + Total Interest-Expense Allowance for Funds Used during 
Construction) divided by (Total Interest-Expense Allowance for Funds 
Used during Construction).

IV. Substantially Underserved Trust Areas

A. Community Designation of ``Substantially Underserved Trust Area''

    If the Administrator determines that a community within ``trust 
land'' (as defined in 38 U.S.C. 3765) has a high need for the benefits 
of the ReConnect Program, the Administrator may designate the community 
as a ``substantially underserved trust area'' (as defined in section 
306F of the RE Act).

B. Consideration as a ``Substantially Underserved Trust Area''

    To receive consideration as a substantially underserved trust area, 
the applicant must submit to the Agency a completed application that 
includes all of the information requested in 7 CFR part 1700, subpart 
D. In addition, the application must identify the discretionary 
authorities within subpart D that it seeks to have applied to its 
application. Note, however, that given the prohibition on funding 
operating expenses in the ReConnect Program, requests for waiver of the 
equity requirements cannot be considered. In addition, due to the 
statutory requirements that established the ReConnect Program, waiver 
of the nonduplication requirements also cannot be considered.

[[Page 67916]]

V. Funding Opportunity Descriptions

A. Funding Categories

1. General
    For the purposes of this FOA, 90 percent of the proposed funded 
service area must not have sufficient access to broadband. Applicants 
must propose to build a network that is capable of providing service to 
every premise located in the proposed funded service area at the time 
the application is submitted at a speed of 25 Mbps downstream and 3 
Mbps upstream. The Agency reserves the right to make funding offers or 
seek consultations to resolve partially overlapping applications. RUS 
may contact the applicant for additional information during the review 
process. If additional information is requested, the applicant will 
have up to 30 calendar days to submit the information. If such 
information is not timely submitted, RUS may reject the application. 
Once all funds for a category have been expended for the ReConnect 
program, all remaining applications will be returned.
2. 100 Percent Loan
    Applications will be processed and awarded on a rolling basis. In 
the event two loan applications are received for the same proposed 
funded service area the application submitted first will be considered 
first. The interest rate for a 100 percent loan will be set at a fixed 
2 percent. Tangible equity to total assets must be at least 20 percent 
at the end of the calendar year starting in the third year of the 
forecast period through the remainder of the forecast period.
3. 50 Percent Loan/50 Percent Grant Combination
    The interest rate for the 50 percent loan component will be set at 
the Treasury rate for the remaining amortization period at the time of 
each advance of funds. Applicants may propose substituting cash for the 
loan component at the time of application and funds must be deposited 
into the construction fund account at the closing of the award. All 
eligible applications will be scored and, subject to Section 
V(C)(5)(b)(i) (overlapping applications), applications with the highest 
score will receive an award offer until all funds are expended for this 
category.
4. 100 Percent Grant
    Applicants must provide a matching contribution equal to 25 percent 
of the cost of the overall project and must clearly identify the source 
of the funds even if it is to be provided from the applicant's 
operating accounts. All matching funds must be deposited into the 
construction fund account at the closing of the award. If the matching 
funds are provided by a third party, a serious commitment from the 
third party must be submitted indicating that the funds will be 
available at the closing of the award if approved. The matching 
contribution can only be used for eligible purposes. All eligible 
applications will be scored, and subject to Section V(C)(5)(b)(i) 
(overlapping applications) applications with the highest score will 
receive an award offer until all funds are expended for this category.

B. Available Funds

1. General
    Approximately $512,000,000 in funding has been set aside for 
funding opportunities under this FOA.
2. Funding Limits
    Award amounts under this FOA will be limited as follows:
    a. 100 Percent Loan. Up to $200,000,000 is available for loans. The 
maximum amount that can be requested in an application is $50,000,000.
    b. 50 Percent Loan--50 Percent Grant. Up to $200,000,000 is 
available for loan/grant combinations. The maximum amount that can be 
requested in an application is $25,000,000 for the loan and $25,000,000 
for the grant. Loan and grant amounts will always be equal.
    c. 100 Percent Grant. Up to $200,000,000 is available for grants. 
The maximum amount that can be requested in an application is 
$25,000,000.
    d. Reserve. Additional budget authority is available for a reserve, 
which may be used for loans or grants under this FOA or may be included 
in additional FOAs. The agency reserves the right to increase funding 
utilizing the application queue under this FOA should additional 
appropriations become available for the same purposes.
3. Repooling
    RUS retains the discretion to divert funds from one funding 
category to another.
4. Award Period
    Awards can be made until all funds have been expended in any given 
funding category. While the completion time will vary depending on the 
complexity of the project, award recipients must complete their 
projects within 5 years from the date funds are first made available.
5. Type of Funding Instrument
    The funding instruments will be grants, loans, and loan/grant 
combinations.

VI. Eligibility Information

A. General

    Applicants must satisfy the following eligibility requirements to 
qualify for funding.

B. Eligible Entities

    The following entities are eligible to apply for assistance:
    1. States, local governments, or any agency, subdivision, 
instrumentality, or political subdivision thereof;
    2. A territory or possession of the United States;
    3. An Indian tribe (as defined in section 4 of the Indian Self-
Determination and Education
    Assistance Act (25 U.S.C. 450b));
    4. Non-profit entities;
    5. For-profit corporations;
    6. Limited liability companies; and
    7. Cooperative or mutual organizations.
    Please note that individuals and legal partnerships are not 
eligible to apply. In addition, co-applicants are not eligible. If two 
entities would like to partner with each other in delivering broadband 
to areas without sufficient access, then one entity must take the lead 
on submitting an application. Inter-company agreements can be used to 
account for revenues and expenses on the applicant's financial 
projections.

C. Application Eligibility Factors

    The following requirements must be met by all applications to be 
eligible for an award. Applications failing to comply with these 
requirements will be rejected.
1. Audited Financial Statement
    Applicants must submit an unqualified, comparative, audited 
financial statement for the previous year from the date the application 
is submitted. If an application is submitted in the first quarter of 
the calendar year and the most recent yearend audit has not been 
completed, the applicant can submit the two previous unqualified audits 
that have been completed. If qualified audits containing a disclaimer 
or adverse opinion are submitted, the application will not be 
considered. An applicant can use the consolidated financials of the 
parent as long as the parent fully guarantees the loan, or in the case 
of a grant, guarantees that construction will be completed as approved 
in the application or will repay the grant to RUS.

