HB 1328
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
House Bill 1328 (Delegate Feldmark)
Economic Matters Finance
Economic Development – Broadband Providers – Joint Trenching and Fee
(Building Out Broadband Act of 2021)
This bill requires the Maryland Department of Transportation (MDOT) and units of local
government to allow joint trenching by broadband providers, as specified. MDOT and local
governments are authorized to assess fees to certain broadband providers that participate
in joint trenching; fees collected by MDOT are distributed to special funds that support
broadband development. To the extent practicable, the State must appropriate federal
funding for the purpose of improving broadband access and adoption. MDOT must adopt
regulations to implement the bill, as specified. The bill expressly authorizes local
governments to adopt policies to extend broadband access to underserved areas, contingent
on the enactment of Senate Bill 66 of 2021 or House Bill 97 of 2021. The bill’s
requirements and authorizations do not apply to a county or municipal corporation within
the Washington Suburban Sanitary District (WSSD). The bill takes effect July 1, 2021.
Fiscal Summary
State Effect: Transportation Trust Fund (TTF) expenditures increase by $186,000 in
FY 2022 for additional staff needed to administer the bill; out-year expenditures reflect
ongoing operating costs and the elimination of one-time costs. TTF expenditures and
nonbudgeted expenditures by the Maryland Transportation Authority (MDTA) may
increase to the extent that the bill results in project delays (not reflected below). Other
special fund revenues and expenditures, specifically for broadband-related special funds,
all of which are administered by the Department of Housing and Community Development
(DHCD), increase as joint trenching fees are collected and disbursed, as discussed below.
(in dollars) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
SF Revenue - - - - -
SF Expenditure $186,000 $167,700 $172,800 $179,000 $185,300
Net Effect (-) (-) (-) (-) (-)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: Revenues and expenditures increase, correspondingly, as local governments
that are not in WSSD collect and spend joint trenching fees. Local government
expenditures may increase to the extent that joint trenching results in project delays, as
discussed below.
Small Business Effect: Minimal.
Analysis
Bill Summary:
Joint Trenching
“Trenching” means a construction project in which a highway right-of-way surface is
opened or removed for the purpose of laying or installing conduit, fiber, or similar
infrastructure in excess of one mile in length. “Trenching” does not include a project for
construction or maintenance of a highway facility, including drainage or culvert work.
A unit of local government and MDOT (including the State Highway Administration
(SHA), MDTA, and the Maryland Transit Administration (MTA)) must allow joint
trenching by broadband providers on a nonexclusive and nondiscriminatory basis. MDOT
or a unit of local government may deny joint trenching if allowing it (1) will hinder or
obstruct highway safety or the construction, maintenance, operations, or related regulation
of highway facilities or (2) is not feasible because it will delay the repair or construction of
a county’s water, wastewater, electricity, or gas lines.
MDOT or a unit of local government may charge a fee to a broadband provider that
participates in joint trenching on reasonable financial terms, but may not do so for a
nonprofit broadband provider. Revenues generated from fees charged by MDOT must be
evenly distributed across funds designed for investment in broadband infrastructure, and
revenues generated from fees charged by a unit of local government must be used to
improve broadband access and adoption within that jurisdiction.
By January 1, 2022, MDOT must, after consulting with stakeholders including broadband
providers, the Maryland Association of Counties, and the Maryland Municipal League,
adopt regulations to implement the bill, including procedures for charging a fee to a
broadband provider for joint trenching (on reasonable financial terms) and procedures for
MDOT and units of local government to provide notice of upcoming trenching projects to
broadband providers.
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Other – Contingent Local Authorization
A county or municipal corporation may adopt, by ordinance or resolution, locally
appropriate policies to advance progress of infrastructure, equipment, and systems needed
to extend broadband access to underserved areas, including the waiving of certain fees and
other specified actions.
This authorization is contingent on the enactment of Senate Bill 66 or House Bill 97, which
(1) establish the Office of Statewide Broadband (OSB) and two new special funds (the
Digital Inclusion Fund and Digital Connectivity Fund) within DHCD to support the
expansion and improvement of broadband infrastructure in the State and (2) require OSB,
instead of the Department of Commerce, to administer the existing RBAF.
Current Law:
State Highway Administration
SHA is responsible for more than 5,200 miles or approximately 16,800 lane miles of road,
2,500 bridges, 3,500 small stream crossing structures, and 80 miles of sound/noise barriers
in the State. It also has responsibility for planning, designing, constructing, and maintaining
these roads and bridges to safety and performance standards while considering
sociological, ecological, and economic concerns.
Rural Broadband Assistance Fund and Rural Broadband Coordination Board
Chapter 176 of 2018 made permanent Chapter 269 of 2006, which, among other things,
established RBAF in Commerce (then the Department of Business and Economic
Development). The purpose of the fund is to assist in the establishment of broadband
communication services in rural and underserved areas of the State.
Commerce has been required to administer the fund, which consists of (1) money
appropriated in the State budget to the fund; (2) money appropriated in the State budget to
the Maryland Economic Development Assistance Fund for the purpose of assisting in the
establishment of broadband communication services in rural and underserved areas of the
State; (3) federal money allocated or granted to the fund; and (4) any other money from
any source accepted for the benefit of the fund. The fund may be used only for planning,
construction, and maintenance of broadband communication services and equipment in
rural and underserved areas and related activities. However, the fund has not received State
or federal funding since 2009.
