Existing law vests the Public Utilities Commission with regulatory authority over public utilities. Pursuant to its existing authority, the commission supervises administration of the states telecommunications universal service programs, including, among others, the California Advanced Services Fund (CASF). Existing law requires the commission to develop, implement, and administer the CASF program to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies. Existing law requires the commission to establish specified accounts within the CASF, including, among other accounts, the Broadband Infrastructure Grant Account and the Federal Funding Account.

Existing federal law, the Infrastructure Investment and Jobs Act of 2021, establishes the federal Broadband Equity, Access, and Deployment Program (BEAD Program). Under that act, Congress appropriated $42,450,000,000 to the Assistant Secretary of Commerce for Communications and Information to carry out the BEAD Program, under which the Assistant Secretary makes grants to states, as provided.

This bill would require the commission, in administering federal BEAD Program funds pursuant to the federal Infrastructure Investment and Jobs Act of 2021, to follow federal guidelines, as defined. Except as provided, the bill would prohibit the commission from imposing any additional rules, processes, procedures, prohibitions, funding prioritizations, or eligibility criteria on any applicant, as defined, that are not explicitly required by the federal guidelines. The bill would require the commission, in exercising any discretion in adopting rules, processes, and procedures to administer BEAD Program funds, to adopt rules, processes, and procedures that, among other things, use the most robust, granular, and accurate broadband availability data. The bill would require the commission to follow certain timelines, including, among other timelines, by requiring the commission to post a copy of the initial proposal submitted by the commission to the National Telecommunications and Information Administration on its internet website at least 45 days before the submission of the initial proposal, as provided.

This bill would require the commission to require require, consistent with federal guidelines, each grant applicant awarded BEAD Program funds to offer at least one low-cost broadband service option by satisfying at least 5 criteria, including, among other criteria, by offering subscription plans based on nationwide pricing, as specified. The bill would require the commission to establish an extremely high cost threshold, as required by the federal guidelines. The bill would authorize the commission to use state funds to assist an applicant with meeting matching fund requirements established by the federal guidelines and would require the commission to only authorize the use of state funds for that purpose on tribal lands, for projects submitted by or in conjunction with a tribe, or in project areas that exceed the extremely high cost threshold. option, as defined. The bill would require the commission to approve or deny a completed application within 180 days after deeming an application complete and would require the commission to develop a plan for addressing the middle-class affordability of broadband services, as provided. The bill would prohibit an applicant from imposing any surcharges or recurring fees beyond those approved by the commission on a low-cost broadband service option, as specified.

This bill would require the commission, on or before January 10, 2024, to submit a written report to the Assembly Committee on Communications and Conveyance and the Senate Committee on Energy, Utilities, and Communication that contains certain information, including, among other information, an assessment of the feasibility of combining the Infrastructure Grant Account, the Federal Funding Account, and the BEAD Program into one last-mile broadband program. The bill would require the above-mentioned provisions to only be implemented to the extent that they do not conflict with federal law. The bill would also make related findings and declarations.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime. Because a violation of an order or decision of the commission implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities. Pursuant to its existing authority, the commission supervises administration of the states telecommunications universal service programs, including, among others, the California Advanced Services Fund (CASF). Existing law requires the commission to develop, implement, and administer the CASF program to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies. Existing law requires the commission to establish specified accounts within the CASF, including, among other accounts, the Broadband Infrastructure Grant Account and the Federal Funding Account.

This bill would require the commission, in administering federal Broadband Equity, Access, and Deployment BEAD Program funds pursuant to the federal Infrastructure Investment and Jobs Act, to use processes and procedures that are consistent with guidelines adopted by the National Telecommunications and Information Administration for the use of the program funds. The Act of 2021, to follow federal guidelines, as defined. Except as provided, the bill would prohibit the commission from imposing any additional rules, processes, procedures, prohibitions, funding prioritizations, or eligibility criteria on any applicant applicant, as defined, that are not consistent with or explicitly required by the federal guidelines. The bill would require the commission, in exercising any discretion in adopting rules, processes, and procedures to administer program BEAD Program funds, to aim to adopt rules, processes, and procedures that, among other things, use the most robust, granular, and accurate broadband availability data. The bill would authorize the commission to require applicants to commit to affordability requirements that are consistent with and do not exceed affordability requirements set by the commission for similar programs as of the enactment of the bill. The bill would require the commission to follow certain timelines, including, among other timelines, by requiring the commission to post a copy of the initial proposal submitted by the commission to the National Telecommunications and Information Administration on its internet website at least 45 days before the submission of the initial proposal, as provided.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime. Because a violation of an order or decision of the commission implementing this bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities. Pursuant to its existing authority, the commission supervises administration of the states telecommunications universal service programs, including, among others, the California Advanced Services Fund (CASF). Existing law requires the commission to develop, implement, and administer the CASF program to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and the substantial social benefits of advanced information and communications technologies. Existing law requires the commission to establish specified accounts within the CASF, including, among other accounts, the Broadband Infrastructure Grant Account and the Broadband Adoption Account.

