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What’s in it for rural? Analyzing the opportunities for rural America in IIJA, CHIPS, and IRA

rural
Editor's note:

This report utilizes data from the Rural-Relevant IIJA CHIPS IRA Funding Database, created by the authors. The database is available for download with methodology located here. Key takeaways are available for download in the report’s At A Glance.

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Introduction

By passing the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act (CHIPS), and the Inflation Reduction Act (IRA), the 117th Congress approved over a trillion dollars in immediate appropriations and nearly $600 billion more in authorizations to invest in infrastructure, clean energy, climate resilience, and industrial policy. Many of the resources are aimed at supporting local and regional institutions and governments, reflecting a renewed focus on place-based policy.

Given the complex challenges that rural communities face to achieve and sustain prosperity, we examined the provisions of this legislation to identify where rural places are statutorily included or where funding objectives are exceptionally relevant to rural community and economic development. Our analysis estimates that more than $464 billion, or 45% of the combined appropriations in these three laws, present a significant opportunity for rural America. An estimated $24 billion, or 2% of these appropriations, is exclusive to rural places.

At the same time, the multiplicity of the programs; their design, matching, and reporting requirements; and their scoring criteria and decisionmaking processes can create barriers to access for rural communities, whose local government officials are often volunteers and whose city halls often have limited staff. Even the wide variety of definitions for “rural” used across federal agencies creates complications. Sixty-six of the programs receiving appropriations are brand-new, complicating an already complex federal ecosystem of more than 400 programs.

Of the rural-significant programs appropriated in this legislation, over half require or show a preference for matching funds, and less than one-third offer flexibility or a waiver. Almost 95% of the rural-exclusive funds are being distributed through programs that require or prefer a match. In addition, state governments will make the final funding decisions on more than half of the rural-significant resources appropriated in the three laws.

These estimations seek to establish a baseline for future accountability and offer insights to local organizations and governments regarding the funding opportunities that might be most relevant to their communities. They also help surface important implications for local, regional, and state officials, leading us to offer several recommendations to federal policymakers to maximize the benefits to rural places.

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Context

Rural America is home to 14% of the U.S. population and covers 97% of the country’s landmass.

Over the past two decades, rural places have been challenged by changes in the national and global economy. Even before the COVID-19 pandemic, employment and labor force participation rate in rural places had not recovered from the Great Recession to their pre-2008 levels—and remain below. Growing disparities between rural and other geographies are reflected in income, housing, educational attainment, and life expectancy. Rural America is also growing older: In 2021, more than 20% of rural Americans were 65 years and older, compared to just 16% of urban Americans, and rural counties make up nearly 85% of “older-age counties.”

The rural population is growing in diversity—racial and ethnic minorities comprise 24% of the rural population, up from 20% in 2010—but rural communities often reflect the dual burden of race and place. Of persistently poor counties, 85% are entirely rural, with approximately 60% of that aggregate population identifying as a racial or ethnic minority.

The Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act (CHIPS), and the Inflation Reduction Act (IRA) have set aside significant new federal investment with the potential to modernize infrastructure, create new economic opportunity, and enable action on climate change. These resources add to an already complex landscape of investment available to rural places for their community and economic development. Our earlier analyses counted more than 400 programs spread throughout 13 departments, 10 independent agencies, and over 50 offices and sub-agencies. Navigating this federal capital market has been challenging for the volunteer elected officials and thinly staffed city halls that are the norm in rural places, often leaving them short of the investment they seek for improving their community’s economic and social outcomes. The wide variety of definitions of “rural” (see Appendix I) used across federal agencies further complicates this ecosystem, creating confusion about eligibility and affecting the ability to quantify and track impact.

A recent survey by the Center for Local, State, and Urban Policy at the University of Michigan found that smaller jurisdictions in Michigan had markedly lower levels of confidence in their ability to find, apply for, and administer future state and federal grants than those with populations above 30,000. Ensuring that the resources available through IIJA, CHIPS, and IRA reach and benefit rural communities will require that they are aware of the available opportunities that match their development aspirations; understand the requirements and decisionmaking processes; and take advantage of additional flexibility or technical assistance where provided.

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Defining the significance to rural places

We analyzed the provisions in each piece of legislation to identify programs with significant potential to advance equitable rural community and economic development. We focused on programs where the primary beneficiaries are local governments or other local and regional entities, with objectives such as building capacity for community change, providing the basis for new economic opportunities, improving community well-being or quality of life, or strengthening social and civic life. We also incorporated selected programs whose funding goes primarily to households, where significant potential for community-level impact exists. There are an additional small number of non-programmatic provisions that are significant for rural development, such as interagency working groups or statutory changes.

