Newly-Unveiled USDOT Programs Fund Rural Development

Rather than only upsizing existing programs, the Infrastructure Investment & Jobs Act (IIJA) created new ones to fill gaps in the type and location of eligible projects — and rural America was a big beneficiary. Two USDOT programs stood out: the Reconnecting Communities Pilot Program, aimed at rural-ag investment for economic development, and the new Rural program under the Multimodal Project Discretionary Grant Program (MPDG), which explicitly calls out agriculture as an eligible use. For rural developers, these are real openings — with the usual federal strings.

Key takeaways

• The IIJA created new programs, not just bigger ones. Congress used the IIJA to fill perceived gaps in eligible project type and location — with meaningful new support directed at rural areas as part of a broader push toward national multimodal resiliency.
• Reconnecting Communities Pilot Program. Mandated to fund rural-ag investment for economic development; the Act describes 50–80% reimbursement of capex in amounts not less than $5M — subject to federal requirements and timelines.
• The MPDG “Rural” program is a unicorn. MPDG is a combined application vessel for INFRA, Mega, and the new Rural Surface Transportation program. INFRA and Mega target massive projects with little room for P3s, but the Rural program explicitly names agriculture as an applicable use — “a distinction with a difference” versus programs that merely allow ag firms to participate.
• Be ready now. With uncertainty around timing, the advice is to start gathering project materials immediately — “you can’t buy time.”

New programs, not just bigger ones

Rural communities are getting a lot of new money from the IIJA/BIL. Beyond broadband and the like, two new USDOT programs highlight the shifting federal focus toward something like national multimodal resiliency — a theme that drew added interest amid supply-chain constraints. Rather than simply upsizing existing programs, the IIJA created additional programs to fill what many in Congress saw as gaps in the type and location of eligible projects. Rural areas picked up considerable additional support.

The newest arrow in USDOT’s rural-resiliency quiver is the Reconnecting Communities Pilot Program. Its mandate is to fund investments in rural ag for the purpose of economic development. The net-net: if you have a project in or near a rural area (a definition itself in flux), there’s likely a way to get federal dollars. Nothing is free, of course — the benefit, described in the Act as 50–80% reimbursement of capex in an amount not less than $5M, comes with living under federal requirements and timelines. Even so, it’s a big win for rural America, and can be for your business.

Next is the newly created Rural program under the Multimodal Project Discretionary Grant Program (MPDG). This one’s a chameleon: it’s a new vessel — basically a combined application process — for one established program (INFRA) and two new ones (Mega and the Rural Surface Transportation program). INFRA and Mega aim at truly massive surface-transportation projects with little real room to deploy our favorite public-private partnership (P3) approach. But the newly created, newly funded Rural program is genuinely interesting for any firm with a rural development opportunity that ties back to a multi/intermodal transportation need. It’s like a unicorn — a USDOT program that specifically calls out its applicability to agriculture projects. Plenty of federal, state, and local programs are used by ag firms to develop facilities, but those generally just allow ag use; they don’t explicitly call out ag as an applicable use — and that’s a distinction with a difference.

Food for thought

In light of all the new programs and dollars, we advise clients to start gathering materials related to potential projects immediately. The advice reflects uncertainty around future funding-announcement timing: we’d rather see clients ready to jump on opportunities at a moment’s notice. As we like to say, you can’t buy time.

Related reading

• The Reconnecting Communities Program
• It’s Always Government Finance Season
• 2022 PIDP Awards Analytics

Prosody helps rural developers and ag businesses match projects to the right new federal programs — and get ready before the window opens. This is policy and market intelligence, not legal advice. Talk to us about your project →