This bill would state the intent of the Legislature to enact subsequent legislation related to broadband communications.

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 662 (Boerner) - Federal Broadband Equity, Access, and Deployment Program funds: administration

Bill Summary:

This bill would establish requirements for the California Public Utilities Commission (CPUC) administration of federal broadband funds under the Broadband Equity, Access and Deployment (BEAD) program, and would prohibit the CPUC from taking any actions to administer the BEAD program that are not specified in this bill.

Fiscal Impact:

• The CPUC estimates one-time costs of $700,000 spread over two years (ratepayer funds) to conduct time-limited proceeding activity, including an Action Plan, Digital Equity Plan, and Initial Proposal, as well as to develop a plan for addressing middle class broadband service affordability. The CPUC notes that, o the extent this bill requires program modifications that are not included in the CPUC’s ongoing BEAD rulemaking, additional staff resources would be needed to manage coordination among competing timelines and requirements between the federal guidelines and the bill. The CPUC also notes that this bill would likely result in future unknown IT project costs to be determined during the California Department of Technology Project Approval Lifecycle process.

Background:

BEAD provides additional broadband infrastructure funding. The federal Infrastructure Investment and Jobs Act (IIJA) included approximately $42 billion in funding for last-mile broadband infrastructure. Under the IIJA, states’ allocations of BEAD funding are based on each state’s share of the nation’s households that remain unserved by broadband infrastructure. Since the enactment of the IIJA, federal agencies and stakeholders have been analyzing broadband access to identify each state’s share of the BEAD funding and develop initial requirements for spending BEAD moneys. In June 2022, On June 26, 2023, the NTIA announced its BEAD funding allocations. California’s allocation is approximately $1.8 billion. Under federal guidance, states must submit their initial proposal for spending BEAD funds by December 26, 2023. California must also submit a Five-Year Action Plan for implementing the BEAD program in August 2023, and this action plan must align with the state’s initial proposal for spending its BEAD funds.

Legislative engagement on BEAD plans. The Legislature has taken an active role in shaping how broadband infrastructure moneys are spent in the state. However, federal guidelines and timelines for implementing BEAD limit the extent to which the Legislature can establish requirements that diverge from those guidelines or substantially change the initial implementation plans submitted by the CPUC to NTIA. To address the Legislature’s need for additional ongoing engagement and information about the status of BEAD implementation, this year’s Budget Act requires the CPUC to submit its initial proposal, Five-Year Action Plan, and final proposal for implementing BEAD to the Legislative Analyst’s Office (LAO) and the relevant legislative and budget committees within 10 days of submitting these documents to NTIA.

Status of the BEAD program. The CPUC is already in the process of developing rules for the BEAD program and will submit both its initial proposal and Five-Year Action Plan for implementation before this bill is enacted. While BEAD guidelines set forth certain specific requirements, the guidelines also enable states to tailor their requirements to their own needs. For example, federal BEAD guidelines require each applicant to offer and affordable plan; however, federal guidelines require the CPUC to submit a proposal for what types of plans will constitute an “affordable” plan for BEAD. As a result, the CPUC has wide latitude to determine the scope of plans that may be considered affordable. In February 2023, the CPUC opened a proceeding (R. 23-02-016) to adopt rules for implementing the BEAD program. Since April 2023, the CPUC has held a number of workshops to solicit input on BEAD.

Proposed Law:

This bill would establish requirements for the CPUC administration of federal broadband funds under the BEAD program, and would prohibit the CPUC from taking any actions to administer the BEAD program that are not specified in this bill. Specifically, this bill would:

1. Require the CPUC, in administering federal BEAD Program funds pursuant to the federal Infrastructure Investment and Jobs Act of 2021, to follow federal guidelines, as defined.
2. Except as provided, prohibit the CPUC from imposing any additional rules, processes, procedures, prohibitions, funding prioritizations, or eligibility criteria on any applicant, as defined, that are not explicitly required by the federal guidelines.
3. Require the CPUC, in exercising any discretion in adopting rules, processes, and procedures to administer BEAD Program funds, to adopt rules, processes, and procedures that, among other things, use the most robust, granular, and accurate broadband availability data.
4. Require the CPUC, consistent with federal guidelines, to require each grant applicant awarded BEAD Program funds to offer at least one low-cost broadband service option, as defined.
5. Require the CPUC to approve or deny a completed application within 180 days after deeming an application complete and would require the commission to develop a plan for addressing the middle-class affordability of broadband services, as provided.
6. Prohibit an applicant from imposing any surcharges or recurring fees beyond those approved by the CPUC on a low-cost broadband service option, as specified.
7. Require the CPUC, on or before January 10, 2024, to submit a report to the relevant policy committees in the Legislature that contains certain information, including, among other information, an assessment of the feasibility of combining the Infrastructure Grant Account, the Federal Funding Account, and the BEAD Program into one last-mile broadband program.
8. Require the above-mentioned provisions to only be implemented to the extent that they do not conflict with federal law.
9. Make related findings and declarations.