Programs are included if they meet one of three classifications:

  • Rural Exclusive: The legislation makes clear that the funding is available only to rural communities.
  • Rural Stipulated: The authorizing, appropriating, or Notice of Funding Opportunity (NOFO) language stipulates a set-aside, minimum inclusion requirement, or a priority consideration for rural communities.
  • Rural Relevant: The geographic distribution of the program is anticipated to be disproportionately rural, or the program objective addresses an issue of significant importance to rural places, as they may be disproportionately affected. For example, roughly 22.3% of Americans in rural areas and 27.7% of Americans in tribal lands lack broadband access compared to only 1.5% of urban Americans, so broadband funding is included. Likewise, much of the funding appropriated for the conservation programs implemented by the United States Department of Agriculture (USDA) will likely be distributed in rural places, so those programs are included.

We take the term “rural” at face value when written into the legislation or NOFO, despite the variety of definitions used by the federal government. We use the umbrella term “rural-significant resources” to refer to the totality of the rural-exclusive, rural-stipulated, and rural-relevant opportunities that we have classified. When creating our monetary baseline, we include the full monetary value of the program as specified by Congress, without trying to estimate the proportion of funds that will reach rural communities.

While legislators sometimes created funding set-asides for rural and tribal communities in the same sentence, this particular analysis refrains from combining the two groups. There is significant overlap between tribal communities and rural places; we have noted and included the preferences and stipulations for tribal communities in the data that we have organized. However, the legal parameters, history, and legacy of the tribal-federal government relationship are unique. We believe that the opportunities available to tribal communities—and where those intersect with rural interests—merit their own, separate analysis, given the distinctive processes and obstacles that tribal entities encounter.

The data collected includes and organizes both authorized and appropriated programs, with additional information such as match requirements, the decisionmaking entity, and the extent to which funding has already been allocated.

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Valuing the relevance of the legislation for rural places: A monetary baseline

The laws contain a variety of approvals and mechanisms that assign a value to funding levels. To establish a monetary baseline, our calculations are based on the appropriations made in each law for community and economic development, as appropriations immediately set aside actual funds. In total, just over $1 trillion was immediately appropriated in the three laws. This includes approximately $827 billion from IIJA, $54 billion from CHIPS, and $145 billion from IRA.

$827 billion IIJA IIJA appropriations fund infrastructure such as transportation, water, and electricity.
$54 billion CHIPS CHIPS appropriations incentivize semiconductor manufacturers to invest in America.
$145 billion IRA This is the segment of IRA appropriations that supports energy security and climate resilience.

The laws also authorize programs, assigning values without making an appropriation. These authorizations have no guarantee of receiving full or even partial funding, and Congress or the administration may apply resources to them through many different processes or arrangements. In collecting and organizing our data, we include authorized-only programs important to rural places but did not track all of these comprehensively, so they are not part of our monetary baseline. Additional information on authorized-only programs, and known congressional appropriations of a few key programs, are available in a later section.

Other mechanisms in the laws, such as tax credits, present their own difficulties when estimating value. The monetary cost to the government and impact on local communities is dependent on demand, so the estimated value fluctuates as forecasts change. The actual value will depend on the scale and volume of transactions as the tax credits are applied.

It must be stressed that after factoring in the loan programs, tax credits, and the extent to which Congress funds the authorized programs, the overall impact of the legislation will be greater than the $1 trillion that the three laws immediately appropriated—potentially much greater. The opportunity for local governments, community-based organizations, and the wide range of local and regional institutions serving rural areas is likely to be more substantial than our monetary baseline.

A $464 billion opportunity: Identifying the rural-significant appropriations in IIJA, CHIPS, and IRA

The combined legislation results in over $464 billion appropriated to rural-significant programs. Thus approximately 45% of all funding appropriated by the laws represents a significant opportunity for rural places.

Table 1

Almost $24 billion of these appropriations are exclusive to rural places. This represents just over 2% of all funding appropriated in the three pieces of legislation.

Appropriations that have rural stipulations are worth ten times the amount of rural-exclusive funding, totaling $204 billion, or approximately 20% of all appropriated funding. Rural-relevant resources represent even more: almost $237 billion, or 23% of all appropriated funding. (These totals represent the entirety of the appropriations for the rural-stipulated and rural-relevant categories, even if rural places are likely to secure just some portion of their overall value.)

Figure 1

A majority of CHIPS (72%) and IRA (60%) appropriations have high significance for rural places, while IIJA (41%) had a smaller portion. However, the CHIPS rural-significant appropriations consist of only two programs—the Workforce and Education Fund ($200 million) which is still being designed, and the Semiconductor Manufacturing Incentives ($39 billion). The Department of Commerce is requiring that semiconductor manufacturers interested in accessing these incentives invest in economically disadvantaged individuals in their local community, but rural individuals and communities are just one of several defined preferences.

When looking at the entire spectrum of funding sources, the Department of Transportation (DOT), Environmental Protection Agency (EPA), and Department of Commerce dominate, combining for almost three-fourths of the rural-significant appropriations in the laws. The majority of rural-exclusive funding will be distributed by USDA (59%), followed by the Department of Transportation (33%), Department of the Interior (4%), and Department of Energy (4%).

