(a) The Rural eConnectivity Program, hereinafter referred to as Program, provides funding in the form of loans, grants, and loan/grant combinations for the costs of construction, improvement, or acquisition of facilities and equipment needed to facilitate broadband deployment in rural areas. One of the essential goals of the Program is to expand broadband service to rural areas that do not have sufficient access to broadband. This part sets forth the general policies, eligibility requirements, types and terms of loans, grants, and loan/grant combinations and program requirements.

(b) Additional information and application materials regarding the Program can be found on the Rural Development website.

(a) The following definitions apply to this part:

Administrator means the Administrator of the Rural Utilities Service, or the Administrator's designee.

Agency means the Rural Utilities Service (RUS).

Applicant means an entity requesting funding under this part.

Application means the Applicant's request for federal funding, which may be approved in whole or in 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 part.

Awardee means a grantee, borrower, or borrower/grantee that has applied and been awarded federal assistance under this part.

Broadband loan means, for purposes of this regulation, 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 this Program.

Broadband loans that were rescinded or defaulted on, or the terms and conditions of which were not met, are not included in this definition, so long as the entity under consideration for an award under this part has not previously defaulted on, or failed to meet the terms and conditions of, an RUS loan or had an RUS loan rescinded.

Broadband service means any fixed terrestrial technology, including fixed wireless, having the capacity to transmit data to enable a subscriber to the service to originate and receive high quality voice, data, graphics and video.

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 the ratio of the sum of the Awardee's total net income or margins, depreciation and amortization expense, and interest expense, minus an allowance for funds used during construction and amortized grant revenue, all divided by the sum of interest on funded debt, other interest and principal payment on debt and capital leases.

Economic life means the estimated useful service life of an asset as determined by RUS.

Eligible service area means any contiguous proposed funded service area where 90 percent of the households to be served do not have sufficient access to broadband service. 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.

Equity means total assets minus total liabilities as reflected on the Applicant's balance sheet.

Fixed wireless service means a wireless system between two fixed locations (e.g., fixed transmitting tower to fixed customer premise equipment).

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 part.

Grant agreement means the grant contract and security agreement between RUS and the Awardee securing the Grant awarded under this part, including any amendments thereto, available for review on the Agency's web page.

Indefeasible Right to Use (IRU) means the long-term agreement of the rights to capacity, or a portion thereof specified in the terms of a certain amount of bandwidth or number of fibers.

Loan means any federal assistance in the form of a loan made under this part.

Loan agreement means the loan contract and security agreement between RUS and the Awardee securing the Loan, including all amendments thereto, available for review on the Agency's web page.

Loan/grant means any federal assistance in the form of a loan/grant combination made under this part.

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 for review on the Agency's web page.

Non-funded service area (NFSA) means any area in which the applicant offers telecommunication/broadband service, or intends to offer telecommunication/broadband service, during the forecast period, but which is not part of its Proposed Funded Service Area.

Pre-application expenses means any reasonable expenses, as determined by RUS, incurred after the release of a Federal Register notice opening an application window 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 PFSA 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 that is not located within:

(i)(A) A city, town, or incorporated area that has a population of greater than 20,000 inhabitants; or

(B) An urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants as defined in the Agency mapping tool.

(ii) In determining a rural area, all areas shall exclude certain populations pursuant to 7 U.S.C. 1991(a)(13)(H) and (I).

RUS Accounting Requirements shall mean compliance with 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 part.

Sufficient access to broadband means a rural area in which households have broadband service at the minimum acceptable level of broadband, as set forth in the latest Federal Register notice announcing funding for the program. This definition will be used to determine the eligibility of a proposed service area and cannot be lower than 10 megabit per second (Mbps) downstream and 1 Mbps upstream. Mobile/Cellular and satellite services, which include systems that use satellite backbone facilities to connect to the internet, will not be considered in making the determination of sufficient access to broadband.

TIER means times interest earned ratio. TIER is the ratio of an Applicant's net income (after taxes) plus interest expense, all divided by interest expense and with all financial terms defined by GAAP.

(b) Unless otherwise provided in the award documents, all financial terms not defined herein shall have the meaning as defined by GAAP.

[86 FR 11609, Feb. 26, 2021, as amended at 87 FR 38642, June 29, 2022; 88 FR 5726, Jan. 30, 2023]

(a) For the purposes of this part:

(1) Ninety (90) percent of the PFSA must not have sufficient access to broadband service;

(2) Applicants must propose to build a network that is capable of providing broadband service to every premises located in the PFSA at the time the application is submitted at a speed defined in the latest Federal Register notice announcing funding for the Program; and

(3) 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.

(b) The amount and types of funds available for assistance, as well as the maximum and minimum award amounts will be published in the Federal Register. Applicants may apply for grants, loans and loan/grant combinations.

The Applicant must certify to the following within the online application system:

(a) That it is authorized to submit the application on behalf of the eligible entity(ies) listed in the Application;

(b) That the Applicant has examined the Application;

(c) That all information in the Application, including certifications and forms submitted are, at the time furnished, true and correct in all material respects;

(d) That the entity requesting funding will comply with the terms, conditions, purposes, and federal requirements of the program;

(e) 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.);

(f) That the Applicant 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 liability or criminal prosecution, if applicable, by the appropriate law enforcement authorities.