Related Legislation:

AB 102 (Ting, 2023) would make various changes needed to implement the Budget Act, including establishing reporting requirements for broadband infrastructure expenditures by CPUC and the California Department of Technology. The bill requires the CPUC to submit its initial proposal, Five-Year Action Plan, and final proposal for implementing BEAD to the LAO and the relevant legislative and budget committees within 10 days of submitting these documents to NTIA.

AB 2749 (Quirk-Silva, 2022) would have required the CPUC to take various steps regarding applications for the FFA, and the bill would have clarified that otherwise eligible wireless providers are eligible for grants from the FFA. The bill was vetoed.

SB 4 (Gonzalez, Chapter 671, Statutes of 2021) and AB 14 (Aguiar-Curry, Chapter 658, Statutes of 2021) revised and extended the CASF by increasing speed standards for CASF-funded infrastructure to 100/20 Mbps, expanded eligibility to communities that lack broadband service meeting federal standards, expanded local governments’ eligibility for CASF grants, and extended CASF’s operation and funding until 2032.

SB 156 (Committee on Budget, Chapter 112, Statutes of 2021) implemented broadband infrastructure spending approved in the 2021 Budget Act. The bill established the FFA within CASF, set forth funding allocations for the FFA, and created technical assistance and additional broadband funding opportunities for local governments. The bill also established the Office of Broadband and Digital Literacy and required the office to oversee the construction of a state-owned, open access middle mile broadband network.

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: Hearing Date: 7/10/2023

SUBJECT:

DIGEST: This bill establishes requirements for the California Public Utilities Commission (CPUC) administration of federal broadband funds under the Broadband Equity, Access and Deployment (BEAD) program. This bill prohibits the CPUC from taking any actions to administer the BEAD program that are not specified in this bill.

ANALYSIS:

Existing law:

1. Establishes the California Advanced Services Fund (CASF), which is administered by the CPUC to fund broadband infrastructure and adoption in unserved and underserved communities. Existing law sets eligibility criteria for CASF grants, sets speed requirements for CASF-funded infrastructure, and authorizes the collection of a surcharge to fund the CASF until 2032. (Public Utilities Code §281 and §281.1)
2. Existing law establishes various accounts within the CASF to fund broadband projects, including the Infrastructure Grant Account (IGA) and the Federal Funding Account (FFA) to fund last-mile broadband infrastructure projects. Existing law allocates surcharge funds to the IGA and allocates federal funds to the FFA to fund these broadband infrastructure projects. (Public Utilities Code §281)

This bill:

1. Requires the CPUC to submit its initial proposal for administering BEAD funds to the relevant legislative policy committees 45 days before the CPUC submits the proposal to the National Telecommunication Information Administration (NTIA). This bill also requires the CPUC to begin accepting applications for BEAD-funded projects within 45 days of receiving NTIA approval for the initial plan.
2. Requires the CPUC to approve or deny a BEAD application within 180 days of either of the following: 1) the application deadline or 2) the application’s date of submittal, depending on whichever is later.
3. Requires each BEAD applicant to meet at least five of the following seven “affordability” criteria to receive approval for an application:
   1. The applicant participates in the Affordable Connectivity program, or a successor federal program.
   2. The applicant participates in the California Lifeline Program.
   3. The applicant offers one all-inclusive subscription plan providing broadband service at speeds of at least 25/3 Mbps or 100/20 Mbps. This plan may not include data caps, extra taxes, fees, or charges to the consumer. This bill requires the CPUC to set the monthly rate for this all-inclusive plan and specifies that the CPUC’s monthly rate may not be set lower than $30 per month.
   4. The applicant offers subscription plans based on nationwide pricing, with choices among multiple tiers of services and prices.
   5. The applicant offers broadband service plans that require no contract and are subject to the same acceptable use plans as other home broadband subscriptions.
   6. The applicant offers home broadband installation for free with no equipment rental fees for low-income households in the project area for three years.
   7. The applicant offers one free device to low-income households in the project area for a period of three years.
4. Authorizes the CPUC to establish additional affordability options but prohibits the CPUC from requiring applicants to comply with additional affordability options.
5. Requires the CPUC to develop a plan for addressing middle-class affordability.
6. Authorizes the CPUC to prioritize applications where the applicant commits to more than five affordability options.
7. Requires the CPUC to set an “extremely high cost” threshold for projects and requires the CPUC to consider certain cost factors when approving fiber broadband projects.
8. Prohibits the use of state moneys, including any monies in the CASF IGA as matching funds unless a project is on tribal lands or exceeds the extremely high cost threshold.
9. Requires the CPUC to submit a report by January 10, 2024, to the relevant legislative policy committees on opportunities to combine applications for multiple broadband programs and statutory changes needed to better coordinate different last-mile broadband funding programs.
10. Prohibits the CPUC from adopting any rules, processes, procedures, prohibitions, funding prioritizations, or eligibility criteria that are not specified in this bill or required by federal guidelines.

