31 CFR part 35 (SLFRF; annual edition 2022)
Summary
Part 35, Pandemic Relief Programs, of the Treasury regulations in 31 CFR, with Subpart A on Coronavirus State and Local Fiscal Recovery Funds, Subpart B on Compensation and Capital Distributions and Subpart C on small business owners demographics data collection. Under § 35.1 the part implements section 9901 of the American Rescue Plan Act, which adds sections 602 and 603 to the Social Security Act to establish the Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Fund. It applies to states, territories, Tribal governments, metropolitan cities, counties and other units of local government that accept such payments. The definitions set the covered period for a state or territory as beginning on March 3, 2021.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“31 CFR part 35 (SLFRF; annual edition 2022).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/31-cfr-part-35-slfrf-annual-edition-2022-25266601b7/
, SHA-256 3368e2dffbd639c11abac4f69c0f6b7067737c4a89f23615f13218bc546431d8.Full text
Office of the Secretary of the Treasury Pt. 35
(g) None of the Trust Fund amounts PART 35—PANDEMIC RELIEF
may be used to acquire land in fee title PROGRAMS
by the Federal Government unless the
land is acquired by exchange or dona- Subpart A—Coronavirus State and Local
tion or the acquisition is necessary for Fiscal Recovery Funds
the restoration and protection of the
natural resources, ecosystems, fish- Sec.
eries, marine and wildlife habitats, 35.1 Purpose.
35.2 Applicability.
beaches, and coastal wetlands of the
35.3 Definitions.
Gulf Coast Region and has the concur-
35.4 Reservation of authority, reporting.
rence of the Governor of the state in 35.5 Use of funds.
which the acquisition will take place. 35.6 Eligible uses.
35.7 Pensions.
§ 34.804 Noncompliance. 35.8 Tax.
(a) If Treasury determines that a 35.9 Compliance with applicable laws.
Gulf Coast State, coastal political sub- 35.10 Recoupment.
division, or coastal zone parish has ex- 35.11 Payments to States.
35.12 Distributions to nonentitlement units
pended funds received under the Direct
of local government and units of general
Component, Comprehensive Plan Com- local government.
ponent, or Spill Impact Component on
an ineligible activity, Treasury will Subpart B—Compensation and Capital
make no additional funds available to Distributions
that recipient from any part of the
35.20 Purpose, applicability, and general
Trust Fund until the recipient has de-
provisions.
posited in the Trust Fund an amount 35.21 Definitions.
equal to the amount expended for an 35.22 Restrictions on compensation.
ineligible activity, or Treasury has au- 35.23 Restrictions on dividends, share
thorized the recipient to expend an buybacks, and other capital distribu-
equal amount from the recipient’s own tions.
funds for an activity that meets the re- 35.24 Annual certification.
quirements of the Act. 35.25 Exemptive relief.
(b) If Treasury determines that a Subpart C—State Small Business Credit Ini-
Gulf Coast State, coastal political sub- tiative Small Business Owners Demo-
division, or coastal zone parish has ma- graphics Data Collection
terially violated a grant agreement
under the Direct Component, Com- 35.26 Authority, scope, and purpose.
prehensive Plan Component, or Spill 35.27 Definitions.
Impact Component, Treasury will 35.28 Annual report requirements.
make no additional funds available to 35.29 Format.
that recipient from any part of the APPENDIX A TO PART 35—EMERGENCY CAPITAL
INVESTMENT PROGRAM MODEL EXCESSIVE
Trust Fund until the recipient corrects
OR LUXURY EXPENDITURES POLICY
the violation.
(c) As a condition of receiving funds, AUTHORITY: 42 U.S.C. 802(f); 42 U.S.C. 803(f);
31 U.S.C. 321; 12 U.S.C. 5701–5710; Division N,
recipients and subrecipients shall
Title V, Subtitle B, Pub. L. 116–260, 134 Stat.
make available their records and per- 1182 (12 U.S.C. 4703a); Section 104A, Pub. L.
sonnel to Treasury in order to carry 103–325, 108 Stat. 2160, as amended (12 U.S.C.
out the purposes of this section. 4701 et seq.); Pub. L. 117–2, 135 Stat. 4 (42
U.S.C. 802 et seq.).
§ 34.805 Treasury Inspector General. SOURCE: 86 FR 13455, Mar. 9, 2021, unless
In addition to other authorities otherwise noted.
available under the Act, the Office of
the Inspector General of the Depart- Subpart A—Coronavirus State and
ment of the Treasury is authorized to Local Fiscal Recovery Funds
conduct, supervise, and coordinate au-
kpayne on VMOFRWIN702 with $$_JOB
dits and investigations of activities SOURCE: 87 FR 4446, Jan. 27, 2022, unless
funded through grants under the Act. otherwise noted.
