Coalition Letter to OMB Director Mulvaney on Rural Infrastructure Plan

March 13, 2018

The Honorable Mick Mulvaney
Director
Office of Management and Budget
The White House
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20502

Dear Director Mulvaney,

On behalf of the undersigned organizations, we seek further information regarding President Trump’s rural infrastructure proposal, “Building a Stronger America: Rural Infrastructure for the 21st Century,” issued on February 20, 2018.

The proposal includes an allocation of $50 billion, or 25 percent, of the $200 billion infrastructure budget. According to the fact sheet, 80 percent of the Rural Infrastructure Program funding will go directly to each governor, and the remaining 20 percent will be issued through rural performance grants to selected states. While we generally support allowing states to spend money rather than the federal government, we have many concerns about the proposal, including the potential for waste, fraud, abuse, and duplication due to the strong focus on rural broadband.

The 2009 stimulus bill had $7.2 billion in broadband funds, with $4.7 billion for the Rural Utilities Service’s (RUS) Broadband Initiatives Program (BIP), and $2.5 billion for the National Telecommunications Information Administration’s (NTIA) Broadband Technology Opportunity Program (BTOP). From fiscal year 2002 to 2009, BIP funding averaged $13 million annually, and the largest annual budget for the predecessor program to BTOP was $1 billion. Under the stimulus, RUS and NTIA were required to award funds in two rounds for a variety of grant applications and obligate all funds over a two-year period.

As reported by the Government Accountability Office and the Department of Commerce Office of Inspector General, broadband stimulus funding often missed the mark due to significant understaffing, an inadequate grant application evaluation process, and lack of oversight. The projects did not help the unserved or underserved, overbuilt existing private-sector projects, duplicated existing federal broadband projects, forced states with large budget deficits to meet a 20 percent matching fund requirement, were awarded to unqualified applications, and were not adequately monitored from start to finish.

The government spent too much money over a short period of time and failed to keep track of how it was being spent. The broadband stimulus effort was a failure that cannot be repeated. We respectfully request your response to the following 10 questions:

1. Will there be an offset to pay for this $50 billion allocation of funds into the Rural Infrastructure Program?

2. Will there be one specific agency overseeing the distribution of the Rural Infrastructure Program funds? If so, which agency will have that oversight, what metrics will be established up front to ensure that the goals of the program are being met, and what will be done to ensure the funding will not be wasted by the recipients or redirected to non-rural infrastructure projects?

3. States have different laws and rules regarding the ability of cities and counties to build their own broadband systems. What action will be taken to prevent federal funds, once they are in the states, from being used for broadband projects that would overbuild and compete with existing private-sector broadband systems?

4. The full $200 billion infrastructure plan will be leveraged into a total of $1.5 trillion. Will the $50 billion be leveraged in a similar manner using private sector investment for rural infrastructure?

5. State agencies have already committed billions of dollars over the next several years for rural broadband. How will each state ensure that it has adequate staffing and oversight for what will clearly be a dramatic increase in such expenditures?

6. What percentage of the funds will be spent on projects and how much will be permitted for overhead?

7. The Federal Communications Commission (FCC) has not completed a Rural Broadband Report since 2011, and the new National Broadband Map uses data published in December 2016. Will this information be updated prior to the allocation of the $50 billion in rural infrastructure spending to ensure the funds will be allocated to truly unserved rural communities, or will this decision be left to each governor’s discretion?

8. How does this plan coordinate with the FCC’s plans for rural broadband access?

9. How will the formula be determined for the distribution of state funding and the rural performance grants?

10. How much of the $50 billion will be used to maintain and repair existing broadband infrastructure, and how much will be spent on new infrastructure?

While the undersigned organizations recognize the importance of connecting all Americans to the internet, particularly those in unserved communities, the administration must incorporate rigorous oversight provisions at the outset and provide adequate resources to track the substantial funds under consideration. It will also be critically important to establish clear, measurable metrics for success, and ensure that taxpayer dollars are used for broadband in areas that are truly unserved and not used to directly compete with the private sector.

Sincerely,

Thomas A. Schatz
President
Council for Citizens Against Government
Waste

Jeffrey Mazzella
President
Center for Individual Freedom

Seton Motley
President
Less Government

Grover Norquist
President
Americans for Tax Reform

Katie McAuliffe
Executive Director
Digital Liberty

Phil Kerpen
President
American Commitment

Judson Phillips
President
Tea Party Nation

Jonathan Bydlak
President
Coalition to Reduce Spending

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