Background

BEAD provides additional broadband infrastructure funding. The federal Infrastructure Investment and Jobs Act (IIJA) included approximately $42 billion in funding for last-mile broadband infrastructure. Under the IIJA, states’ allocations of BEAD funding are based on each state’s share of the nation’s households that remain unserved by broadband infrastructure. Since the enactment of the IIJA, federal agencies and stakeholders have been analyzing broadband access to identify each state’s share of the BEAD funding and develop initial requirements for spending BEAD moneys. In June 2022, On June 26, 2023, the NTIA announced its BEAD funding allocations. California’s allocation is approximately $1.8 billion. Under federal guidance, states must submit their initial proposal for spending BEAD funds by December 26, 2023. California must also submit a Five-Year Action Plan for implementing the BEAD program in August 2023, and this action plan must align with the state’s initial proposal for spending its BEAD funds.

Legislative engagement on BEAD plans. The Legislature has taken an active role in shaping how broadband infrastructure moneys are spent in the state. However, federal guidelines and timelines for implementing BEAD limit the extent to which the Legislature can establish requirements that diverge from those guidelines or substantially change the initial implementation plans submitted by the CPUC to NTIA. To address the Legislature’s need for additional ongoing engagement and information about the status of BEAD implementation, this year’s Budget Act requires the CPUC to submit its initial proposal, Five-Year Action Plan, and final proposal for implementing BEAD to the Legislative Analyst’s Office (LAO) and the relevant legislative and budget committees within 10 days of submitting these documents to NTIA. This bill would also require the CPUC to submit its initial proposal to the relevant legislative policy committees 45 days before the CPUC submits this proposal to NTIA. However, the CPUC may submit its initial proposal before this bill is enacted.

Building the plane while landing it? This bill establishes a set of requirements for the CPUC’s administration of BEAD funding while prohibiting the CPUC from adopting any implementation steps that are not included in this bill or in federal guidelines for the BEAD program. However, the CPUC is already in the process of developing rules for the BEAD program and will submit both its initial proposal and Five-Year Action Plan for implementation before this bill is enacted. While BEAD guidelines set forth certain specific requirements, the guidelines also enable states to tailor their requirements to their own needs. For example, federal BEAD guidelines require each applicant to offer and affordable plan; however, federal guidelines require the CPUC to submit a proposal for what types of plans will constitute an “affordable” plan for BEAD. As a result, the CPUC has wide latitude to determine the scope of plans that may be considered affordable. In February 2023, the CPUC opened a proceeding (R. 23-02-016) to adopt rules for implementing the BEAD program. Since April 2023, the CPUC has held a number of workshops to solicit input on BEAD. This bill may establish requirements that are contrary to those developed pursuant to the stakeholder workshops conducted by the CPUC. It is unclear how the CPUC could incorporate the all changes required by this bill and meet deadlines to submit its implementation plans to NTIA.

Need for amendments. As currently written, this bill establishes BEAD implementation requirements that may require revisions to plans that the CPUC is already in the process of developing with stakeholders. To the extent that the author and committee wish to adopt BEAD implementation requirements while limiting the bill’s impact to deadlines for submitting implementation plans, the author and committee may wish to amend this bill to do the following:

• Clarify that the CPUC must act on a BEAD funding application within 180 days of deeming the application complete.
• Delete provisions of this bill specifying the types of affordable plan criteria an applicant must offer and instead clarify that the CPUC must adopt at least one affordable option pursuant to the federal guidelines.
• Clarify that applicants may not add surcharges or recurring fees to an affordable plan, unless otherwise permitted by the federal guidelines.
• Clarify provisions requiring the CPUC to develop a plan to address the middle-class affordability of broadband services.
• Delete provisions requiring the CPUC to set an extremely high cost threshold and specifying the criteria for setting that threshold.