Figure 2

Sectors: Transportation leads the way—though is not rural-specific

Transportation represents the largest category of rural-significant appropriations, worth more than $159 billion in funding and contract authority, though only $7.8 billion of these appropriations are exclusive to rural communities. The energy and power sector offers over $80 billion in opportunities, primarily focused on clean energy. This is notable and indicative of the important role that rural places will necessarily play in the transition to a clean energy economy. The Department of Energy (DOE) is responsible for overseeing the distribution of $40 billion of these resources, heralding an important role for DOE in providing investment to rural communities.

In general terms, the relative scale of categories mirrors their relative sizes in the legislation. Transportation is the largest category overall in the IIJA, for example. For more detail on the types of programs that comprise these categories and that are rural-significant, see Appendix II. It is also important to note that overall value does not necessarily signify importance; sectors with smaller pools of funds nonetheless may play outsized roles in advancing rural communities and economic development.

Figure 3

A prime example is the investment in six federally chartered regional commissions, with $1.38 billion split among the Appalachian Regional Commission ($1 billion), Delta Regional Authority ($150 million), Northern Border Regional Commission ($150 million), Denali Commission ($75 million), Southeast Crescent Regional Commission ($5 million), and Southwest Border Regional Commission ($1.25 million). These appropriations are part of the IIJA and will be available from FY22-26.

The regional commissions’ service areas are largely rural, and they are federally mandated to target a portion of their resources to economically distressed areas. Their ability to package different funding streams and work directly with local communities make them an accessible resource to rural communities that have limited experience accessing federal funds.

Authorizations

Congress authorized 20 additional rural-significant programs without appropriating funds in the legislation. The combined value assigned to those 20 authorized-only programs equals just over $22 billion. While the authorizations are evenly split between CHIPS and the IIJA, (the IRA did not make any authorizations), CHIPS accounts for almost 90% of the assigned value. The extent to which Congress provides the intended level of resources for these authorized programs will have important implications for the extent to which rural communities might benefit.

The CHIPS and Science Act accounts for almost $20 billion of these authorized-only rural-significant programs. The three largest programs by assigned value—the Regional Technology and Innovation Hubs (Tech Hubs), the Regional Innovation Engines (NSF Engines), and the Distressed Area Recompete Pilot Program (Recompete)—all take a place-based approach to revitalizing areas that have been left out of key economic shifts. Tech Hubs and NSF Engines both make stipulations for the inclusion of rural. Approximately 60% of the non-metro population in the U.S. lives in a geographic area eligible for Recompete, a place-based program to support the economic renewal of economically distressed places experiencing a significant gap in prime-age employment.

Each of these programs have subsequently received appropriations at a fraction of their assigned value: Tech Hubs, an initial appropriation of $500 million against a $10 billion authorization for five years; Recompete, an initial appropriation of $200 million against an authorization of $1 billion for five years; NSF Engines, an initial appropriation of $200 million against a combined authorization with the Translation Accelerators program of $6.5 billion over five years. Realizing the full impact of these programs will depend on the extent to which Congress continues to appropriate funding.

Other rural-significant authorizations include the STEM Education Research program ($15 million authorized), modifying and expanding the Established Program to Stimulate Competitive Research (EPSCoR) to build the STEM education and workforce development capacity of rural communities ($500 million authorized), and the establishment of clean energy innovation ecosystems ($250 million authorized).

Direct Federal Spending

Approximately $13.8 billion (3%) of the rural-significant funding is direct federal spending, meaning that the federal government spends this money directly on federal lands or facilities. While the scale of this spending is not as large as other opportunities, it can have an outsized impact on specific communities. Federal investments in wildfire prevention and ecological restoration protect neighboring towns and can result in new jobs to support the activities, while infrastructure improvements at federal recreation sites like national parks and forests generate economic returns for local communities. For areas rich in natural resources, federal investments in protecting those natural assets are an important source of local wealth creation.

Congressionally mandated initiatives

Our data collection incorporates an additional 16 provisions that are not spending programs but congressionally mandated efforts that may benefit rural communities (e.g., creating new agency offices, new program priorities, studies of historical (in)efficiencies, etc.), since these highlight additional attention to rural needs by Congress. These include the creation of a 21st Century Energy Workforce Advisory Board, tax credits for facilities located in energy or low-income communities, and expansion of the National Institute of Standards and Technology’s Educational Outreach and Support for Underrepresented Communities.

Direct-to-Consumer Spending

Most programs in this analysis fund community projects, but we have included select programs that provide direct-to-consumer benefits, because of their potential multiplying effects on rural economic development. Many of the USDA programs in this analysis, for example, support rural small businesses or agricultural producers.

Two new Department of Energy programs fund state and tribal rebate programs that encourage residential energy efficiency upgrades, with an emphasis on reaching low and middle-income households ($8.8 billion). Further funding targeted toward low-income households includes the Weatherization Assistance Program ($3.5 billion) and the Low-Income Home Energy Assistance Program ($500 million). The Federal Communications Commission’s Affordable Connectivity Program ($14.2 billion) provides a discount on monthly internet service and a one-time discount on computers or tablets for qualifying low-income households.