[[Page 67917]]

2. Fully Completed Application
    Applicants must submit a complete application and provide all 
supporting documentation required for the application.
3. Timely Buildout Completion
    A project is eligible only if the application demonstrates that the 
project can be completely built out within 5 years from the date funds 
are first made available.
4. Technical Feasibility
    Only projects that RUS determines to be technically feasible will 
be eligible for an award. Applicants will be required to submit a 
network design, network diagram, project costs and a buildout timeline, 
all certified by a professional engineer. The certification from the 
professional engineer must state that the proposed network can deliver 
broadband service at the required level of service to all premises in 
the proposed funded service area. If a certification is not submitted, 
the application may not be considered for funding.
5. Service Areas
a. Eligible Service Areas
    (i) Applicants must propose to provide broadband service directly 
to all premises in the proposed funded service area that do not have 
sufficient access to broadband.
    (ii) If any part of the applicant's proposed funded service area is 
ineligible, RUS, in its sole discretion, may request that an applicant 
modify its application, if RUS believes the modification is feasible. 
Otherwise, RUS will reject the application.
b. Ineligible Service Areas
    (i) Overlapping Service Areas.
    RUS will not fund more than one project that serves any one given 
geographic area. Invariably, however, applicants will propose service 
areas that overlap, varying from small de minimus areas of the 
territory, but which may be significant with respect to households 
involved, to larger areas of the service territory, but which may 
contain few households or businesses, if any. As a result, devising a 
procedure which will cover every overlap circumstance cannot be done. 
Nevertheless, it is the agency's intent to make as many eligible 
applications viable for consideration as possible. That may mean the 
agency may: (1) Determine the overlap to be so insignificant that no 
agency action is necessary; (2) request one or more applications to be 
revised to eliminate the overlapping territory; (3) choose one 
application over another given the amount of assistance requested, the 
number of awards already chosen in the area or State, or the need for 
the project in the specific area due to other factors; or (4) simply 
choose the project that scores higher or in the judgement of the agency 
is more financially feasible.
    ii. Prior Funded Service Areas.
    (A) RUS Broadband Loans. Service areas of borrowers that have RUS 
broadband loans, as defined in this FOA, are ineligible for all other 
applicants, and can be found at https://reconnect.usda.gov. However, 
RUS broadband borrowers that have built out their service areas 
consistent with their application and loan documents, but were not 
required to provide, and are currently not providing, sufficient access 
to broadband pursuant to this FOA are eligible to apply for funding for 
these service areas; provided that they have not defaulted on, and have 
materially complied with, in the sole discretion of RUS, their prior 
broadband loan requirements. Current RUS broadband borrowers that have 
received funding to provide sufficient access to broadband, but not yet 
built out their system are ineligible to apply.
    (B) RUS Community Connect Grants. Service areas that received 
grants under the RUS Community Connect Grant Program are eligible if 
they do not have sufficient access to broadband, except for those 
grants still under construction. Service areas still under construction 
can be found at https://reconnect.usda.gov.
    (C) RUS BIP Grants. Service areas that received a 100 percent grant 
under the RUS Broadband Initiatives Program (BIP) are eligible if they 
do not have sufficient access to broadband. However, if the applicant 
is the same BIP grantee, then the applicant may only request a 100 
percent loan.
    (D) State-funded Areas. Applicants are encouraged to work with the 
Governor's office for the states where they are proposing to provide 
broadband service and submit information detailing where state funding 
has been provided.
    (E) Connect America Fund Phase II Auction--Auction 903 (CAF II). 
Funding for service areas of CAF II recipients can only be requested by 
the entity that is receiving the CAF II support, and such funding is 
limited to a 100% loan. The CAF II service areas can be found at 
https://reconnect.usda.gov and may also be found on the FCC web page.
    (F) ReConnect Program Awards. Service areas of companies that 
received a ReConnect award in round one are not eligible for funding 
under this FOA.
6. Fully Funded
    A project is eligible only if, all project costs can be fully 
funded or accounted for in the application. To demonstrate this, 
applications must include evidence of all funding, other than the RUS 
award, necessary to support the project, such as bank account 
statements, firm letters of commitment from equity participants, or 
outside loans, which must evidence the timely availability of funds. If 
outside loans are used, they may only be secured by assets other than 
those used for collateral under this FOA. Equity partners that are not 
specifically identified by name will not be considered in the financial 
analysis of the application. If the application states that other funds 
are required for the project in addition to the ReConnect funding 
requested, evidence must be included in the application identifying the 
source of funds and when the funds will be available. If the additional 
funding is not clearly identified, the application may not be 
considered for an award.
7. Financial Feasibility and Sustainability
    Only projects that RUS determines to be financially feasible and 
sustainable will be eligible for an award under this FOA. A project is 
financially feasible when the applicant demonstrates to the 
satisfaction of RUS that it will be able to generate sufficient 
revenues to cover expenses; will have sufficient cash flow to service 
all debts and obligations as they come due; will have a positive ending 
cash balance as reflected on the cash flow statement for each year of 
the forecast period; and, by the end of the forecast period, will meet 
at least two of the following requirements: A minimum TIER requirement 
of 1.2, a minimum DSCR requirement of 1.2, and a minimum current ratio 
of 1.2. In addition, applicants must demonstrate positive cash flow 
from operations at the end of the forecast period.
    If an applicant has no existing debt, is not proposing to borrow 
funds during the forecast period, and is applying only for grant funds, 
only the current ratio will be applied and not the TIER or DSCR. For 
this situation, applicants must meet the minimum current ratio 
requirement.
8. Service Requirements
    Facilities funded with grant funds must provide broadband service 
proposed in the application for the composite economic life of the 
facilities, as approved by RUS, or as provided in