397
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00407 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.1 31 CFR Subtitle A (7–1–22 Edition)
§ 35.1 Purpose. not prescribed prior to the start of the
covered period.
This part implements section 9901 of
Covered period means, with respect to
the American Rescue Plan Act (Sub-
a state or territory, the period that:
title M of Title IX of Pub. L. 117–2),
(1) Begins on March 3, 2021; and
which amends Title VI of the Social
(2) Ends on the last day of the fiscal
Security Act (42 U.S.C. 801 et seq.) by
year of such State or territory in
adding sections 602 and 603 to establish
which all funds received by the State
the Coronavirus State Fiscal Recovery
or territory from a payment made
Fund and Coronavirus Local Fiscal Re-
under section 602 or 603 of the Social
covery Fund.
Security Act have been expended or re-
§ 35.2 Applicability. turned to, or recovered by, the Sec-
retary.
This part applies to states, terri- COVID–19 means the Coronavirus
tories, Tribal governments, metropoli- Disease 2019.
tan cities, nonentitlement units of COVID–19 public health emergency
local government, counties, and units means the period beginning on January
of general local government that ac- 27, 2020 and lasting until the termi-
cept a payment or transfer of funds nation of the national emergency con-
made under section 602 or 603 of the So- cerning the COVID–19 outbreak de-
cial Security Act. clared pursuant to the National Emer-
gencies Act (50 U.S.C. 1601 et seq.).
§ 35.3 Definitions.
Deposit means an extraordinary pay-
Baseline means tax revenue of the re- ment of an accrued, unfunded liability.
cipient for its fiscal year ending in The term deposit does not refer to rou-
2019, adjusted for inflation in each re- tine contributions made by an em-
porting year using the Bureau of Eco- ployer to pension funds as part of the
nomic Analysis’s Implicit Price employer’s obligations related to pay-
Deflator for the gross domestic product roll, such as either a pension contribu-
of the United States. tion consisting of a normal cost compo-
Capital expenditures has the same nent related to current employees or a
meaning given in 2 CFR 200.1. component addressing the amortiza-
County means a county, parish, or tion of unfunded liabilities calculated
other equivalent county division (as by reference to the employer’s payroll
defined by the Census Bureau). costs.
Covered benefits include, but are not Eligible employer means an employer
limited to, the costs of all types of of an eligible worker who performs es-
leave (vacation, family-related, sick, sential work.
military, bereavement, sabbatical, jury Eligible workers means workers need-
duty), employee insurance (health, life, ed to maintain continuity of oper-
dental, vision), retirement (pensions, ations of essential critical infrastruc-
401(k)), unemployment benefit plans ture sectors, including health care;
(Federal and State), workers’ com- emergency response; sanitation, dis-
pensation insurance, and Federal In- infection, and cleaning work; mainte-
surance Contributions Act taxes (which nance work; grocery stores, res-
includes Social Security and Medicare taurants, food production, and food de-
taxes). livery; pharmacy; biomedical research;
Covered change means a change in behavioral health work; medical test-
law, regulation, or administrative in- ing and diagnostics; home- and commu-
terpretation that reduces any tax (by nity-based health care or assistance
providing for a reduction in a rate, a with activities of daily living; family
rebate, a deduction, a credit, or other- or childcare; social services work; pub-
wise) or delays the imposition of any lic health work; vital services to
tax or tax increase. A change in law in- Tribes; any work performed by an em-
cludes any final legislative or regu- ployee of a State, local, or Tribal gov-
latory action, a new or changed admin- ernment; educational work, school nu-
istrative interpretation, and the phase- trition work, and other work required
kpayne on VMOFRWIN702 with $$_JOB
in or taking effect of any statute or to operate a school facility; laundry
rule if the phase-in or taking effect was work; elections work; solid waste or
398
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00408 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.3
hazardous materials management, re- ant to section 9901 of the American
sponse, and cleanup work; work requir- Rescue Plan Act. General revenue also
ing physical interaction with patients; includes revenue from liquor stores
dental care work; transportation and that are owned and operated by state
warehousing; work at hotel and com- and local governments. General rev-
mercial lodging facilities that are used enue does not include revenues from
for COVID–19 mitigation and contain- utilities, except recipients may choose
ment; work in a mortuary; and work in to include revenue from utilities that
critical clinical research, development, are part of their own government as
and testing necessary for COVID–19 re- general revenue provided the recipient
sponse. does so consistently over the remain-
(1) With respect to a recipient that is der of the period of performance. Rev-
a metropolitan city, nonentitlement enue from Tribal business enterprises
unit of local government, or county, must be included in general revenue.