Tax credits

For overall impact at a macroeconomic level, the most consequential of these types of direct-to-consumer benefits are the tax credits. In addition to the CHIPS semiconductor manufacturing investment credit, the IRA creates or extends some two dozen tax credits for individuals (e.g., residential solar panels or electric vehicles) and the private sector (e.g., clean energy projects, energy efficiency improvements) in clean energy. Most of these tax credits are uncapped, meaning any eligible entity with a qualifying investment can claim the credit. Beyond the tax credits themselves, two additional updates to the tax code will have important ramifications for rural communities.

First, several of the IRA tax credits offer bonus credit amounts for investments made in certain communities (e.g., energy communities, tribal land, low-income communities) or that meet prevailing wage and apprenticeship requirements. The bonus tax credit amount makes these communities more attractive for private sector investment and can incentivize higher-quality investments through the wage and apprenticeship requirements.

Second, the IRA extends the benefits of these tax credits to public and nonprofit entities through elective or direct pay. These entities, which do not owe federal income tax, would typically not be able to claim a tax credit. Direct pay equalizes the benefits these entities receive from making the same investments as private businesses, by allowing them to receive a payment directly from the Treasury in the same amount as a private business can claim in a tax credit.

The potential of these tax credits for rural people and places is extremely significant, but not included in the monetary baseline we have established for rural-significance because of the difficulty of estimating their value at this time. While they provide a very significant entry point for support for equitable rural development, absent targeted assistance and special financing mechanisms, their impact may be limited in rural communities. For many rural places, tax credits may be an unfamiliar and highly technical tool that requires access to tax professionals experienced with these mechanisms and the IRS process for claiming credits. The tax credit is also provided retroactively, requiring a project to be fully financed upfront, and does not cover the full cost of an investment, which may often act as a barrier for rural communities.

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Expanding the universe: An analysis of the 100+ rural-significant programs in IIJA, CHIPS, and IRA

We also examined the number and scope of the programs that comprise the monetary baseline, in order to analyze the parameters and arrangements created by the legislation and assess the complexity that rural places will face as they seek to access these resources.

Table 2

One hundred and eleven rural-significant programs received appropriations directly in the laws, of which 66—almost 60%—are new. While this number of programs reflects a high degree of responsiveness by Congress to the investment needs of local communities, the additions further complicate a federal capital marketplace that already has over 400 programs available to rural places for supporting their community and economic development. The high number of new programs also means applicants will often be starting completely from scratch.

Only a small segment—about 17%—of the appropriated programs are rural-exclusive. The majority are rural-relevant, meaning rural communities will often be vying for funds against larger jurisdictions—suburban or urban areas—that generally have more staffing capacity and technical expertise.

An additional 20 rural-significant programs were authorized by Congress without receiving funding. If all were to receive appropriations, this would result in a universe of 131 rural-significant programs—79 of which are new.

IIJA authorized or appropriated a majority of the rural-significant programs (69%), reflecting the wide-ranging scope of programs in that law. Congress directed that most of the IIJA funding be distributed in annual disbursements from 2022 through 2026, so communities will have multiple opportunities to apply to these programs in many cases.

Implications for local, regional, and state officials

Federal programs vary dramatically in design and implementation, which can be influenced by everything from congressional requirements to departmental priorities. With limited capacity to apply for funding, community organizations and local governments must make calculations about where to focus their efforts. Some design elements pose challenges, others opportunities. By collecting and organizing information on some of these key parameters, we seek to identify and present an assessment of the different design elements that local communities and organizations will often face in trying to access these resources.

Timing

The clock is ticking. By mid-October 2023, close to one-quarter of the rural-significant programs that were appropriated funds in the laws have already fully allocated their funding. At the time of writing, the application processes were open for about a fifth of the programs. The good news is that even in the midst of all this activity, a large portion of the funding remains to be allocated.

Match requirements

For rural communities, there may be the requirement for applicants to match some percentage of their federal award with other funds. Rural communities have smaller tax bases and disproportionately lower access to philanthropic dollars; distressed rural communities face even greater hurdles.

Of the rural-significant programs appropriated in the bills, over half require or prefer a match. It is clear that Congress continues to use match requirements as a key design element, as these are not just due to overhang from old programs. More than half of the new programs significant to rural that were appropriated in the legislation require or prefer a match. The value of the appropriated programs that require or prefer matches equals $256.8 billion. Less than a third of the combined rural-exclusive and rural-stipulated programs offer waivers or flexibility to the implementing agency to reduce the match requirement.

Table 3

Match requirements or preferences are not always created by statute. Congress, for example, did not stipulate a match when it authorized the Recompete pilot program in CHIPS. The Economic Development Administration, however, has signaled that it may give preference to applicants with an identified match when decisions on final implementation grants are made.

The areas of particular interest for rural communities are also those that most often require matching funds. The Department of Transportation has 16 programs (70% of its rural-significant programs) that require or prefer a match, while the Department of Energy has 12 programs (63%), and USDA has 11 programs (55%). For broadband, the new BEAD program and the State Digital Equity program require matching funds from states, which will make the funding decisions, but there is nothing to stop the state from passing on the cost to local communities either directly or indirectly.