[[Page 67918]]

the Award Documents. This includes the grant assets that are funded 
with a 50 percent loan and 50 percent combination award. Facilities 
funded with loan funds must provide broadband service through the 
amortization period of the loan.
9. Application Transparency
a. Pre-Award Public Notice
    To ensure transparency for the ReConnect Program, the Agency's 
mapping tool will include the following information from each 
application and be displayed for the public:
    (i) The identity of the applicant;
    (ii) the areas to be served;
    (iii) the type of funding requested;
    (iv) the status of the application;
    (v) the number of households without sufficient access to 
broadband; and (vi) a list of the census blocks to be served.
b. Post-Award Public Notice
    For all approved applications, the agency will post on its website: 
The name of the company receiving funding, the type of funding 
received, the location of the proposed funded service area and the 
purposes of the funding.
c. Post-Award Reporting
    Awardees will be required to submit semi-annual reports for three 
years after the completion of construction on the following 
information:
    (i) The number and location of residences and businesses that will 
receive service at or greater than the requirement for the appropriate 
funding category.
    (ii) the types of facilities constructed and installed;
    (iii) the speed of the data services being delivered;
    (iv) the average price of the data services being delivered in each 
proposed service area; and
    (v) the broadband adoption rate for each proposed service 
territory, including the number of new subscribers generated from the 
facilities funded. This information will be used to analyze the 
effectiveness of the funding provided and will allow the Agency to 
track adoption rates as new and improved broadband services are being 
provided.

D. Eligible Cost Purposes

1. General
    Award and matching funds must be used only to pay for eligible 
costs incurred post award, except for approved pre-application 
expenses. Eligible costs must be consistent with the cost principles 
identified in 2 CFR 200, subpart E, Cost Principles. In addition, costs 
must be reasonable, allocable, and necessary to the project. Any 
application that proposes to use any portion of the award or matching 
funds for any ineligible costs may be rejected.
2. Eligible and Ineligible Costs
a. Eligible Award Costs
    Award funds may be used to pay for the following costs:
    (i) To fund the construction or improvement of facilities, 
including buildings and land, required to provide broadband service, 
including facilities required for providing other services over the 
same facilities, such as equipment required to comply with CALEA;
    (ii) To fund reasonable preapplication expenses in an amount not to 
exceed five percent of the award. If an applicant applied for funding 
in round one, preapplication expenses may be eligible for reimbursement 
under this round of funding if these expenses support the round two 
application (i.e., engineering design, market survey, subscriber 
projections, etc.). RUS reserves the sole right to accept or reject 
expenses associated with round one. Otherwise, preapplication expenses 
for round two may be reimbursed only if they are incurred after the 
publication date of this FOA, and properly documented. Preapplication 
expenses must be included in the first request for award funds and will 
be funded with either grant or loan funds. If the funding category 
applied for has a grant component, then grant funds will be used for 
this purpose;
    (iii) To fund the acquisition of an existing system that does not 
currently provide sufficient access to broadband for upgrading that 
system to meet the requirements of this FOA. The cost of the 
acquisition is limited to 40 percent of the amount requested. 
Acquisitions can only be considered in the 100 percent loan category; 
and
    (iv) To fund terrestrial-based facilities for satellite broadband 
service, provided the applicant clearly identifies the PFSA, 
demonstrates the ability to provide 25 Mbps downstream and 3 Mbps 
upstream simultaneously to every premise in the PFSA, and offers 
subscribers reasonable service plans that do not cap bandwidth usage.
b. Ineligible Award Costs
    Award funds may not be used for any of the following purposes:
    (i) To fund operating expenses of the Awardee;
    (ii) To fund costs incurred prior to the date on which the 
application was submitted, except for eligible pre-application expenses 
incurred prior to the date of the publication date of this FOA, or as 
otherwise identified in Section D(2)(a)(ii) above;
    (iii) To fund an acquisition of an affiliate, or the purchase or 
acquisition of any facilities or equipment of an affiliate. Note that 
if affiliated transactions are contemplated in the application, 
approval of the application does not constitute approval to enter into 
affiliated transactions, nor acceptance of the affiliated arrangements 
that conflict with the obligations under the award documents;
    (iv) To fund the acquisition of a system previously funded by RUS;
    (v) To fund the purchase or lease of any vehicle other than those 
used primarily in construction or system improvements;
    (vi) To fund broadband facilities leased under the terms of an 
operating lease or an indefeasible right of use (IRU) agreement;
    (vii) To fund the merger or consolidation of entities;
    (viii) To fund costs incurred in acquiring spectrum as part of an 
FCC auction or in a secondary market acquisition. Spectrum that is part 
of a system acquisition may be considered for loan funding;
    (ix) To fund facilities that provide mobile services;
    (x) To fund the acquisition of a system that is providing 
sufficient access to broadband;
    (xi) To refinance outstanding debt; nor
    (xii) To fund facilities not required to provide broadband service.

VII. Application and Submission Information

A. Online Application System

    All applications under this FOA must be submitted through the RUS 
Online Application System located at https://reconnect.usda.gov. 
Additional information can be found in the Application Guidelines found 
at the above location. This website will be updated regularly.

B. Registration

1. General
    Please note the process for requesting a DUNS Number and a cage 
code could be lengthy, and applicants should not wait until it is time 
to submit an application to obtain these. It is recommended applicants 
immediately start this process for these.

[[Page 67919]]

2. Dun and Bradstreet Universal Numbering System (DUNS) Number
    All applicants must register for a DUNS number as part of the 
application. The applicant can obtain the DUNS number free of charge by 
calling Dun and Bradstreet. Go to http://fedgov.dnb.com/webform for 
more information on assignment of a DUNS number or confirmation. DUNS 
numbers of parent or affiliated operations cannot be substituted for 
the applicant. If a DUNS number is not provided, the application cannot 
be considered for an award.
3. System for Award Management (SAM)
    Prior to submitting an application, the applicant must also 
register in SAM at https://www.sam.gov/portal/SAM/#1 and supply a 
Commercial and Government Entity (CAGE) Code number as part of the 
application. SAM registration must be active with current data at all 
times, from the application review throughout the active Federal award 
funding period. To maintain active SAM registration, the applicant must 
review and update the information in the SAM database annually from the 
date of initial registration or from the date of the last update. The 
applicant must ensure that the information in the database is current, 
accurate, and complete. If the CAGE Code of the applicant is not 
included in the application, the application will not be considered for 
an award.

