House File 2459 - Introduced HOUSE FILE 2459 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 638) (COMPANION TO SF 2262 BY COMMITTEE ON COMMERCE) A BILL FOR An Act relating to broadband service, including matters under 1 the purview of the office of the chief information officer, 2 the empower rural Iowa broadband grant fund, and certain 3 broadband infrastructure tax exemptions, and including 4 effective date and retroactive applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5607HV (1) 88 ja/jh

H.F. 2459 Section 1. Section 8B.1, subsections 5, 13, and 14, Code 1 2020, are amended to read as follows: 2 5. “Facilitate” means a communication service provider’s 3 ability to provide broadband service at or above the download 4 and upload speeds specified in the definition of targeted 5 service area in this section or section 8B.11, subsection 6 5, paragraph “a” , if applicable, to a home, farm, school, 7 or business within a commercially reasonable time and at a 8 commercially reasonable price upon request by a consumer. 9 13. “Targeted service area” means a any of the following: 10 a. A United States census bureau census block located 11 in this state, including any crop operation located within 12 the census block, or other geographic unit the office sets 13 by rule, within which no communications service provider 14 offers or facilitates broadband service at or above the 15 download and upload speeds identified by the federal 16 communications commission pursuant to section 706 of the 17 federal Telecommunications Act of 1996, as amended. 18 b. Any geographic area, as the office sets by rule, that 19 is materially underserved by broadband service such that 20 the download and upload speeds identified by the federal 21 communications commission pursuant to section 706 of the 22 federal Telecommunications Act of 1996, as amended, of the 23 broadband service in the geographic area are not meaningfully 24 available. The office’s power to determine the geographic 25 area by rule under this paragraph includes the power to define 26 and interpret standards as to whether a geographic area is 27 materially underserved and broadband service is meaningfully 28 available. 29 14. “Underserved area” means any portion of a targeted 30 service area within which no communications service provider 31 offers or facilitates broadband service meeting the download 32 and upload speeds specified in the definition of targeted 33 service area in this section . 34 Sec. 2. Section 8B.9, subsection 5, Code 2020, is amended 35 -1- LSB 5607HV (1) 88 ja/jh 1/ 10

H.F. 2459 to read as follows: 1 5. An annual report regarding the status of broadband 2 expansion and coordination, the connecting Iowa farms, schools, 3 and communities empower rural Iowa broadband grant program 4 established under section 8B.11 , and the adequacy of the speed 5 set in the definition of targeted service area in section 8B.1 . 6 Sec. 3. Section 8B.10, subsection 1, Code 2020, is amended 7 to read as follows: 8 1. The determination of whether a communications service 9 provider offers or facilitates broadband service meeting the 10 download and upload speeds specified in the definition of 11 targeted service area in section 8B.1 shall be determined 12 or ascertained by reference to broadband availability maps 13 or data sources that are widely accepted for accuracy and 14 available for public review and comment and that are identified 15 by the office by rule. The office shall periodically make 16 renewed determinations of whether a communications service 17 provider offers or facilitates broadband service at or above 18 the download and upload speeds specified in the definition of 19 targeted service area in section 8B.1 , which shall, to the 20 extent updated maps and data sources are available at the time, 21 include making such determinations prior to each round of grant 22 applications solicited by the office pursuant to section 8B.11 . 23 Sec. 4. Section 8B.10, Code 2020, is amended by adding the 24 following new subsection: 25 NEW SUBSECTION . 3. All findings and determinations made 26 pursuant to this section shall exclude mobile wireless or 27 satellite data, capabilities, and delivery mediums. 28 Sec. 5. Section 8B.11, subsection 1, Code 2020, is amended 29 to read as follows: 30 1. The office shall administer a broadband grant program 31 designed to reduce or eliminate unserved and underserved 32 areas in the state, leveraging federal funds and public and 33 private partnerships where possible, by awarding grants to 34 communications service providers that reduce or eliminate 35 -2- LSB 5607HV (1) 88 ja/jh 2/ 10