Of programs that require a match, the minimum percentage ranges from 75% (USDA REAP) to 10% (State Digital Equity Competitive Grants, FEMA Safeguarding Tomorrow Loan Fund). In some cases, the match percentage is lowered for economically distressed rural communities (FEMA BRIC) or non-private sector applicants (Department of Energy ERA).

Funding type

One piece of good news for rural communities is that the bulk of the appropriated funds are offered in the form of grants. With their limited tax base and fiscal restrictions, many rural communities are constrained by the level of debt that they are able to service; support in the form of loans or loan guarantees is often not as attractive. About 85% of the appropriated rural-significant programs are grant-only, and an additional 7% offer a combination of either loans or grants. Loan-only appropriated programs make up less than 2%.

Table 4

Among the suite of programs offering financing, it is positive to note that agencies are beginning to use program rules to mitigate risk and increase access for rural and distressed communities. For example, the loans offered through USDA’s Electric Loans for Renewable Energy (PACE) program are partially forgivable. USDA’s ReConnect Program for broadband access provides 100% grants for certain distressed and vulnerable communities, and their Assistance for Rural Electric Cooperatives (New ERA) Program offered 0% interest rates for loans serving a certain threshold of distressed or disadvantaged communities.

Funding decisions

Less than one-third of the appropriated programs give state governments a role in determining the ultimate distribution of the funds—but these programs amount to approximately $240 billion in resources. Thus, state governments will make the final funding decisions on over half of the rural-significant resources appropriated in the three laws. These include programs such as the Surface Transportation Block Grants, the BEAD program for broadband deployment, and the Abandoned Mine Reclamation Fund.

For most of these programs, funds are allocated to states via a formula defined for the program, which typically measures the target population in a state and allocates funds proportionately. States then choose how to distribute that funding to different communities. This method often guarantees each state receives a minimum amount of funding and narrows the competition for the funds to communities within that state.

This scenario requires local communities to work closely with state government. Some states have created match programs for infrastructure and clean energy projects, for example. However, securing state support for federal cost-shares can be politically fraught in certain contexts. Many states with some of the poorest rural places in the country have poor records of ensuring distribution to support those places. It is critical that states ensure a level playing field for their most vulnerable rural communities and maximize the public benefit of these investments, guaranteeing that those communities receive fair consideration for their requests.

Justice40

The Justice40 Initiative is a whole-of-government effort to direct 40% of the overall benefits of selected federal investments to disadvantaged communities that are marginalized, underserved, and burdened by pollution. Justice40 includes investments related to climate change, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and clean water and wastewater infrastructure.

Forty-three percent of the rural-significant programs identified in our analysis are part of Justice40. Justice40 target communities are identified at the census tract level to be “disadvantaged,” based on criteria developed for the Climate and Economic Justice Screening Tool that include environmental, climate, and socioeconomic burdens. Just over half of rural census tracts in the U.S. (as defined by  the Office of Management and Budget’s non-metropolitan designation) are disadvantaged by Justice40 standards. Given the large segment of rural-significant programs that are a part of Justice40, and the significant proportion of rural communities that meet Justice40 criteria, the initiative provides an important additional entry point for rural communities to access these resources.

EPA’s Thriving Communities Technical Assistance Centers (TCTACs), created in partnership with the Department of Energy to help deliver on the objectives of Justice40, offer a case in point. The Biden administration is investing $177 million in 16 technical assistance centers across the county to help communities unlock investment from the IIJA and IRA to advance environmental justice. This offers rural communities the potential to obtain technical assistance that would bolster their often-limited staffing and to access technical expertise. At the same time, the TCTACs are not exclusive to rural places, which will have to vie alongside many different types of communities to access that technical assistance.

Planning/technical assistance

Indeed, the vast majority of the rural-significant programs appropriated in the laws are focused on implementing projects. However, five programs (USDA Conservation Technical Assistance, $1 billion; USDA Assistance and Support for Underserved Farmers, Ranchers, Foresters, $125 million; DOT Rural Transportation Assistance Program, $77.9 million; State Digital Equity Planning Grant, $60 million; DOT Rural and Tribal Assistance Pilot Program, $10 million) exclusively support planning or technical assistance efforts. Another forty-six programs allow resources to be used for implementation and/or planning, often explicitly mandated by statute to include both.

Implications for implementing agencies and federal policymakers

Combine the more than $464 billion in rural-significant appropriations, the authorized programs that have received subsequent partial appropriations and the wide-ranging direct-to-consumer incentives and tax credits—the opportunities for rural places are substantial. By establishing this baseline, we seek to provide the basis for further analysis and improve accountability regarding the impact of the legislation on rural places. In collecting and organizing the information, we also seek to help rural communities and organizations be better positioned to identify the right opportunities for themselves and navigate the landscape of options. Given the complexity, we offer several recommendations associated with this baseline:

  • Ensure transparent, accessible, and timely reporting of funds and the location of their intended impact: Transparent, accessible, and accurate reporting on where and how funds are being spent will be necessary so that both agencies and the general public understand how well those funds are reaching rural communities—as well as what types of communities are accessing the resources. Data should be comprehensive for all three pieces of legislation, easily accessible by the public, attributed to a location of impact, searchable, and easily filtered by the type of jurisdiction (urban, suburban, and rural). Users should also be able to match geographic and demographic characteristics with the spending locations.