C. Contents of the Application

    Due to the complexities and the many scenarios that must be 
addressed, if multiple applications are submitted, applicants will be 
limited to ONE application for this FOA. A complete application will 
include the following information as requested in the RUS Online 
Application System:
    1. General information on the applicant and the project including:
    (a) A description of the project that will be made public 
consistent with the requirements herein and
    (b) The estimated dollar amount of the funding request.
    2. An executive summary of the proposed project.
    This summary shall include, but not be limited to, a detailed 
description of existing operations, discussion about key management, 
description of the workforce, description of interactions between any 
parent, affiliated or subsidiary operation, a detailed description of 
the proposed project, and the source of the matching funds.
    3. A description of the proposed funded service area including the 
number of premises passed.
    4. Subscriber projections including the number of subscribers for 
broadband, video and voice services and any other service that may be 
offered; A description of the proposed service offerings, and the 
associated pricing plan that the applicant proposes to offer.
    5. A map, utilizing the RUS mapping tool located at https://reconnect.usda.gov of the proposed funded service areas identifying the 
areas without sufficient access to broadband and any non-funded service 
areas of the applicant.
    6. A description of the advertised prices of service offerings by 
competitors in the same area.
    7. A network design which includes a description of the proposed 
technology used to deliver the broadband service demonstrating that all 
premises in the proposed funded service area can be offered broadband 
service, a network diagram, a buildout timeline and milestones for 
implementation of the project, and a capital investment schedule 
showing that the system can be built within 5 years, all of which must 
be certified by a professional engineer who is certified in at least 
one of the states where there is project construction. The 
certification from the professional engineer must clearly state that 
the proposed network can deliver the broadband service to all premises 
in the proposed funded service area at the minimum required service 
level. In addition, if the applicant is requesting the points for 
providing a 100 Mbps upstream and 100 Mbps downstream, the 
certification must also state that the proposed system is capable of 
delivering this service to all premises; a list of all required 
licenses and regulatory approvals needed for the proposed project and 
how much the applicant will rely on contractors or vendors to deploy 
the network facilities. Note that in preparing budget costs for 
equipment and materials, RUS' Buy American requirements apply.
    8. Resumes of key management personnel, a description of the 
organization's readiness to manage a broadband services network, and an 
organizational chart showing all parent organizations and/or holding 
companies (including parents of parents, etc.), and all subsidiaries 
and affiliates.
    9. A legal opinion that:
    a. Addresses the applicant's ability to enter into the award 
documents;
    b. describes all material pending litigation matters;
    c. addresses the applicant's ability to pledge security as required 
by the award documents and
    d. addresses the applicant's ability to provide broadband service 
under state or tribal law.
    10. Summary and itemized budgets of the infrastructure costs of the 
proposed project, including if applicable, the ratio of loans to 
grants, and any other sources of outside funding. The summary must also 
detail the amount of matching funds and the source of these funds. If 
the matching funds are coming from a third partly, a commitment letter 
and support that the funds are available must also be submitted. 
Matching funds must be deposited into the RUS Construction Fund at the 
closing of the award.
    11. A detailed description of working capital requirements and the 
source of these funds.
    12. Historical financial statements for the last four years 
consisting of a balance sheet, income statement, and cash flow 
statement. If an entity has not been operating for four years, 
historical statements for the period of time the entity has been 
operating.
    13. An unqualified, comparative audited financial statement for the 
previous calendar year from the date the application is submitted. A 
subsidiary can use the consolidated financial statements of the parent 
organization if the parent guarantees the award as outlined in Section 
VI.C(1) above. For governmental entities financial statements must be 
accompanied with certifications as to unrestricted cash that may be 
available on a yearly basis to the applicant.
    14. Pro Forma financial analysis, prepared in conformity with U.S. 
GAAP and the Agency's guidance on grant accounting found at https://www.rd.usda.gov/files/AccountingGuidance10.pdf. The Pro Forma should 
validate the sustainability of the project by including subscriber 
estimates related to all proposed service offerings; annual financial 
projections with balance sheets, income statements, and cash flow 
statements; supporting assumptions for a five-year forecast period and 
a depreciation schedule for existing facilities, those facilities 
funded with federal assistance, matching funds, and other funds. This 
pro forma should indicate the committed sources of capital funding and 
include a bridge year prior to the start of the forecast period. This 
bridge year shall be used as a buffer between the historical financial 
information and the forecast period and is the year in which the 
application is submitted.

[[Page 67920]]

    15. All attachments required in the RUS Online application system;
    16. A scoring sheet, analyzing the scoring criteria set forth in 
this FOA;
    17. A list of all the applicant's outstanding and contingent 
obligations, including copies of existing notes, loan and security 
agreements, guarantees, any existing management or service agreements, 
and any other agreements with parents, subsidiaries and affiliates, 
including but not limited to debt instruments that use the applicant's 
assets, revenues or stock as collateral;
    18. Compliance with the Agencies Environmental Policies and 
Procedures of 7 CFR part 1970 is required. To facilitate compliance the 
applicant must provide completed Environmental Questionnaire(s) as 
prompted by the application system. The questionnaire consists of 
project descriptions for environmental review purposes. All project 
activities, specific project locations, and supporting documentation, 
must be provided to further the Agencies analysis of potential impacts 
to the environment. The applicant must supply required environmental 
authorizations and permits, including those required by the National 
Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 et seq.) 
(NEPA), the National Historic Preservation Act of 1966, as amended (16 
U.S.C. 470 et seq.) (NHPA), and the Endangered Species Act of 1973, as 
amended (16 U.S.C. 1534 et seq.) (ESA) as applicable. Project maps or 
site plans are required to identify cable routes, building locations, 
tower locations, equipment locations and all structures and facilities 
that are part of the project. The Agency will use data provided in the 
intake system to complete the environmental review for this project, 
and may require the applicant to provide additional information, and 
studies post-application. This information is needed to assist with an 
efficient and timely review of the environmental requirements.
    19. Certification from the applicant that agreements with, or 
obligations to, investors do not breach the obligations to the 
government under the draft Award Documents, especially distribution 
requirements, and that any such agreements will be amended so that such 
obligations are made contingent to compliance with the Award Documents. 
Such certification should also specifically identify which, if any, 
provisions would need to be amended; and
    20. If service is being proposed on tribal land, a certification 
from the proper tribal official that they are in support of the project 
and will allow construction to take place on tribal land. The 
certification must: (1) Include a description of the land proposed for 
use as part of the proposed project; (2) identify whether the land is 
owned, held in Trust, land held in fee simple by the Tribe, or land 
under a long-term lease by the Tribe; (3) if owned, identify the land 
owner; and (4) provide a commitment in writing from the land owner 
authorizing the applicant's use of that land for the proposed project. 
If no certification is provided, then this area may be ineligible for 
funding.
    21. Any other information requested in the online application 
system.