The Rural Broadband Coordination Board must, among other responsibilities, review and
approve the disbursement of funds from RBAF and any other federal, State, and private
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financial resources that may be provided to assist the establishment of broadband
communication services in rural and underserved areas of the State.
Senate Bill 66 was signed by the Governor as emergency legislation in April 2021 and
became Chapter 74 of 2021. As a result, RBAF is now administered by OSB and DHCD.
State Fiscal Effect:
Joint Trenching Administrative Costs
The bill creates substantial new responsibilities for MDOT and particularly SHA; because
SHA is responsible for maintaining thousands of miles of State right-of-way, it is the
transportation agency likely to be most affected by the bill. Moreover, to ensure a
successful program, SHA must work with local governments to correspond and share
information with broadband providers. Due to these new responsibilities, SHA needs
additional staff. Therefore, TTF expenditures increase by $186,030 in fiscal 2022, which
assumes that staff must be in place on the bill’s July 1, 2021 effective date, to respond to
requests from broadband providers to conduct trenching. The estimate reflects the cost of
hiring two permanent full-time program managers to work with local governments, manage
the collection of fees, and generally administer the joint trenching program. This estimate
assumes that the staff provide support for other transportation agencies (such as MDTA or
MTA) as necessary and appropriate. It includes salaries, fringe benefits, one-time start-up
costs, and ongoing operating expenses.
Positions 2.0
Salaries and Fringe Benefits $174,540
Operating Expenses 11,490
Total FY 2022 TTF Administrative Expenditures $186,030
Future year expenditures reflect annual increases, employee turnover, and ongoing
operating expenses.
Potential Transportation Project Costs
MDOT advises that the bill’s requirements could affect both the design and construction
timelines for any project affected by joint trenching, since the bill necessitates regular and
ongoing coordination between MDOT, local governments, and broadband providers
regarding those projects. Any resulting delay in a project directly increases costs for the
affected project; however, any such occurrence cannot be predicted and, therefore, an
estimate of these potential costs is not included in this analysis.
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Department of Housing and Community Development – Special Funds
As previously noted, Senate Bill 66 was signed by the Governor in April 2021 and became
Chapter 74 of 2021, thereby requiring RBAF to be administered by OSB and DHCD and
establishing two new special funds related to the improvement of broadband infrastructure
in the State. Because this bill requires joint trenching fees collected by MDOT to be evenly
distributed among all funds designed for investment in broadband infrastructure, special
fund revenues and expenditures for DHCD increase correspondingly as joint trenching fees
accrue evenly to these three special funds and are disbursed for authorized purposes. Total
revenues to and expenditures from these funds depend on the size, scope, and frequency of
joint trenching projects and on the fees set by MDOT and, therefore, cannot be reliably
estimated at this time.
The fiscal and policy note for Senate Bill 66 estimates that three staff are needed for OSB
to perform its duties; these staff are likely to be able to handle the administration of RBAF
(which has a funding source under this bill) as well. Therefore, this estimate does not
include any additional staff for DHCD to administer RBAF.
Federal Funding for Improving Broadband Access
The bill specifies that, to the extent practicable, federal funding be appropriated to improve
broadband access and adoption. This analysis assumes that, should such funding be
available and appropriated for that purpose, it would have otherwise been expended.
Accordingly, this provision may affect the timing and purpose of federal expenditures; any
such impact cannot be reliably estimated at this time.
Local Fiscal Effect: Local revenues and expenditures for counties and municipalities that
are not in WSSD increase to the extent that local governments elect to collect and spend
joint trenching fees under the bill. Additionally, local revenues for those jurisdictions may
decrease minimally to the extent that local governments waive permitting fees. Any such
impact depends on the fees set by each local government, how often joint trenching takes
place, and whether a local government chooses to waive fees and, therefore, cannot be
reliably estimated at this time.
Similar to the project delays discussed above for MDOT, the bill may result in the delay of
local government projects affected by joint trenching, resulting in increased costs for those
projects. Local governments can provide the necessary information to MDOT using
existing budgeted resources.
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 Additional Information
Prior Introductions: None.
Designated Cross File: SB 824 (Senator Hester, et al.) (Chair, Joint Cybersecurity,
Information Technology, and Biotechnology Committee) - Finance.
Information Source(s): Department of Information Technology; Department of
Commerce; Maryland Department of Transportation; Carroll, Harford, Montgomery, and
St. Mary’s counties; towns of Bel Air and Leonardtown; Department of Legislative
Services
Fiscal Note History: First Reader - March 3, 2021
an/mcr Third Reader - April 8, 2021
Revised - Amendment(s) - April 8, 2021
Revised - Updated Information - May 27, 2021
Analysis by: Richard L. Duncan Direct Inquiries to:
(410) 946-5510
(301) 970-5510
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Statutes affected:
Text - First - Economic Development – Broadband Providers – Joint Trenching and Fee (Building Out Broadband Act of 2021): 51-101 Economic Development, 51-102 Economic Development, 51-103 Economic Development, 13-504 Economic Development, 8-654 Transportation
Text - Third - Economic Development – Broadband Providers – Joint Trenching and Fee (Building Out Broadband Act of 2021): 2-021 Housing and Community Development, 51-101 Economic Development, 51-102 Economic Development, 51-103 Economic Development, 13-504 Housing and Community Development, 8-654 Transportation