H.F. 2459 targeted service areas by installing broadband infrastructure 1 that facilitates broadband service in targeted service areas 2 at or above the download and upload speeds specified in the 3 definition of targeted service area in section 8B.1 subsection 4 5 , in accordance with this section . 5 Sec. 6. Section 8B.11, subsection 2, paragraphs a and b, 6 Code 2020, are amended to read as follows: 7 a. A connecting Iowa farms, schools, and communities An 8 empower rural Iowa broadband grant fund is established in the 9 state treasury under the authority of the office. The fund 10 shall consist of moneys available to and obtained or accepted 11 by the office. Moneys in the fund are appropriated to the 12 office to be used for the grant program , including for the 13 administration and operation of the grant program . 14 b. The office shall use moneys in the fund to provide grants 15 to communications service providers pursuant to this section . 16 The office may use moneys in the fund to pay the costs and 17 expenses associated with the administration and operation of 18 the grant program. The office shall use moneys in the fund to 19 leverage available federal moneys if possible. 20 Sec. 7. Section 8B.11, subsection 2, Code 2020, is amended 21 by adding the following new paragraph: 22 NEW PARAGRAPH . d. Notwithstanding paragraph “c” or any 23 provision to the contrary, moneys in the fund that have been 24 awarded but not paid to a communications service provider 25 shall not revert but shall remain available to the office for 26 purposes of administering the award in a manner consistent with 27 the terms and conditions of any corresponding contract or grant 28 agreement governing the administration of the award. 29 Sec. 8. Section 8B.11, subsection 3, Code 2020, is amended 30 to read as follows: 31 3. Communications service providers may apply to the office 32 for a grant pursuant to this section for the installation 33 of broadband infrastructure that facilitates broadband 34 service in targeted service areas at or above the download 35 -3- LSB 5607HV (1) 88 ja/jh 3/ 10

H.F. 2459 and upload speeds specified in the definition of targeted 1 service area in section 8B.1 subsection 5 . The office may, 2 by rule, increase the minimum download and upload speeds 3 for grant eligibility pursuant to this section . The office 4 shall include representatives from schools, communities, 5 agriculture, industry, and other areas as appropriate to review 6 and recommend grant awards. The office shall conduct an open 7 application review process that includes the opportunity 8 for the public to submit factual information as part of a 9 validation process to address claims that a targeted service 10 area is currently served with broadband service at or above 11 the download and upload speeds specified in the definition 12 of targeted service area in section 8B.1 subsection 5 . Upon 13 completion of the validation process, the office may modify 14 a proposed targeted service area to account for information 15 received during the validation process. The office shall make 16 available a public internet site identifying all publicly 17 available information contained in the applications, the 18 members of the review committee, a summary of the review 19 committee’s recommended results, and any results of performance 20 testing conducted after the project is completed. 21 Sec. 9. Section 8B.11, subsection 4, paragraph a, 22 unnumbered paragraph 1, Code 2020, is amended to read as 23 follows: 24 The office shall award grants on a competitive basis for 25 the installation of broadband infrastructure that facilitates 26 broadband service in targeted service areas at or above the 27 download and upload speeds specified in the definition of 28 targeted service area in section 8B.1 subsection 5 , after 29 considering the following: 30 Sec. 10. Section 8B.11, subsection 4, paragraph a, 31 subparagraph (2), Code 2020, is amended to read as follows: 32 (2) The applicant’s total proposed budget for the project, 33 including the all of the following: 34 (a) The amount or percentage of local or federal matching 35 -4- LSB 5607HV (1) 88 ja/jh 4/ 10

H.F. 2459 funds, if any, and any funding obligations shared between 1 public and private entities , and the . 2 (b) The percentage of funding provided directly from the 3 applicant , including whether the applicant requested from the 4 office an amount less than the maximum amount the office could 5 award pursuant to subsection 5 and, if so, the percentage of 6 the project cost that the applicant is requesting . 7 Sec. 11. Section 8B.11, subsection 5, Code 2020, is amended 8 to read as follows: 9 5. The office shall not award a grant pursuant to this 10 section that exceeds fifteen any of the following amounts: 11 a. Thirty-five percent of the communications service 12 provider’s project cost, for projects that will result in the 13 installation of broadband infrastructure that will facilitate 14 broadband service providing a minimum download speed of one 15 hundred megabits per second and a minimum upload speed of 16 twenty megabits per second. 17 b. Fifteen percent of the communications service provider’s 18 project cost , for projects that will result in the installation 19 of broadband infrastructure that will facilitate broadband 20 service providing a minimum download speed less than one 21 hundred megabits per second but greater than or equal to the 22 download speed specified in the definition of targeted service 23 area in section 8B.1, and a minimum upload speed less than 24 twenty megabits per second but greater than or equal to the 25 upload speed specified in the definition of targeted service 26 area in section 8B.1 . 27 Sec. 12. Section 427.1, subsection 40, paragraph b, Code 28 2020, is amended to read as follows: 29 b. The exemption shall apply to the installation of 30 broadband infrastructure that facilitates broadband service 31 at or above the download and upload speeds specified in the 32 definition of targeted service area in section 8B.1 commenced 33 and completed on or after July 1, 2015, and before July 1, 34 2025, in a targeted service area, and used to deliver internet 35 -5- LSB 5607HV (1) 88 ja/jh 5/ 10