    The data must also be available for programs where states will determine the distribution of awards, especially given the extent to which states are the primary decisionmakers. It will be important to easily track decisions that states are making on allocations, to assess the degree to which they are meeting the intentions of the legislation. Data should also include direct-to-consumer benefits and tax credits. Importantly, costs associated with making this data available should not be passed on to awardees as additional reporting requirements, but be borne by federal agencies.

    Build.gov represents a starting point, but is not comprehensive nor easily disaggregated by size or type of jurisdiction, nor by other demographic characteristics. A potential next step would have data officers in selected agencies work with program staff to identify important data characteristics on which to report, and adapt their data collection and reporting tools to enable this level of transparency.

  • Review the applicability and use of match requirements: As rural communities seek to access the resources appropriated in this legislation, they will often be faced with requirements to contribute a portion of the total cost. Rural local governments, however, are often fiscally constrained, and local leaders often cite match requirements as a primary barrier to access. The data makes clear, however, that Congress continues to see match requirements as an important component, even when authorizing new programs. Further analysis and policy discourse on the extent to which cost-sharing is achieving the original Congressional objectives when instituted within a program, versus the extent to which it is creating barriers to access and diluting the public benefit for rural communities, must become a top priority for policymakers interested in improving the effectiveness of federal policy in supporting equitable rural development.
  • Expand resources for capacity and technical assistance: Focused attention during the implementation of these appropriations will be necessary to reach the rural areas that might benefit most and maximize the public benefit. Capacity constraints, complexity of application processes, inexperience with federal and state processes, and the unique characteristics of rural governance often combine to make it difficult to access an available investment. The influx of investment is also increasing the complexity of local decisionmaking, from land- and water-use policies to infrastructure development, and other issues such as regional collaboration. While the legislation offers some resources for technical assistance, and the administration has undertaken efforts such as the EPA’s Thriving Communities Technical Assistance Centers (TCTACs), federal technical assistance is often narrowly defined and designed to be the entry to a specific program.

    To unlock the rural-significant resources in the IIJA, CHIPS, and IRA, rural communities would benefit from flexible, direct investment in the “infrastructure” of community and economic development: staffing, training, organizational development, partnerships and coordination, access to necessary technical expertise, community engagement, improved systems for collecting evidence and relevant data, and development of new governance models.

    Navigating the available opportunities, developing a viable project, preparing an application, managing the project and its reporting requirements will often require procuring additional expertise or partnering with an experienced rural development hub. An initiative such as the grant program proposed by the Rural Partnership and Prosperity Act, a bipartisan bill introduced by Senators Bob Casey (D-PA) and Deb Fischer (R-NE), would help maximize the opportunities afforded by this legislation for rural communities and should receive consideration within the 2023 Farm Bill.

The opportunities in the IIJA, CHIPS, and IRA to support and strengthen rural communities are significant. However, almost all of these resources are just that: opportunities. Only a small fraction of the resources appropriated in the combined laws were exclusively set aside for rural places. Urban and suburban places also face challenges of capacity and fiscal space, and it is heartening to see growing recognition by federal and state governments to the complexity that all types of local jurisdictions are encountering in accessing and managing these investments. The extent to which rural communities are able to take advantage of these opportunities, however, will depend in part on the sensitivity of federal agencies and their attention to the specific and unique constraints of rural places as these programs are implemented. This will be especially important in reaching the most marginalized and vulnerable rural places, and turning this baseline of opportunity into reality.

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Appendix I: Overview of the three bills

IIJA: The Infrastructure Investment and Jobs Act (IIJA), focused primarily on building and maintaining physical infrastructure, is generally valued at a total of $1.2 trillion. Approximately $827 billion is actual appropriations, with the remaining $373 billion authorizations. Roughly half is baseline spending from renewing programs at current funding levels. $550 billion is new spending, either from providing additional funds to existing programs or creating new programs.

CHIPS: The CHIPS and Science Act (CHIPS) seeks to strengthen American competitiveness and U.S. leadership in semiconductor manufacturing, research, and workforce. Estimates put its overall value at approximately $280 billion in potential future spending across a wide range of research sectors. However, the law appropriates only $54.2 billion, of which $50 billion is for semiconductor manufacturers. $6 billion of the $50 billion is loan subsidy, to support up to $75 billion in loans. In addition to the $50 billion investment, semiconductor manufacturers also benefit from a new investment tax credit in the law, which had an original estimated cost of $24 billion.

IRA: In addition to tax code changes, prescription drug pricing reform, and changes to the Affordable Care Act, the Inflation Reduction Act (IRA) invests in domestic energy production and security, manufacturing, and action on climate change (with support for cleaner and renewable energy sources). Unlike the other two laws, the IRA does not include authorizations, instead appropriating funds for immediate use.