D. Material Representations

    The application, including certifications, and all forms submitted 
as part of the application will be treated as material representations 
upon which RUS will rely in awarding grants and loans.

VIII. Application Evaluation Criteria

A. Evaluation Criteria

    Applications for the 50/50 loan/grant combo and the 100 percent 
grants will be scored and ranked against the following criteria below. 
However, applications that cover the same proposed service area will be 
evaluated as described in Section V(C)(5)(b)(i) above. If eligible 
applications receive the same score and funding becomes limited, the 
application that is proposing to serve the highest number of households 
without sufficient broadband service will be funded first.
1. Rurality of Proposed Funded Service Area (25 Points)
    Points will be awarded for serving the least dense rural areas as 
measured by the population of the proposed funded service area per 
square mile or if the proposed funded service area is located at least 
one hundred miles from a city or town that has a population of greater 
than 50,000 inhabitants. If multiple service areas are proposed, the 
density calculation will be made on the combined areas as if they were 
a single area and not the average densities. For the determination of 
the location of the proposed funded service areas, all proposed funded 
service areas must be located at least one hundred miles from a city or 
town that has a population of greater than 50,000. Population densities 
of 6 or less or if the proposed funded service area is located one 
hundred miles from a city or town of 50,000, 25 points will be awarded.
2. Farms Served (20 Points)
    Applicants will receive 1 point for every 10 farms served up to a 
maximum of 20 points. Farms will be counted using 2017 Census of 
Agriculture data. The total area in square miles by county covered by 
the Proposed Funded Service Area will be treated as its own analysis 
area. The mapping tool will calculate the analysis area in square miles 
as a percentage of the total county area in square miles and then 
multiply this percentage by the total number of farms located in that 
county. If there is more than one county covered by the PFSA, the sum 
of all analysis area(s) will be used to determine the total number of 
farms for that PFSA. Farms will be counted using the GIS layer located 
in the RUS mapping tool at: https://reconnect.usda.gov.
3. Performance of the Offered Service (20 Points)
    For projects that are proposing to build a network that is capable 
of providing at least 100 Mbps symmetrical service to all premises, 20 
points will be awarded. The certification from the Professional 
Engineer must certify that the proposed system can deliver these speeds 
to every premise in the proposed funded service area.
4. Businesses (15 Points)
    Applicants will receive 1 point for each business that pre-
subscribes for broadband service up to a maximum of 15 points. 
Applicants must have the owner of the business sign the presubscription 
form provided in the application system and submit them as part of 
their application.
5. Healthcare Centers (15 Points)
    For every healthcare center served 1 point will be awarded up to a 
maximum of 15 points. Healthcare centers will be counted using the GIS 
layer located in the RUS mapping tool at https://reconnect.usda.gov. 
For tribal areas not identified in the GIS layer, the tribal leader of 
the area can submit documentation supporting the number of healthcare 
facilities and will receive 1 point up to a total of 15 points for 
every healthcare facility that is identified. A certification that the 
facilities exist and are being used must be submitted by the tribal 
leader.
6. Educational Facilities (15 Points)
    For every school served 1 point will be awarded up to a maximum of 
15 points. Schools will be counted using the GIS layer provided in the 
RUS mapping tool located at https://reconnect.usda.gov. For tribal 
areas not identified in the GIS layer, the tribal leader of the area 
can submit documentation supporting the number

[[Page 67921]]

of educational facilities and will receive 1 point up to a total of 15 
points for every educational facility that is identified. A 
certification that the facilities exist and are being used must be 
submitted by the tribal leader.
7. Essential Community Facilities (15 Points)
    For every essential community facility served 1 point will be 
awarded up to a maximum of 15 points. Essential community facilities 
will be counted using the GIS layer located in the RUS mapping tool at 
https://reconnect.usda.gov. For tribal areas not identified in the GIS 
layer, the tribal leader of the area can submit documentation 
supporting the number of Essential Community Facilities and will 
receive 1 point up to a total of 15 points for every Essential 
Community Facility that is identified. A certification that the 
facilities exist and are being used must be submitted by the tribal 
leader.
8. Opportunity Zones (5 Points)
    For applications that are proposing to provide service in at least 
part of an area identified as an Opportunity Zone, 5 points shall be 
awarded. Opportunity Zones will be analyzed using the GIS layer located 
at https://reconnect.usda.gov.
9. State or Tribal Broadband Activity (20 Points)
    For projects that are in a State or tribal area that has a 
broadband plan that has been updated within five years of the date of 
publication of this FOA, 10 points will be awarded. An additional 5 
points will be awarded for projects located in states that do not 
restrict utilities from delivering broadband service, and 5 more points 
for projects located in states that expedite right-of-way and 
environmental requirements. Applicants will be required to submit 
evidence from the appropriate State or tribal official that a broadband 
plan has been implemented and updated, that there are no restrictions 
on utilities providing broadband service, and that procedures are in 
place for expediting right-of-way and environmental requirements. If 
service is proposed in multiple states tribal areas, then evidence must 
be submitted from each state or tribal area to get the appropriate 
points.

IX. Notice of Proposed Funded Service Areas

A. The Agency Will Publish a Public Notice of Each Application

    The application must provide a summary of the information required 
for such public notice including the following:
    1. The identity of the applicant;
    2. A map of each proposed funded service area showing the rural 
area boundaries and the areas without sufficient access to broadband 
using the Agency's Mapping Tool;
    3. The amount and type of support requested;
    4. The status of the review of the application;
    5. The estimated number of households without sufficient access to 
broadband in each service area exclusive of satellite and mobile 
broadband service; and
    6. A description of all the types of services that the applicant 
proposes to offer in each service area.