H.F. 2459 services to the public. A person claiming an exemption under 1 this subsection shall certify to the local assessor prior to 2 commencement of the installation that the installation of 3 broadband infrastructure will facilitate broadband service 4 at or above the download and upload speeds specified in the 5 definition of targeted service area in section 8B.1 within a 6 targeted service area and shall specify the current number 7 of homes, farms, schools, and businesses in the targeted 8 service area that were offered to which broadband service was 9 facilitated and the download and upload speeds available prior 10 to the broadband infrastructure installation for which the 11 exemption is claimed and the number of homes, farms, schools, 12 and businesses in the targeted service area that will be 13 offered to which broadband service will be facilitated and the 14 download and upload speeds that will be available as a result 15 of installation of the broadband infrastructure for which the 16 exemption is claimed. 17 Sec. 13. Section 427.1, subsection 40, paragraph f, 18 subparagraph (1), subparagraph division (d), Code 2020, is 19 amended to read as follows: 20 (d) Certification from the office of the chief information 21 officer pursuant to section 8B.10 that the installation will 22 facilitate broadband service at or above the download and 23 upload speeds specified in the definition of targeted service 24 area in section 8B.1 in a targeted service area. 25 Sec. 14. 2019 Iowa Acts, chapter 136, section 6, subsection 26 1, is amended to read as follows: 27 1. There is appropriated from the general fund of the state 28 to the office of the chief information officer for the fiscal 29 year beginning July 1, 2019, and ending June 30, 2020, the 30 following amount, or so much thereof as is necessary, to be 31 used for the purposes designated: 32 For deposit in the connecting Iowa farms, schools, and 33 communities empower rural Iowa broadband grant fund established 34 under section 8B.11 for a broadband grant program; and for 35 -6- LSB 5607HV (1) 88 ja/jh 6/ 10

H.F. 2459 salaries, support, maintenance, and miscellaneous purposes: 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000 2 Sec. 15. EFFECTIVE DATE. This Act, being deemed of 3 immediate importance, takes effect upon enactment. 4 Sec. 16. RETROACTIVE APPLICABILITY. The following applies 5 retroactively to July 1, 2015: 6 The section of this Act enacting section 8B.11, subsection 7 2, paragraph “d”. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill relates to broadband service, including matters 12 under the purview of the office of the chief information 13 officer, the empower rural Iowa broadband grant fund, and 14 certain broadband infrastructure tax exemptions. 15 The bill amends the definitions of “facilitate”, “targeted 16 service area”, and “underserved area” for purposes of Code 17 chapter 8B. 18 The bill amends the definition of “facilitate” to mean a 19 communication service provider’s ability to provide broadband 20 service at or above the download and upload speeds specified in 21 the definition of “targeted service area” or in Code section 22 8B.11(5), which is also amended under the bill, as described in 23 more detail below. 24 Currently, “targeted service area” is defined to mean 25 a United States census bureau census block located in 26 this state, including any crop operation located within 27 the census block, within which no communications service 28 provider offers or facilitates broadband service at or above 29 the download and upload speeds identified by the federal 30 communications commission pursuant to section 706 of the 31 federal Telecommunications Act of 1996, as amended. To this 32 definition, the bill adds as an alternative any geographic 33 area, as determined by the office of the chief information 34 officer by rule, that is materially underserved by broadband 35 -7- LSB 5607HV (1) 88 ja/jh 7/ 10

