SB2527 SD2

SECTION 1. The legislature finds that the economic and business incentives to deploy broadband infrastructure may be insufficient to economically justify providing full access to broadband services in low-density, rural locations and other unserved and underserved areas of the State where the unit costs of providing service may not provide an adequate return on investment.

Economically feasible deployment of infrastructure for high-speed broadband across the State, especially to low population density areas, presents a more formidable challenge than faced by most states, which are part of one continental land mass. The unique geography of the State prevents the use of less costly options for connectivity.

Access to broadband services in unserved and underserved areas of the State would enhance Hawaii's overall economic development, education, health care, and emergency services. Making grants available for the deployment of broadband infrastructure to unserved and underserved areas would encourage new investment in broadband infrastructure and move the State toward full access to broadband services.

The legislature strongly supports efforts to improve access to broadband services for residents, consumers, and businesses across the State. Although broadband coverage in the State is widespread, additional investment can be made to meet access needs in rural communities.

The purpose of this Act is to facilitate the deployment of broadband infrastructure in unserved and underserved areas of the State by identifying and addressing any remaining obstacles to full deployment of broadband infrastructure to all areas of Hawaii. More specifically, this Act establishes the broadband infrastructure grant program to award grants to extend the deployment of facilities used to provide broadband service to unserved and underserved areas of the State.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to title 13 to be appropriately designated and to read as follows:

"Chapter

broadband infrastructure grant program

§ -1 Definitions. As used in this chapter, unless the context requires otherwise:

"Broadband infrastructure" shall have the same meaning as in section 440J-1.

"Broadband service" shall have the same meaning as "broadband access or broadband service" in section 440J-1.

"Department" means the department of business, economic development, and tourism.

"Program" means the broadband infrastructure grant program established by this chapter.

"Project" means a proposed deployment of broadband infrastructure set forth in an application for grant funding authorized under this chapter.

"Project area" means a census block or aggregation of adjacent census blocks proposed to be covered in an application for grant funding authorized under this chapter.

"Underserved area" means a project area with access to broadband service that the minimum upload and download speeds are less than double the minimum upload and download speeds required for broadband service.

"Unserved area" means a project area without access to broadband service.

§ -2 Establishment of the broadband infrastructure grant program. There is established the broadband infrastructure grant program within the department of business, economic development, and tourism for administrative purposes. The department shall receive and review grant applications and may award grants for eligible projects pursuant to the program.

§ -3 Eligible projects. The department may award grants for eligible projects; provided that on the date the application is submitted, the area to be served by the project shall be an unserved area or underserved area; provided further that no funds may be used to support any project involving the upgrade of an existing broadband plant by an applicant.

§ -4 Eligible applicants. To be eligible for a grant, an applicant shall:

(1) Commit to paying a minimum of twenty per cent of the total project costs out of the applicant's own funds; provided that no portion of these funds shall be derived from federal or state government grants, loans, or subsidies;

(2) Be any non-governmental entity with demonstrated experience in providing broadband service, broadband infrastructure, or other communication services to residential customers within the State; and

(3) Commit to complying with net neutrality principles as defined by Executive Order No. 18-02.

§ -5 Applications. (a) The department shall establish an annual time period to commence an open process for submission of applications for funding under the program. The time period for submission shall be no less than sixty days and no more than ninety days.

(b) The form of the application shall be as prescribed by the department and shall include submission of:

(1) Evidence demonstrating the applicant's experience and ability to build, operate, and manage broadband infrastructure serving residential customers;

(2) A description of the project area, including a list of census blocks covered by the proposed deployment. If a census block included in a project is partially served by a provider of broadband service, the application shall include a:

(A) Description of the portions of the census block that are served;

(B) Description of the portions of the census block that constitute an unserved area or underserved area; and

(C) Certification that no portion of the grant provided by the program for the project shall be used to extend or deploy facilities to any already-served households;

(3) A description of the broadband infrastructure that is proposed to be deployed, including facilities, equipment, and network capabilities, including minimum speed thresholds;

(4) Evidence, including certification from the applicant, demonstrating the unserved or underserved nature of the project area;