B. Notification After the Application Has Been Received

    The Agency will publish the public notice on an Agency web page 
after the application has been submitted through the online application 
system and will remain on the web page for a period of 45 calendar 
days. The notice will ask existing service providers to submit to the 
Agency, within this notice period, the following information:
    1. The number of residential and business customers within the 
applicant's service area currently purchasing broadband service, 
defined as at a minimum speed of 10 Mbps downstream and 1 Mbps 
upstream, the rates of data transmission being offered, and the cost of 
each level of broadband service charged by the existing service 
provider;
    2. The number of residential and business customers within the 
applicant's service area receiving voice and video services and the 
associated rates for these other services; and
    3. A map showing where the existing service provider's services 
coincide with the applicant's service area using the Agency's Mapping 
Tool.
    Please note that the Agency will be contacting any entity that 
responds to the notice and will be requesting additional information 
such as test result that demonstrate that the area in question has 
sufficient access to broadband service.

C. Agency Determination of Sufficient Access to Broadband in Proposed 
Funded Service Area

    The Agency will use the information submitted to determine if there 
is sufficient access to broadband in any part of the proposed funded 
service area. Notwithstanding non-responses by actual and potential 
providers, the Agency will use all information available in evaluating 
the feasibility of the project.

D. Treatment of Submitted Information

    The information submitted by an existing service provider will be 
treated as proprietary and confidential to the extent permitted under 
applicable law.

E. Notice of Application Is Approved

    If an application is approved, an additional notice will be 
published on the agency's website that will include the following 
information:
    1. The name of the entity receiving the financial assistance;
    2. The type of assistance being received;
    3. The purpose of the assistance and the location of the proposed 
funded service area; and
    4. The semiannual reports submitted under Section X(B)(6)e of this 
FOA.

X. Evaluation and Processing Procedures

A. Review of Application

    Applications will be evaluated using the criteria stated in Section 
VII.C of this FOA. Public comments received with respect to an 
application's proposed funded service area will be reviewed and 
evaluated. Eligibility of proposed funded service areas will be 
verified by the Agency.
    RUS also reserves the right to ask applicants for clarifying 
information and additional verification of assertions in the 
application. For those applications that RUS has selected for funding, 
RUS will send award documents.

B. Review of Awardee Operations

1. Entities That Receive Funding Under This FOA
    For all entities that receive funding under this FOA, RUS may send 
a team to the awardee's facilities to complete a Management Analysis 
Profile (MAP) of the entire operation. MAPs are used by RUS as a means 
of evaluating an Awardee's strengths and weaknesses and ensuring that 
awardees are prepared to fulfil the terms of the award. Once an 
applicant accepts an award offer, RUS may schedule a site visit as soon 
as possible.
2. Agency Right Not To Advance Funds
    RUS reserves the right not to advance funds until the MAP has been 
completed. If the MAP identifies issues that can affect the operation 
and completion of the project, those issues must be addressed to the 
satisfaction of RUS before funds can be advanced. Funding may be 
rescinded if following

[[Page 67922]]

a MAP, the agency determines that the awardee will be unable to meet 
the requirements of the award.

XI. Award Administration Information

A. Award Notices

    Successful applicants will receive an offer letter and award 
documents from RUS following award notification. Applicants may view 
sample award documents at https://reconnect.usda.gov.

B. Administrative Requirements

1. Pre-Award Conditions
    No funds will be disbursed under this program until all other 
sources of funding have been obtained and any other pre-award 
conditions have been met. Failure to obtain one or more sources of 
funding committed to in the Application or to fulfill any other pre-
award condition within 90 days of award announcement may result in 
withdrawal of the award.
2. Advance Procedures
    RUS loan and grant advances are made at the request of the Awardee 
according to the procedures stipulated in the Award Documents. ALL 
MATCHING FUNDS OR CASH PROVIDED IN LIEU OF LOAN FUNDS MUST BE EXPENDED 
FIRST, FOLLOWED BY LOAN FUNDS, AND THEN BY GRANT FUNDS, EXCEPT FOR RUS 
APPROVED PRE-APPLICATION EXPENSES. Grant funds, if any, will be used 
for eligible preapplication expenses only on the first advance request. 
Accordingly, applications that do not account for such advance 
procedures in the pro forma five-year forecast may be rejected.
3. Construction
    a. All project assets must comply with 7 CFR part 1788, and 7 CFR 
part 1970 located at https://www.rd.usda.gov/publications/regulations-guidelines/regulations, the ReConnect Program Construction Procedures 
located at https://reconnect.usda.gov, any successor regulations found 
on the agency's website, and any other guidance from the Agency.
    b. The build-out of the project must be completed within five years 
from the date funds are made available. Build-out is considered 
complete when the network design has been fully implemented, the 
service operations and management systems infrastructure is 
operational, and the awardee is ready to support the activation and 
commissioning of individual customers to the new system.
5. Servicing
    a. Awardees must make payments on the loan as required in the note 
and Award Documents.
    b. Awardees must comply with all terms, conditions, affirmative 
covenants, and negative covenants contained in the Award Documents.
6. Accounting, Monitoring, and Reporting Requirements
    a. Awardees must adopt a system of accounts for maintaining 
financial records acceptable to the Agency, as described in 7 CFR part 
1770, subpart B.
    b. Awardees must submit annual comparable audited financial 
statements along with a report on compliance and on internal control 
over financial reporting, and management letter in accordance with the 
requirements of 7 CFR part 1773. The Certified Public Accountant (CPA) 
conducting the annual audit is selected by the borrower and must be 
satisfactory to RUS as set forth in 7 CFR 1773 subpart B--RUS Audit 
Requirements.
    c. Awardees must comply with all reasonable Agency requests to 
support ongoing monitoring efforts. The Awardee shall afford RUS, 
through its representatives, reasonable opportunity, at all times 
during business hours and upon prior notice, to have access to and the 
right to inspect: The Broadband System, any other property encumbered 
by the Award Documents, any and all books, records, accounts, invoices, 
contracts, leases, payrolls, timesheets, cancelled checks, statements, 
and other documents, electronic or paper of every kind belonging to or 
in the possession of the Awardee or in any way pertaining to its 
property or business, including its subsidiaries, if any, and to make 
copies or extracts therefore.
    d. Awardee records shall be retained and preserved in accordance 
with the provisions of 7 CFR part 1770, subpart A.
    e. Awardees must submit semiannual reports for 3 years after 
completion of the project, which must include the following:
    (1) The purpose of the financing, including new equipment and 
capacity enhancements that support high-speed broadband access for 
educational institutions, health care providers, and public safety 
service providers (including the estimated number of end users who are 
currently using or forecasted to use the new or upgraded 
infrastructure);
    (2) The progress towards fulfilling the objectives for which the 
assistance was granted, including:
    (i) The number of residences and businesses that will receive 
service equal to or greater than the speed required for the appropriate 
funding category;
    (ii) The types of facilities constructed and installed;
    (iii) The speed of the broadband services being delivered;
    (iv) The average price of the broadband services being delivered in 
each proposed service area;
    (v) The broadband adoption rate for each proposed service 
territory, including the number of new subscribers generated from the 
facilities funded; and
7. Assistance Instruments
    a. Terms and conditions of loans, grants, or loan/grant 
combinations are set forth in the non-negotiable standard loan, grant, 
or loan/grant agreements and the corresponding note, and/or mortgage, 
if applicable, which may be found at https://reconnect.usda.gov.
    b. Award Documents must be executed prior to any advance of funds.
    c. Sample Award Documents can be found at https://reconnect.usda.gov.
8. Loan and Loan/Grant Terms and Conditions
    Among others, the following terms shall apply to the loans:
a. Interest Rate
    If an applicant is applying for a 100% loan, the interest rate 
shall be fixed at 2%. If an applicant is applying for a 50/50 loan/
grant combination, the loan shall bear interest at a rate equal to the 
cost of borrowing to the Department of Treasury for obligations, as 
determined by the government, of comparable maturity. The applicable 
interest rate will be set at the time of each advance.
b. Repayment Period
    Unless the Applicant requests a shorter repayment period, loans 
must be repaid with interest within a period that, rounded to the 
nearest whole year, is equal to the expected Composite Economic Life of 
the project assets, as determined by RUS based upon acceptable 
depreciation rates, plus three years. Acceptable depreciation rates can 
be found in the ReConnect Program Constructions Procedures found at 
https://reconnect.usda.gov.
c. Amortization Period
    Interest begins accruing on the date of each loan advance. All 
interest and principle payments will be deferred for a three-year 
period starting when funds are made available to be drawn by the 
Awardee. At the end of the three-year deferral period, accrued interest 
will be capitalized and added to the