H.F. 2459 service such that the download and upload speeds identified 1 by the federal communications commission pursuant to section 2 706 of the federal Telecommunications Act of 1996, as 3 amended, of the broadband service in the geographic area are 4 not meaningfully available. The bill grants to the office 5 the power to determine what constitutes a geographic area 6 being “materially underserved” and broadband service being 7 “meaningfully available”. 8 The bill modifies the definition of “underserved area” to 9 remove language related to broadband service being offered 10 in a targeted service area. As a result, an underserved 11 area now means any portion of a targeted service area within 12 which no communications service provider facilitates broadband 13 service meeting the download and upload speeds specified in the 14 definition of targeted service area. 15 Currently, the office is to determine whether a 16 communications service provider offers or facilitates broadband 17 service at the proper download and upload speed by reference 18 to broadband availability maps or data sources that are widely 19 accepted for accuracy and available for public review and 20 comment and that are identified by the office by rule. The 21 bill changes this provision in several ways. First, the bill 22 deletes reference to a communications service provider offering 23 broadband service. Second, the bill removes the requirement 24 that the maps or data sources be widely accepted for accuracy 25 and available for public review and comment. Third, the bill 26 requires that the office’s determinations exclude mobile 27 wireless or satellite data, capabilities, and delivery mediums. 28 The bill changes the name of the connecting Iowa farms, 29 schools, and communities broadband grant fund to the empower 30 rural Iowa broadband grant fund. The bill also modifies how 31 moneys in the empower rural Iowa broadband grant fund may be 32 used. The bill permits the office to use moneys in the fund for 33 purposes of administering and operating the grant program. 34 In addition, the bill establishes that moneys in the fund 35 -8- LSB 5607HV (1) 88 ja/jh 8/ 10

H.F. 2459 that have been awarded to a communications service provider but 1 not paid shall not revert but shall remain available to the 2 office for purposes of administering the award. This provision 3 is retroactively applicable to July 1, 2015. 4 Currently, Code section 8B.11(3) allows the office, by rule, 5 to increase the minimum download and upload speeds for grant 6 eligibility under the fund. The bill deletes this provision, 7 which prevents the office from increasing the minimum download 8 and upload speeds for grant eligibility. 9 The bill adds to the factors the office is to consider 10 when determining whether to award grants from the fund. When 11 considering the applicant’s total proposed budget, in addition 12 to the factors currently considered, the office is now also 13 to consider whether the applicant requested from the office 14 an amount less than the maximum amount the office could award 15 pursuant to Code section 8B.11(5). 16 The office is currently prohibited from awarding a grant 17 from the fund that exceeds 15 percent of the communications 18 service provider’s project cost. The bill amends this 19 provision to allow for an award of up to 35 percent of 20 the communications service provider’s project cost for 21 projects that will result in the installation of broadband 22 infrastructure that will facilitate broadband service providing 23 a minimum download speed of 100 megabits per second and a 24 minimum upload speed of 20 megabits per second. The bill 25 allows for an award of up to 15 percent of the communications 26 service provider’s project cost for projects that will result 27 in the installation of broadband infrastructure that will 28 facilitate broadband service providing a minimum download speed 29 less than 100 megabits per second but greater than or equal 30 to the download speed specified in the definition of targeted 31 service area, and a minimum upload speed less than 20 megabits 32 per second but greater than or equal to the upload speed 33 specified in the definition of targeted service area. 34 The bill amends Code section 427.1(40)(b) to remove 35 -9- LSB 5607HV (1) 88 ja/jh 9/ 10

H.F. 2459 reference to the broadband service being offered, inserting 1 that the broadband service need only be facilitated. 2 Currently, Code section 427.1(40) provides that the 3 certification from the office that the installation will 4 facilitate broadband service at or above the download and 5 upload speeds specified in the definition of targeted service 6 area is pursuant to Code section 8B.10. The bill strikes the 7 reference to Code section 8B.10. 8 The bill makes conforming changes related to the change 9 in name of the fund from the connecting Iowa farms, schools, 10 and communities broadband grant fund to the empower rural Iowa 11 broadband grant fund. 12 The bill takes effect upon enactment. 13 -10- LSB 5607HV (1) 88 ja/jh 10/ 10