Prior/Related Legislation

AB 102 (Ting, 2023) makes various changes needed to implement the Budget Act, including establishing reporting requirements for broadband infrastructure expenditures by CPUC and the California Department of Technology. The bill requires the CPUC to submit its initial proposal, Five-Year Action Plan, and final proposal for implementing BEAD to the LAO and the relevant legislative and budget committees within 10 days of submitting these documents to NTIA. The bill is currently in the enrollment process.

AB 2749 (Quirk-Silva, 2022) would have required the CPUC to take various steps regarding applications for the FFA, and the bill would have clarified that otherwise eligible wireless providers are eligible for grants from the FFA. The bill was vetoed.

SB 4 (Gonzalez, Chapter 671, Statutes of 2021) and AB 14 (Aguiar-Curry, Chapter 658, Statutes of 2021) revised and extended the CASF by increasing speed standards for CASF-funded infrastructure to 100/20 Mbps, expanded eligibility to communities that lack broadband service meeting federal standards, expanded local governments’ eligibility for CASF grants, and extended CASF’s operation and funding until 2032.

SB 156 (Committee on Budget, Chapter 112, Statutes of 2021) implemented broadband infrastructure spending approved in the 2021 Budget Act. The bill established the FFA within CASF, set forth funding allocations for the FFA, and created technical assistance and additional broadband funding opportunities for local governments. The bill also established the Office of Broadband and Digital Literacy and required the office to oversee the construction of a state-owned, open access middle mile broadband network.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

None received

OPPOSITION:

#OaklandUndivided

California Alliance for Digital Equity
California Community Foundation

Common Sense Media

Electronic Frontier Foundation

Media Alliance

Michelson Center for Public Policy

NextGen California

Rural County Representatives of California

The Children’s Partnership

The Greenlining Institute

The Utility Reform Network

ARGUMENTS IN SUPPORT: According to the author:

Addressing broadband connectivity for unserved and underserved Californians continues to be a top priority for state government. While we have existing state programs established by the Legislature to expand broadband infrastructure, BEAD is a federal program that could potentially circumvent any consultation with the Legislature and the legislative process. With potentially billions of dollars that will be awarded to California and administered by the California Public Utilities Commission, it is imperative to adopt requirements for the CPUC to follow. Without any guardrails for this funding, the CPUC could potentially impose requirements and procedures for accessing the funds that are beyond what is necessary or reasonable. Instead, this bill would require the CPUC to strictly follow federal guidelines and to the extent any discretion exists, aim to adopt California specific rules that reduce barriers to participation.

ARGUMENTS IN OPPOSITION: Opponents argue that this bill is unnecessary, inflexible and may conflict with federal guidance to states for the BEAD program. In opposition, The Utility Reform Network (TURN) states:

The BEAD Program can significantly advance the promise of 21st-century high-speed internet access for all Californians. However, AB 662 introduces uncertainty in a dynamic process currently underway. The bill would effectively surrender the state’s partnership role and potentially interrupt, delay, or even halt the state’s ability to meet the state’s unique broadband needs and aggressive NTIA timelines. For the reasons stated above, the Committee should not advance AB 662.

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ASSEMBLY THIRD READING

ATR Bill Id:AB 662

Author:(Boerner)

As Amended Ver:March 9, 2023

Majority vote

SUMMARY

This bill would require the California Public Utilities Commission (CPUC) to strictly follow federal guidelines established by the National Telecommunications and Information Administration (NTIA) for use of federal Broadband Equity, Access, and Deployment (BEAD) Program funds.

Major Provisions

1. Defines "federal guidelines" to mean guidelines adopted by the National Telecommunications and Information Administration for administration of the program funds.
   1. Defines "program funds" to mean federal Broadband Equity, Access, and Deployment Program funds.
2. Requires the CPUC, in administering the program funds, to use the processes and procedures that are consistent with the federal guidelines.
3. Prohibits the CPUC from imposing any additional rules, processes, procedures, prohibitions, funding prioritizations, or eligibility criteria on any applicant that are not consistent with or explicitly required by the federal guidelines.
4. Requires the CPUC, in exercising any discretion in adopting rules, to aim to adopt rules, processes, and procedures that accomplish all of the following:
   1. Simplify the application process and minimize the levels of additional review for applications that otherwise meet the minimum financial, technological, and other requirements of the federal guidelines.
   2. Maximize the availability of federal funds available to California.
   3. Use the most robust, granular, and accurate broadband availability data.
5. Authorizes the CPUC to require applicants to commit to affordability requirements that are consistent with and do not exceed existing affordability requirements set by the CPUC for similar programs as of the enactment of this bill.