[[Page 67923]]

outstanding principal, and monthly payments will be established in an 
amount that amortizes the outstanding balance in equal payments over 
the remaining term of the loan.
d. Build-Out Period
    All proposed construction (including construction with matching and 
other funds) and all advance of funds must be completed no later than 
five years from the time funds are made available.
e. Loan Security
    The loan portion of the award must be adequately secured, as 
determined by RUS.
    (i) For Corporations and LLC's, the loan and loan/grant 
combinations must be secured by all assets of the Awardee. RUS must be 
given an exclusive first lien, in form and substance satisfactory to 
RUS, on all assets of the Awardee, including all revenues. RUS may 
share its first lien position with one or more lenders on a pari passu 
basis, except with respect to grant funds, if security arrangements are 
acceptable to RUS. Applicants must submit a certification that their 
prior lender or lienholder on any Awardee assets has already agreed to 
sign the RUS' standard intercreditor agreement or co-mortgage found at 
https://reconnect.usda.gov. Note that RUS will not consider sharing 
assets with any related party or affiliate of the Awardee. Moreover, 
given that RUS cannot renegotiate these standard agreements, Awardees 
that are unable to obtain sign-off on the security arrangements may 
have their awards rescinded within 60 days of the date the Awardee is 
made aware of the approval of its application.
    (ii) For Tribal entities and municipalities, RUS will develop 
appropriate security arrangements.
    (iii) Unless otherwise approved by RUS in writing, all property and 
facilities purchased with award funds must be owned by the Awardee.
f. Grant Security
    The grant portion of the award must also be adequately secured, as 
determined by RUS.
    (i) The government must be provided an exclusive first lien on all 
grant assets during the service obligation of the grant, and thereafter 
any sale or disposition of grant assets must comply with the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards, codified in 2 CFR part 200. Note that this part 
will apply to ALL grant funds of an Awardee, regardless of the entity 
status or type of organization.
    (ii) All Awardees must repay the grant if the project is sold or 
transferred without receiving written approval from RUS during the 
service obligation of the grant.
9. Award Terms and Conditions
a. Scope
    Awardees are required to comply with the requirements established 
herein. Any obligation that applies to the Awardee shall extend for the 
life of the award-funded facilities.
b. Sale or Lease of Project Assets
    The sale or lease of any portion of the Awardee's facilities must 
be approved in writing by RUS.
c. Certifications
    (i) The Applicant must certify that it is authorized to submit the 
application on behalf of the eligible entity(ies) listed in the 
Application; that the Applicant has examined the Application; that all 
information in the Application, including certifications and forms 
submitted, are, at the time furnished, true and correct in all material 
respects; that the entity requesting funding will comply with the 
terms, conditions, purposes, and federal requirements of the program; 
that no kickbacks were paid; and that a false, fictitious, or 
fraudulent statement or claim on the Application is grounds for denial 
or termination of an award, and/or possible punishment by a fine or 
imprisonment as provided in 18 U.S.C. 1001 and civil violations of the 
False Claims Act (31 U.S.C. 3729 et seq.);
    (ii) The Applicant must certify that it will comply with all 
applicable federal, tribal, state, and local laws, rules, regulations, 
ordinances, codes, orders, and programmatic rules and requirements 
relating to the project, and acknowledges that failure to do so may 
result in rejection or de-obligation of the award, as well as civil or 
criminal prosecution, if applicable, by the appropriate law enforcement 
authorities.
10. Financial and Compliance Reporting Requirements
    Awardees must submit to RUS 30 calendar days after the end of each 
calendar year quarter, balance sheets, income statements, statements of 
cash flow, rate package summaries, and the number of customers taking 
broadband service on a per community basis utilizing RUS' on-line 
reporting system. These reports must be submitted throughout the loan 
amortization period or for the economic life of the facilities funded 
with a 100 percent grant. In addition, Awardees will be required to 
submit annually updated service area maps through the RUS mapping tool 
showing the areas where construction has been completed and premises 
are receiving service until the entire proposed funded service area can 
receive the broadband service. At the end of the project, Awardees must 
submit a service area map indicating that all construction has been 
completed as proposed in the application. If parts of the proposed 
funded service area have not been constructed, RUS may require a 
portion of the award to be rescinded or paid back.