For the purposes of analyzing its impact on rural community and economic development, we focused on its provisions related to energy and manufacturing, which are valued at $369 billion overall. That estimate includes approximately $145 billion in appropriations, along with some two dozen tax credits, which have a variable estimated cost. Almost all the tax credits in the IRA are uncapped, meaning that any eligible entity with a qualifying expense can claim the credit in their tax filing. As such, the ultimate value of these tax credits will depend on demand; as more companies and individuals claim the credits, the cost will increase. Already, the official estimate for the combined energy security and climate change provisions has increased from $369 to $391 billion; other estimates have ranged from $781 billion to over $1 trillion.

Definitions of Rural

Our analysis takes the term “rural” at face value when written into the legislation or an agency’s Notice of Funding Opportunity (NOFO). However, it should be noted that those definitions can vary widely. The Regional Technology and Innovation Hubs Program authorized in CHIPS, for example, mandates that one-third of new hubs created must benefit small or rural communities, defined as areas with a population of 250,000 or less. Selected U.S. Department of Agriculture (USDA) programs, on the other hand, classify rural towns as 10,000 people or less. The referenced programs would both be included in this analysis, as the legislation specifies them as serving rural communities. As a comparison, rural development practitioners and advocates often use the Office of Management and Budget’s core-based statistical area delineations as their preferred federal definition, which specify that an urbanized core of 50,000 or fewer people is considered “nonmetropolitan” or rural. The Rural Aperture Project at the Center on Rural Innovation offers a good resource for how different federal definitions of rural can create confusion regarding eligibility as well as outcomes.

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Appendix II: Detailed rural-significant appropriations by sector

Transportation is the largest category of rural-significant appropriations, worth more than $159 billion in funding and contract authority; $7.8 billion of these appropriations are exclusive to rural communities.

For example, the Railroad Crossing Elimination Pilot Program ($3 billion in total appropriations) reserves a minimum of 20% of funding for projects in rural areas. PROTECT Grants ($1.4 billion in total contract authority) sets aside a minimum 25% of funding for rural projects to make surface transportation more resilient to extreme weather events. Other sizable opportunities include the set-asides for the Surface Transportation Block Grant Program ($72 billion in total contract authority), INFRA ($8 billion total in combined contract authority and appropriations), RAISE ($7.5 billion in total appropriations), Section 5311 Formula Grants for Rural Areas ($4.1 billion in contract authority), and Rural Surface Transportation Grants ($2 billion in contract authority), among others.

To ensure engagement with rural places, IIJA created the Rural Opportunities to Use Transportation for Economic Success (ROUTES) Office at the Department of Transportation. The law also created the Rural and Tribal Assistance Pilot Program ($3.4 million in appropriations for FY23), which provides competitive funding for rural local governments and Tribes to hire staffing support for transportation project applications.

Energy and power funding is the second largest category of rural-significant appropriations, worth approximately $81 billion. The Department of Energy will oversee distribution of more than $40 billion of this funding through 19 programs. The Environmental Protection Agency (EPA) and USDA also have significant programs. EPA’s Greenhouse Gas Reduction Fund ($27 billion in appropriations) will finance clean technology and solar projects, while the USDA Empowering Rural America (New ERA) program ($9.7 billion in appropriations) will provide grants and loan subsidies for rural electric cooperatives to undertake projects in clean energy and energy efficiency improvements.

Broadband funding ($62 billion in appropriations) has particular importance for rural communities, given the persistent gap in rural access. These resources focus on closing the gap in physical deployment as well as ensuring accessibility through initiatives such as the new Broadband Equity, Access, and Deployment (BEAD) program, which will allocate $42.5 billion to the states to distribute; the Affordable Connectivity Program, $14.2 billion to enable low-income households to subscribe to high-speed internet; and the three State Digital Equity Programs, worth $3.29 billion. The USDA ReConnect program received $1.9 billion in appropriations, which the department reported as financing $2.86 billion in loans and $140 million in technical assistance.

Environmental funding (approximately $53 billion in appropriations) encompasses programs focused on pollution, conservation, and restoration. The category includes several well-established USDA Natural Resources Conservation Service programs for agricultural land: Environmental Quality Incentives Program ($8.45 billion), Regional Conservation Partnership Program ($4.95 billion), Conservation Stewardship Program ($3.25 billion), Agricultural Conservation Easement Program ($1.4 billion), and Conservation Technical Assistance ($1 billion). Other funding is distributed directly to states to clean up abandoned mines ($11.3 billion) and oil or gas wells ($4.7 billion), while competitive funding is available to restore hazardous superfund sites ($3.5 billion) and brownfields ($1.5 billion). Two EPA programs that allow for more flexible community projects are the state-decided Climate Pollution Reduction Grants ($5 billion) and the Environmental and Climate Justice program ($3 billion).