COMMENTS

1. BEAD Program Background. In November 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act (IIJA) into law. Among many other provisions, the law established the Broadband Equity, Access, and Deployment (BEAD) Program. BEAD dedicates $42.5 billion to the states to construct broadband networks, establish subsidies to offset the cost of internet service for lower-income households, and create programs to provide end users with the devices and training they need to use the new and upgraded networks. The BEAD Program also marks the first time the federal government is providing grants to states specifically for these purposes. Recent estimates of California's share of the money have varied, the California Public Utilities Commission has estimated a range of between $900-million to $1.1 billion dollars.

Structured as block grants to states, the BEAD program rules include requirements—such as ongoing engagement with local stakeholders and marginalized communities, higher speed and reliability standards, and data collection to assess usage and impact of program funds—that are designed to correct some shortcomings of prior federal policy and establish consistency across states. Although much of the program design for administration of BEAD funds has been determined by NTIA in their Notice of Funding Opportunity (NOFO), states have some discretion with implementing the program. For example, states can impose conditions on recipients of grants, or use their own data for the challenge process and accept different data than the Federal Communications Commission (FCC) to potential challenge provider data. Similarly, states are permitted to adopt their own affordability guidelines that go above and beyond the bare minimum requirements in the NOFO. The additional flexibility will be important for states like California that will likely need additional measures to keep broadband affordable in such a high cost state.

1. The Governor had unilateral power to name CPUC as the administrator of BEAD funds. Under the statutory framework of the BEAD program, the Governor of each state seeking BEAD funds had the authority to name the state administrator for their state's BEAD funds. On July 1, 2022, Governor Gavin Newsom designated the CPUC as the administrator of the BEAD Program for California. While this selection was reasonable considering the CPUC's experience running the California Advanced Services Fund (CASF), the decision did not provide any role for consultation with the Legislature. Unlike the California Advanced Services Fund (CASF), there is also no state statutory framework to guide implementation of BEAD funds. In effect, the Legislature has been left with no formalized role to shape the future of the BEAD program.

By establishing requirements for the CPUC to follow, this bill would create more certainty around implementation of the BEAD Program. Additionally, this bill would explicitly require the CPUC to follow the funding requirements set by NTIA. To the extent there is any discretion in administering the funds, this bill would require the CPUC to implement rules that favor efficiency and simplicity rather than complexity.

1. CPUC proceeding to establish BEAD rules. In February 2023 the CPUC initiated a new rulemaking process (proceeding) to develop rules to determine grant funding, eligibility, and compliance for BEAD Program funds. The proceeding will develop rules that cover a breadth of important issues, such as establishing parameters to define extremely high-cost areas, project prioritization, rules for the application challenge process, establishing applicant match requirements, ministerial review, and other grant requirements. This bill would work in tandem with that process, to ensure the final rules adopted by the CPUC reflect the intent of the Legislature. Enacting requirements for the CPUC to follow in adopting rules for the BEAD program is especially important considering recent experiences with the California Advanced Services Fund program. Specifically, some of the processes and procedures adopted by the CPUC – such as their prioritizations and maps – have caused delay. Taking lessons learned from that program, this bill would require the CPUC to implement a more simplified application review process that minimizes barriers to awarding funding.

According to the Author

"Addressing broadband connectivity for unserved and underserved Californians continues to be a top priority for state government. While we have existing state programs established by the Legislature to expand broadband infrastructure, BEAD is a federal program that could potentially circumvent any consultation with the Legislature. With potentially a billion dollars that will be awarded to California and administered by a state agency, the California Public Utilities Commission, it is imperative to adopt requirements for the CPUC to follow. Without any guardrails for this funding, the CPUC could potentially impose requirements and procedures for accessing the funds that are beyond what is necessary or reasonable. Instead, this bill would require the CPUC to strictly follow federal guidelines and to the extent any discretion exists, aim to adopt California specific rules that reduce barriers to participation."

Arguments in Support

California's Independent Telecommunications Companies (CITC) argue that the bill would promote the efficient administration of the BEAD Program. They argue that the bill provides important guidelines for the CPUC's rulemaking for the BEAD program, which should expedite the process of granting the federal funds. This bill directs the CPUC to conform to the established federal guidelines and avoid creating different or additional requirements for grant applicants.

Arguments in Opposition

No opposition on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. No state costs.
2. Significant fiscal effects because it constrains the CPUC's ability to administer BEAD funds.

VOTES

ASM COMMUNICATIONS AND CONVEYANCE: 13-0-0

YES: Boerner Horvath, Jim Patterson, Bonta, Davies, Garcia, Holden, Hoover, Low, Maienschein, Papan, Luz Rivas, Rodriguez, Weber

ASM APPROPRIATIONS: 15-0-1

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: March 9, 2023

CONSULTANT: Emilio Perez / C. & C. / (916) 319-2637 FN: 0000733

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 662

Author:(Boerner Horvath) – As Amended Ver:March 9, 2023

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill generally constrains the California Public Utilities Commission’s (CPUC’s) administration of federal Broadband Equity, Access and Deployment Program (BEAD) funds.