(5) The number of households in each:

(A) Unserved area that would gain access to broadband service; and

(B) Underserved area that would gain access to broadband service with minimum upload and download speeds that are equal to or more than double the minimum upload and download speeds required for broadband service,

as a result of the grant;

(6) The total cost and timeline for completion of the project;

(7) The amount of matching funds that the applicant proposes to contribute and a certification that no portion of the matching funds are derived from any federal or state government grants, loans, or subsidies;

(8) Evidence demonstrating the economic and commercial feasibility of the project;

(9) A list of all government authorizations, permits, and other approvals required for the project and a timeline for the applicant's acquisition of the approvals; and

(10) Any other information required by the department.

§ -6 Review of applications; approval. (a) Within five business days following the last day of the time period for submission of applications to the program, the department shall make all of the applications available for review in a publicly available electronic file posted on the department's website.

(b) A broadband service provider that provides service within or directly adjacent to a proposed project area may submit a written challenge to any application within forty-five days of the department making the applications available for review pursuant to subsection (a). The challenge may:

(1) Dispute an applicant's certification that a proposed project area is an unserved area or underserved area or that no other federal or state programs provide funding that is available to the applicant for a project for which program support is sought; or

(2) Attest to the challenging provider's existing or planned provision of broadband service within the applicant's proposed project area.

(c) In reviewing applications and any accompanying challenge, the department shall review the proposed project areas to ensure that all awarded funds are used to deploy broadband infrastructure to unserved areas or underserved areas.

(d) The department shall award program grants based upon a scoring system that shall be released to the public at least thirty days prior to the first day of the time period for submission of applications. The scoring system shall give the highest weight or priority to the following specific criteria:

(1) Projects proposing to serve a larger geographic area, whether an unserved area or underserved area;

(2) Applicants with more experience and technical ability to successfully deploy and provide broadband service and more financial resources available to finance the project;

(3) Projects for which fewer government funds and less support are necessary to deploy broadband infrastructure in an economically feasible manner;

(4) Projects with a higher amount of matching funds proposed to be committed by the applicant;

(5) Projects in unserved areas, rather than those in underserved areas;

(6) High service speed thresholds proposed in the application and high scalability of the broadband infrastructure proposed to be deployed;

(7) Applicants with a high ability to leverage nearby or adjacent broadband infrastructure to facilitate the proposed deployment of service to households;

(8) Projects that do not duplicate any existing broadband infrastructure in the project area; and

(9) Other factors the department determines to be reasonable and appropriate, consistent with the purpose of facilitating the deployment of broadband infrastructure to unserved and underserved areas.

(e) Each grant award shall include a reasonable timeframe to complete the project.

§ -7 Departmental authority. The department may:

(1) Following notice and an opportunity to cure, require disgorgement of grant funds in response to an applicant's pattern of failure to build-out a project area in accordance with the timelines and milestones set forth in its application;

(2) Consider an applicant's financial ability to complete the project proposed in an application;

(3) Make reasonable requests for information necessary for the oversight and administration of any project funded pursuant to this chapter; and

(4) Impose any new or additional regulatory requirements on grant recipients, through grant agreements or any other mechanism, in addition to the program implementation rules expressly authorized in this chapter.

§ -8 Rules. (a) The department shall adopt rules pursuant to chapter 91 to effectuate the purposes of this chapter.

(b) The rules shall:

(1) Include reasonable oversight and reporting provisions to ensure that grant moneys are used as intended; and

(2) Not impose any financial penalty or liquidated damages provisions, or provisions that are not reasonably related to the deployment of broadband infrastructure on the State in accordance with this chapter."

SECTION 3. Within one hundred eighty days of the approval of this Act, the department of business, economic development, and tourism shall adopt rules pursuant to chapter 91, Hawaii Revised Statutes, to implement the broadband infrastructure grant program; provided that any rules adopted pursuant to this section shall include rules regarding the submission, review, and approval of applications; administration of projects funded; and grant agreements memorializing the award of funds.

SECTION 4. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2527
THIRTIETH LEGISLATURE, 2020		S.D. 2
STATE OF HAWAII