Water infrastructure funding (over $50 billion in appropriations) primarily consists of EPA capitalization grants for state revolving funds. These revolving funds enable states to make low-cost loans to local communities for drinking and wastewater infrastructure projects. As local governments repay the loans over time, states relend the money to finance new projects. IIJA provides supplemental funding for the Clean Water and Drinking Water State Revolving Funds ($23.4 billion in total). It also adds new authorities and appropriations to replace lead pipes ($15 billion) and to address emerging contaminants ($10 billion across three programs). Importantly for rural communities, the law mandates that large portions of this funding be distributed as additional subsidization (i.e., loan principal forgiveness or grants, rather than loans) and emphasizes set-asides for small or disadvantaged communities.

Investment in six federally chartered regional commissions ($1.38 billion) provides additional opportunities for community and economic development, with funds split among the Appalachian Regional Commission ($1 billion), Delta Regional Authority ($150 million), Northern Border Regional Commission ($150 million), Denali Commission ($75 million), Southeast Crescent Regional Commission ($5 million), and Southwest Border Regional Commission ($1.25 million).

The regional commissions’ service areas are largely rural, and they are federally mandated to target a portion of their resources to economically distressed areas. Their ability to package different funding streams and work directly with local communities may make them an accessible resource to rural communities that have limited experience accessing federal funds.

Of the climate-resilient funding (over $11 billion), a substantial portion is directed at combatting wildfires, but coastal resiliency and infrastructure hardening programs also received appropriations.

The remaining appropriations, while categorized as miscellaneous, have significant implications for advancing equity in rural places. The majority of these appropriations (approximately $7 billion total) consist of pandemic-era assistance for distressed USDA farm loan borrowers ($3.1 billion) and agricultural producers who have experienced discrimination in USDA’s farm lending programs ($2.2 billion). Two additional USDA programs provide technical assistance to underserved farmers ($125 million) and funding to support land access for underserved farmers ($250 million)—with an emphasis on addressing heirs’ property and highly fractionated land issues, which are significant barriers to African American and Native American farmers, respectively.

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Rural-Relevant IIJA CHIPS IRA Funding Database

This database collects and organizes information and data on provisions in the Infrastructure Investment and Jobs Act (IIJA), CHIPS and Science Act (CHIPS), and Inflation Reduction Act (IRA), both programmatic and non-monetary, that are relevant to rural community and economic development.

Programs are included if they meet one of three classifications:

  • Rural Exclusive: The funding is available only to rural communities.
  • Rural Stipulated: The authorizing, appropriating, or Notice of Funding Opportunity (NOFO) language stipulates a set-aside, minimum inclusion requirement, or a priority consideration for rural communities.
  • Rural Relevant: The geographic distribution of the program is anticipated to be disproportionately rural, or the program objective addresses an issue of significant and disproportionate importance to rural places.

The data collected for each provision includes key information on funding authorizations and appropriations; the type of funding; match requirements and waivers; development objective; eligibility; timing and availability of funds; and program status, among others. Federal, state, and local government officials; practitioners at organizations serving rural places; and rural community members may find the information useful in understanding the opportunities that are available. We take the term “rural” at face value when written into the legislation or NOFO, despite the variety of definitions used, both in the legislation and throughout the federal government.

Data is accurate as of October 11, 2023. We welcome suggested clarifications, updates, and corrections as identified by readers. Please submit suggestions to globalmedia@brookings.edu noting these, with background of your related experience or expertise.

Authors

  • Acknowledgements and disclosures

    The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views or policies of the Institution, its management, its other scholars, or the funders acknowledged below.

    The authors are indebted to Lucas Kreuzer for exceptional research assistance and to many colleagues who strengthened this brief through their careful review and feedback, including Carlos Martín, Joe Parilla, and Amanda Weinstein.

    Brookings gratefully acknowledges the support of Resource Rural at the Heartland Fund.

    Brookings recognizes that the value it provides is in its absolute commitment to quality, independence, and impact. Activities supported by its donors reflect this commitment.

  • Footnotes
    1. The data referenced here and used for these estimations was current as of October 11, 2023. Available resources change as agencies allocate and distribute funding on an ongoing basis.
    2. The complement to rural-significant funding is not urban-exclusive or urban-significant funding. This analysis focuses on rural-significant opportunities; everything else is classified as all other funding. That funding may be urban-exclusive or open to all types of communities, and simply not rated as significantly relevant to rural interests.
    3. A more specific estimation of the actual share of rural-stipulated and rural-relevant funds going to rural communities is beyond the scope of this report but would be a valuable follow-up analysis.
    4. The Southeast Crescent Regional Commission began operations in late 2021 upon Senate confirmation of its first presidentially-appointed federal co-chair. IIJA provided the Southwest Border Regional Commission with its first appropriations to enable it to begin operations.
    5. There are two additional authorized-only programs but they are direct federal spending, where the money would be spent on federal lands or facilities, rather than be available to communities.
    6.  The Southeast Crescent Regional Commission began operations in late 2021 upon Senate confirmation of its first presidentially-appointed federal co-chair. IIJA provided the Southwest Border Regional Commission with its first appropriations to enable it to begin operations.