US Treasury Releases Final Version of SLFRF/CPF Supplemental Broadband Guidance

The US Treasury Department has released the final version of important compliance guidance applicable to broadband projects funded through the State and Local Fiscal Recovery Fund (SLFRF) or Capital Project Fund (CPF) awards. The “SLFRF and CPF Supplemental Broadband Guidance” addresses several crucial issues relating to the use of SLFRF and CPF funds for broadband projects, including the crucial distinction of internet service providers (ISP) acting as “contractors” vs. “sub-recipients,” the treatment of “program income,” the scope of the Federal interest in the grant-funded property, procurement requirements, and other issues. Key changes adopted in the final guidance are as follows:

• Broadened definition of “ISP”: The final Guidance still uses the term “ISP,” but includes the following key sentence: “For purposes of this guidance, the term ‘ISP’ includes sub-recipients and contractors installing broadband infrastructure using SLFRF and CPF funds, and is not limited to entities that provide retail Internet access service.”
• Revenue from fiber IRUs and leases is not “program income”: The final Guidance squarely addresses the issue: “Treasury clarifies that income from indefeasible rights of use (IRUs) and leases relating to broadband infrastructure will not be considered program income.”
• A “fixed amount sub-award” can include an award involving a cost-sharing or match requirement, or where the recipient requires the ISP to submit evidence of costs: In the final Guidance, Treasury adopts a broad interpretation of “fixed amount sub-award,” so that it may include sub-awards that include a cost-based component or a match requirement. 
• Prior incurred costs may be reimbursable: The final Guidance clarifies that costs incurred by an ISP prior to receiving an award “are reimbursable to the extent that they would have been allowable if incurred after the date of the federal award or sub-award (for example, if an ISP purchased fiber or other broadband equipment in advance of being awarded a sub-award or contract).”
• Retroactive application: The final Guidance clarifies that it applies retroactively. It applies “to broadband infrastructure contracts and sub-awards funded by SLFRF and CPF for states, territories, freely associated states, and local governments, including those entered into [before] the release of this guidance.”