Specifically, this bill directs the CPUC, in administering BEAD funds, to use processes and procedures that are consistent with federal guidelines adopted by the National Telecommunications and Information Administration (NTIA) and to not impose any additional rules, processes, procedures, prohibitions, funding prioritizations or eligibility criteria on any applicant that are not consistent with or explicitly required by the federal guidelines.

The bill further directs the CPUC, in exercising any discretion in adopting rules, processes, and procedures applicable to its administration of BEAD funds, to aim to adopt rules, processes and procedures that:

1. Simplify the application process and minimize the levels of additional review for applications that otherwise meet the minimum financial, technological and other requirements of the federal guidelines.
2. Maximize the availability of federal funds available to California.
3. Use the most robust, granular and accurate broadband availability data.

The bill authorizes the CPUC, preceding conditions notwithstanding, to require applicants to commit to affordability requirements that are consistent with and do not exceed existing affordability requirements set by the CPUC for similar existing programs.

FISCAL EFFECT:

No state costs.

Nonetheless, this bill is a candidate for the committee’s suspense file because it constrains the CPUC’s ability to administer BEAD funds, which is, in itself, a significant fiscal effect.

COMMENTS:

BEAD is part of the federal Infrastructure Investment and Jobs Act of 2021 (IIJA). BEAD provides $42.45 billion to expand high-speed internet access by funding planning, infrastructure deployment and adoption programs in all 50 states and in territories of the United State. BEAD is administered at the federal level by NTIA, which plans to allocate BEAD funds to the states and territories based on the share of unserved locations within each state and territory, generally in accordance with the broadband maps created by the Federal Communications Commission. According to the CPUC, California will likely receive around $1 billion in BEAD funds.

Consistent with authority granted by the IIJA, Governor Newsom, on July 1, 2022, charged the CPUC with administering BEAD funds in California. On December 20, 2022, the Biden Administration awarded $4.9 million in BEAD initial planning funds to the CPUC, as well as $4 million to the California Department of Technology. On February 22 of this year, the CPUC announced the beginning of a process by which the CPUC will develop rules to determine grant funding, eligibility and compliance for funds distributed to California under BEAD. CPUC President Alice Reynolds describes the rulemaking efforts as:

An in-depth public engagement process to develop the roadmap for how these funds will be used in California. I look forward to collaborating with stakeholders across the state, including local governments, tribes, regional broadband consortia, digital equity advocates, labor organizations, and Internet service providers. This outreach is essential and will ensure we are using these funds as effectively and equitably as possible to build sustainable networks that will offer future-proof, reliable, and affordable service to unserved and underserved regions of the state.

This bill seems to be a response to frustration with the pace at which the CPUC has distributed other federal funds to expand broadband infrastructure and service in California. More specifically, the CPUC administers the Federal Funds Account, as subaccount of the California Advanced Services Fund, the statutory purpose of which is to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation and the substantial social benefits of advanced information and communications technologies.

In 2021, the Legislature created the Federal Funds Account to receive nearly $2 billion made available to California by the American Rescue Plan Act (ARPA) to build last-mile broadband projects in the state. Federal rules require California broadband projects funded by ARPA be completed by December 31, 2026. The CPUC has spent many months developing rules, guidelines and materials—including maps of priority areas for funding. However, the CPUC has yet to award a grant from the Federal Funds Account.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: March 29, 2023

ASSEMBLY COMMITTEE ON COMMUNICATIONS AND CONVEYANCE

Tasha Boerner Horvath, Chair

ABPCA Bill Id:AB 662 (

Author:Boerner Horvath) – As Amended Ver:March 9, 2023

SUBJECT: Federal Broadband Equity, Access, and Deployment Program funds: administration

SUMMARY: This bill would require the California Public Utilities Commission (CPUC) to strictly follow federal guidelines established by the National Telecommunications and Information Administration (NTIA) for use of federal Broadband Equity, Access, and Deployment (BEAD) Program funds. Specifically, this bill:

1. Defines “federal guidelines” to mean guidelines adopted by the National Telecommunications and Information Administration for administration of the program funds.
   1. Defines “program funds” to mean federal Broadband Equity, Access, and Deployment Program funds.
2. Requires the CPUC, in administering the program funds, to use the processes and procedures that are consistent with the federal guidelines.
3. Prohibits the CPUC from imposing any additional rules, processes, procedures, prohibitions, funding prioritizations, or eligibility criteria on any applicant that are not consistent with or explicitly required by the federal guidelines.
4. Requires the CPUC, in exercising any discretion in adopting rules, to aim to adopt rules, processes, and procedures that accomplish all of the following:
   1. Simplify the application process and minimize the levels of additional review for applications that otherwise meet the minimum financial, technological, and other requirements of the federal guidelines
   2. Maximize the availability of federal funds available to California.
   3. Use the most robust, granular, and accurate broadband availability data.
5. Authorizes the CPUC to require applicants to commit to affordability requirements that are consistent with and do not exceed existing affordability requirements set by the CPUC for similar programs as of the enactment of this bill.