workers in any additional non-public Intergovernmental transfers means
sectors as each chief executive officer money received from other govern-
of such recipient may designate as crit- ments, including grants and shared
ical to protect the health and well- taxes.
being of the residents of their metro- Low-income household means a house-
politan city, nonentitlement unit of hold with:
local government, or county; or (1) Income at or below 185 percent of
(2) With respect to a State, territory, the Federal Poverty Guidelines for the
or Tribal government, workers in any size of its household based on the pov-
additional non-public sectors as each erty guidelines published most re-
Governor of a State or territory, or cently by the Department of Health
each Tribal government, may designate and Human Services; or
as critical to protect the health and (2) Income at or below 40 percent of
well-being of the residents of their the Area Median Income for its county
State, territory, or Tribal government. and size of household based on data
Essential work means work that: published most recently by the Depart-
(1) Is not performed while tele- ment of Housing and Urban Develop-
working from a residence; and ment.
(2) Involves: Micro-business means a small business
(i) Regular in-person interactions that has five or fewer employees, one
with patients, the public, or coworkers or more of whom owns the small busi-
of the individual that is performing the ness.
work; or Moderate-income household means a
(ii) Regular physical handling of household with:
items that were handled by, or are to (1) Income at or below 300 percent of
be handled by patients, the public, or the Federal Poverty Guidelines for the
coworkers of the individual that is per- size of its household based on poverty
forming the work. guidelines published most recently by
Funds means, with respect to a re- the Department of Health and Human
cipient, amounts provided to the re- Services; or
cipient pursuant to a payment made (2) Income at or below 65 percent of
under section 602(b) or 603(b) of the So- the Area Median Income for its county
cial Security Act or transferred to the and size of household based on data
recipient pursuant to section 603(c)(4) published most recently by the Depart-
of the Social Security Act. ment of Housing and Urban Develop-
General revenue means money that is ment.
received from tax revenue, current Metropolitan city has the meaning
charges, and miscellaneous general given that term in section 102(a)(4) of
revenue, excluding refunds and other the Housing and Community Develop-
correcting transactions and proceeds ment Act of 1974 (42 U.S.C. 5302(a)(4))
from issuance of debt or the sale of in- and includes cities that relinquish or
vestments, agency or private trust defer their status as a metropolitan
transactions, and intergovernmental city for purposes of receiving alloca-
kpayne on VMOFRWIN702 with $$_JOB
transfers from the Federal Govern- tions under section 106 of such Act (42
ment, including transfers made pursu- U.S.C. 5306) for fiscal year 2021.
399
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00409 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.3 31 CFR Subtitle A (7–1–22 Edition)
Net reduction in total spending is diminishment of the eligible worker’s
measured as the State or territory’s previous, current, or prospective wages
total spending for a given reporting or remuneration; or
year excluding its spending of funds, (2) With regard to work that the eli-
subtracted from its total spending for gible worker continues to perform, pay
its fiscal year ending in 2019, adjusted of up to $13 per hour that is in addition
for inflation using the Bureau of Eco- to the eligible worker’s regular rate of
nomic Analysis’s Implicit Price wages or remuneration, with no reduc-
Deflator for the gross domestic product tion, substitution, offset, or other di-
of the United States for that reporting minishment of the worker’s current
year. and prospective wages or remunera-
Nonentitlement unit of local government tion.
means a ‘‘city,’’ as that term is defined Qualified census tract has the same
in section 102(a)(5) of the Housing and meaning given in 26 U.S.C.
Community Development Act of 1974 42(d)(5)(B)(ii)(I).
(42 U.S.C. 5302(a)(5)), that is not a met- Recipient means a State, territory,
ropolitan city. Tribal government, metropolitan city,
Nonprofit means a nonprofit organiza- nonentitlement unit of local govern-
tion that is exempt from Federal in- ment, county, or unit of general local
come taxation and that is described in government that receives a payment
section 501(c)(3) or 501(c)(19) of the In- made under section 602(b) or 603(b) of
ternal Revenue Code. the Social Security Act or transfer
Obligation means an order placed for pursuant to section 603(c)(4) of the So-
property and services and entering into cial Security Act.
contracts, subawards, and similar
Reporting year means a single year or
transactions that require payment.
partial year within the covered period,
Pension fund means a defined benefit
aligned to the current fiscal year of the
plan and does not include a defined
State or territory during the covered
contribution plan.
period.