XII. Other Information

A. Discretionary Awards

    The government is not obligated to make any award as a result of 
this announcement and will fund only projects that are deemed likely to 
achieve the program's goals and for which funds are available.

B. Environmental and National Historic Preservation Requirements

    Federal Agencies are required to analyze the potential 
environmental impacts, as required by the NEPA and the NHPA for 
Applicant projects or proposals seeking funding. All Applicants are 
required to complete an Environmental Questionnaire, provide a 
description of program activities and to submit all other required 
environmental documentation as requested in the application system or 
by the Agency after the application is submitted. It is the Applicant's 
responsibility to obtain all necessary federal, tribal, state, and 
local governmental permits and approvals necessary for the proposed 
work to be conducted. Applicants are expected to design their projects 
so that they minimize the potential for adverse impacts to the 
environment. Applicants also will be required to cooperate with the 
granting agencies in identifying feasible measures to reduce or avoid 
any identified adverse environmental impacts of their proposed 
projects. The failure to do so may be grounds for not making an award. 
Applications will be reviewed to ensure that they contain sufficient 
information to allow Agency staff to conduct a NEPA analysis so that 
appropriate NEPA documentation can be submitted to the appropriate 
federal and state agencies, along with the recommendation that the 
proposal is in compliance with applicable environmental and historic 
preservations laws. Applicants proposing activities that cannot be 
covered by existing environmental compliance procedures will be 
informed after the technical review stage whether

[[Page 67924]]

NEPA compliance and other environmental requirements can otherwise be 
expeditiously met so that a project can proceed within the timeframes 
anticipated under the ReConnect Program. If additional information is 
required after an application is accepted for funding, funds can be 
withheld by the agency under a special award condition requiring the 
Awardee to submit additional environmental compliance information 
sufficient for the Agency to assess any impacts that a project may have 
on the environment.

C. De-Obligation

    The RUS reserves the right to deobligate awards to Awardees under 
this FOA that demonstrate an insufficient level of performance, 
wasteful or fraudulent spending, or noncompliance with environmental 
and historic preservation requirements.

D. Confidentiality of Applicant Information

    Applicants are encouraged to identify and label any confidential 
and proprietary information contained in their applications. The Agency 
will protect confidential and proprietary information from public 
disclosure to the fullest extent authorized by applicable law, 
including the Freedom of Information Act, as amended (5 U.S.C. 552), 
the Trade Secrets Act, as amended (18 U.S.C. 1905), the Economic 
Espionage Act of 1996 (18 U.S.C. 1831 et seq.), and CALEA (47 U.S.C. 
1001 et seq.). Applicants should be aware, however, that the 
Consolidated Appropriations Act requires substantial transparency. For 
example, RUS is required to make publicly available on the internet a 
list of each entity that has applied for a loan or grant, a description 
of each application, the status of each application, the name of each 
entity receiving funds, and the purpose for which the entity is 
receiving the funds.

E. Compliance With Applicable Laws

    Any recipient of funds under this FOA shall be required to comply 
with all applicable federal, tribal and state laws, including but not 
limited to:
    1. The nondiscrimination and equal employment opportunity 
requirements of Title VI of the Civil Rights Act of 1964, as amended 
(42 U.S.C. 2000e et seq., 7 CFR pt. 15);
    2. Section 504 of the Rehabilitation Act (29 U.S.C. 794 et seq.; 7 
CFR pt. 15b);
    3. The Age Discrimination Act of 1975, as amended (42 U.S.C. 6101 
et seq.; 45 CFR pt. 90);
    4. Executive Order 11375, amending Executive Order 11246, Relating 
to Equal Employment Opportunity (3 CFR pt. 102). See 7 CFR pts. 15 and 
15b and 45 CFR pt. 90, RUS Bulletin 1790-1 (``Nondiscrimination among 
Beneficiaries of RUS Programs''), and RUS Bulletin 20-15:320-15 
(``Equal Employment Opportunity in Construction Financed with RUS 
Loans'');
    5. The Architectural Barriers Act of 1968, as amended (42 U.S.C. 
4151 et seq.);
    6. The Uniform Federal Accessibility Standards (UFAS) (Appendix A 
to 41 CFR subpart 101-19.6); and
    7. The Council on Environmental Quality Regulations for 
Implementing the Procedural Provisions of NEPA and certain related 
federal environmental laws, statutes, regulations, and Executive Orders 
found in 7 CFR 1970.
    A more complete list of such requirements can be found in the 
applicable Award Documents.

F. Communications Laws

    Awardees will be required to comply with all applicable federal, 
tribal and state communications laws and regulations, including, for 
example, the Communications Act of 1934, as amended, (47 U.S.C. 151 et 
seq.) the Telecommunications Act of 1996, as amended (Pub. L. 104-104, 
110 Stat. 56 (1996), and CALEA. For further information, see http://www.fcc.gov.

G. Executive Order 13132

    It has been determined that this notice does not contain policies 
with federalism implications as that term is defined in Executive Order 
13132.

H. Authorized Signatories

    Only authorized grant and loan officers can bind the Government to 
the expenditure of funds.

I. Paperwork Reduction Act and Recordkeeping Requirements

    The Information Collection and Recordkeeping requirements contained 
in this FOA have been approved by OMB Control Number 0572-0152. Copies 
of all forms, regulations, and instructions referenced in this FOA may 
be obtained from RUS. Data furnished by the Applicants will be used to 
determine eligibility for program benefits. Furnishing the data is 
voluntary; however, the failure to provide data could result in program 
benefits being withheld or denied.

Chad Rupe,
Administrator, Rural Utilities Service.
[FR Doc. 2019-26522 Filed 12-9-19; 8:45 am]
BILLING CODE 3410-15-P