Today, the California Public Utilities Commission (CPUC) conditionally approved an additional $9.9 million of California Advanced Services Funds (CASF) to complete the 530-mile Digital 395 project in the Eastern Sierra region.  Previously, the project received a CASF grant of $19.3 million with a federal American Recovery and Reinvestment Act (ARRA) grant of $81 million from the Department of Commerce’s National Telecommunications Information Agency (NTIA).

The Digital 395 broadband project is bringing a 150 Gigabit fiber optic, middle mile/backhaul capacity along U.S. Highway 395 from Barstow, California in San Bernardino County to the Nevada state line at Topaz Lake in the North, ending at Carson City, Nevada.  The project will help create route diversity and redundancy for the Internet between Southern California and Nevada, which in turn will render more reliable and speedy communications and public safety, telemedicine and national security applications.  In the project area are an estimated 28, 127 households, 2,571 businesses, and 168 community anchor institutions, including 74 educational, 12 health care, 11 library and 26 public safety entities who could benefit.

According to CPUC Resolution T-17408, the additional grant was to cover a variety of unforeseen project cost overruns, including (1) the costs of new poles or undergrounding of fiber, because of new pole loading factors adopted by the Commission after the project was approved; (2) unanticipated boring costs arising from certain permits due to environmental and cultural sites consideration;  (3) construction costs for the distribution backbone to connect anchor institutions, communities and other broadband providers; and (4) additional administrative and overhead labor costs to complete those tasks.

The decision highlights the complexities of building a large fiber project in an environmentally-conscious and complex state like California.  The project went through three U.S. Bureau of Land Management (BLM) Areas, four U.S. National Forests, two Department of Defense installations, seven Native American tribal reservations, and an endangered species habitat. The applicant estimated it worked with 41 agencies during the project.

As a result, permitting costs experienced a 30% overrun, from the initial estimate of $1.29 million to $1.69 million.  The California Department of Fish and Wildlife (CDFW) required a mitigation monitoring and reporting plan relating to the desert tortoise population, a threatened species, which cost $3.7 million in mitigation fees.  Three desert tortoises were observed by monitors close to the project area in the China Lake area when the work occurred, but were not disturbed.

Other unexpected costs included $387,974 by CalTrans for staff time and encroachment fees relating to the project.  Also, several months were spent seeking alternate routes relating to land owned under CalTrans right-of-ways by the BLM, US Forest Service and Los Angeles Department of Water and Power (LADWP).  LADWP initially sought $1 million for land use, however the decision states that a mediation settlement established cost recovery of $144,000 for LADWP.  The Bureau of Indian Affairs required an unforeseen $36,000 in fees for right-of-ways relating to seven tribes along the project route.

New funds are also going to be applied to bury fiber beneath culturally sensitive sites, and $195,000 to replace poles in some areas.  Cost increases of $2.5 million were caused by changes to the Commission’s rules on pole loading that occurred after the initial application was proffered to the CPUC.  Finally the funds will finance the distributing the backbone to connect about 40 anchor institutions, communities and Internet providers to the middle mile facilities, and increased administrative and legal costs.

The CPUC said it investigated whether the federal government could fund the overrun but concluded it could not, as under federal law, any remaining funds from the ARRA projects must be returned to Treasury.  CBC is a not-for-profit organization and relies on ARRA and CASF funds to operate.  Further, the Commission found that Mono County and the Town of Mammoth Lakes were not in a financial situation to provide any funds.  The CPUC found that the project incurred additional costs from factors unforeseen by the applicant when it applied, and granted the funds.  It directed the staff to reserve $3.6 million to pay the CDFW mitigation fee, and ordered the applicant to complete the project within the scope and budget contained in the resolution to ensure the Digital 395 is completed.  It was passed 4-0 (Commissioner Florio necessarily being absent).