EXISTING LAW:

1. Existing federal law establishes the BEAD Program, under the Administration of the NTIA, to provide $42.45 billion to expand high-speed internet access by funding planning, infrastructure deployment and adoption programs in all 50 states.

FISCAL EFFECT: Unknown

COMMENTS:

1. BEAD Program Background. In November 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act (IIJA) into law. Among many other provisions, the law established the Broadband Equity, Access, and Deployment (BEAD) Program, the federal government’s most ambitious investment in high-speed, affordable internet to date. BEAD dedicates more than $42 billion to construct broadband networks, establish subsidies to offset the cost of internet service for lower-income households, and create programs to provide end users with the devices and training they need to use the new and upgraded networks. The BEAD Program also marks the first time the federal government is providing grants to states specifically for these purposes. Recent estimates of California’s share of the money have varied, with recent estimates from the California Public Utilities Commission ranging from between $900-million to $1.1-billion dollars.

As block grants to states, BEAD includes requirements—such as ongoing engagement with local stakeholders and marginalized communities, higher speed and reliability standards, and data collection to assess usage and impact of program funds—that are designed to correct some shortcomings of prior federal policy and establish consistency across states. Although much of the program design for administration of BEAD funds has been determined by NTIA in their Notice of Funding Opportunity (NOFO), states do have flexibility in implementing the program. For example, states can use their own data for the challenge process and accept different data than the Federal Communications Commission (FCC) to potential challenge provider data. Similarly, states are permitted to adopt their own affordability guidelines that go above and beyond the bare minimum requirements in the NOFO. This could be important for states like California that will likely need additional measures to keep broadband affordable in such a high cost state.

1. The Governor had unilateral power to name CPUC as the administrator of BEAD funds. Under the statutory framework of the BEAD program, the Governor of each state seeking BEAD funds had the authority to name the state administrator for their state’s funds. On July 1, 2022, Governor Gavin Newsom designated the CPUC as the administrator of the BEAD Program for California. While this selection was reasonable considering the CPUC’s experience running the California Advanced Services Fund (CASF), the decision did not provide any role for consultation with the Legislature. Furthermore, unlike the CASF program which has a statutory framework to administer CASF funds, no such requirement exists in state law for BEAD. Without legislation, the Legislature is left with no formalized role to shape the future of the BEAD program.

To the extent that NTIA has set clear guidelines for administering the funds, this bill would explicitly require the CPUC to follow those funding requirements. To the extent there is any flexibility in administering the funds, this bill would require the CPUC to implement rules that favor efficiency and simplicity rather than complexity and analysis.

1. 5-Year Broadband Plan. On December 20, 2022, the Biden Administration awarded the CPUC $4.9 million for BEAD Initial Planning Funds. Pursuant to the BEAD statute, a state that receives Initial Planning Funds must submit to NTIA a Five-Year Action Plan that establishes the state’s broadband goals and priorities. The Five-Year Action Plan is intended to provide a foundation for alignment with future aspects of the program, including a final proposal for using the funds. According to the CPUC, the 5-Year Action plan is due to NTIA at the end of August 2023.
2. CPUC proceeding to establish BEAD rules. In February the CPUC initiated a new rulemaking process (proceeding), develop rules to determine grant funding, eligibility, and compliance for BEAD Program funds. The proceeding will develop rules that cover a breadth of important issues, such as establishing parameters to define extremely high-cost areas, project prioritization, rules for the application challenge process, establishing applicant match requirements, ministerial review, and other grant requirements. This bill would work in tandem with that process, to ensure the final rules adopted by the CPUC reflect the intent of the Legislature. Enacting requirements for the CPUC to follow in adopting rules for the BEAD program is especially important considering recent experiences with the FFA program. Specifically, some of the processes and procedures adopted by the CPUC – such as the priority areas map – have cost a great deal of time to implement and delayed funding being awarded. Taking lessons learned from that program, this bill would require the CPUC to implement a more simplified application review process that minimizes barriers to awarding funding.

REGISTERED SUPPORT / OPPOSITION:

Support

California Independent Telephone Companies

Opposition

None on file

Analysis Prepared by: Emilio Perez / C. & C. / (916) 319-2637