Period of performance means the time
Secretary means the Secretary of the
period described in § 35.5 during which a
Treasury.
recipient may obligate and expend
funds in accordance with sections State means each of the 50 States and
602(c)(1) and 603(c)(1) of the Social Se- the District of Columbia.
curity Act and this subpart. Small business means a business con-
Premium pay means an amount of up cern or other organization that:
to $13 per hour that is paid to an eligi- (1) Has no more than 500 employees
ble worker, in addition to wages or re- or, if applicable, the size standard in
muneration the eligible worker other- number of employees established by
wise receives, for all work performed the Administrator of the Small Busi-
by the eligible worker during the ness Administration for the industry in
COVID–19 public health emergency. which the business concern or organi-
Such amount may not exceed $25,000 in zation operates, and
total over the period of performance (2) Is a small business concern as de-
with respect to any single eligible fined in section 3 of the Small Business
worker. Premium pay may be awarded Act (15 U.S.C. 632).
to non-hourly and part-time eligible Tax revenue means revenue received
workers performing essential work. from a compulsory contribution that is
Premium pay will be considered to be exacted by a government for public
in addition to wages or remuneration purposes excluding refunds and correc-
the eligible worker otherwise receives tions and, for purposes of § 35.8, inter-
if, as measured on an hourly rate, the governmental transfers. Tax revenue
premium pay is: does not include payments for a special
(1) With regard to work that the eli- privilege granted or service rendered,
gible worker previously performed, pay employee or employer assessments and
and remuneration equal to the sum of contributions to finance retirement
all wages and remuneration previously and social insurance trust systems, or
kpayne on VMOFRWIN702 with $$_JOB
received plus up to $13 per hour with no special assessments to pay for capital
reduction, substitution, offset, or other improvements.
400
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00410 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.5
Territory means the Commonwealth conditions or violations of law, includ-
of Puerto Rico, the United States Vir- ing actions necessary to prevent eva-
gin Islands, Guam, the Commonwealth sions of this subpart.
of the Northern Mariana Islands, or (b) Extensions or accelerations of tim-
American Samoa. ing. The Secretary may extend or ac-
Title I eligible schools means schools celerate any deadline or compliance
eligible to receive services under sec- date of this part, including reporting
tion 1113 of Title I, Part A of the Ele- requirements that implement this sub-
mentary and Secondary Education Act part, if the Secretary determines that
of 1965, as amended (20 U.S.C. 6313), in- such extension or acceleration is ap-
cluding schools served under section propriate. In determining whether an
1113(b)(1)(C) of that Act. extension or acceleration is appro-
Tribal enterprise means a business priate, the Secretary will consider the
concern: period of time that would be extended
(1) That is wholly owned by one or or accelerated and how the modified
more Tribal governments, or by a cor- timeline would facilitate compliance
poration that is wholly owned by one with this subpart.
or more Tribal governments; or (c) Reporting and requests for other in-
(2) That is owned in part by one or formation. During the period of per-
more Tribal governments, or by a cor- formance, recipients shall provide to
poration that is wholly owned by one the Secretary periodic reports pro-
or more Tribal governments, if all viding detailed accounting of the uses
other owners are either United States of funds, modifications to a State or
citizens or small business concerns, as Territory’s tax revenue sources, and
these terms are used and consistent such other information as the Sec-
with the definitions in 15 U.S.C. retary may require for the administra-
657a(b)(2)(D). tion of this section. In addition to reg-
Tribal government means the recog- ular reporting requirements, the Sec-
nized governing body of any Indian or retary may request other additional in-
Alaska Native Tribe, band, nation, formation as may be necessary or ap-
pueblo, village, community, component propriate, including as may be nec-
band, or component reservation, indi- essary to prevent evasions of the re-
vidually identified (including par- quirements of this subpart. False state-
enthetically) in the list published on ments or claims made to the Secretary
January 29, 2021, pursuant to section may result in criminal, civil, or admin-
104 of the Federally Recognized Indian istrative sanctions, including fines, im-
Tribe List Act of 1994 (25 U.S.C. 5131). prisonment, civil damages and pen-
Unemployment rate means the U–3 un- alties, debarment from participating in
employment rate provided by the Bu- Federal awards or contracts, and/or
reau of Labor Statistics as part of the any other remedy available by law.
Local Area Unemployment Statistics
program, measured as total unemploy- § 35.5 Use of funds.
ment as a percentage of the civilian (a) In general. A recipient may only
labor force. use funds to cover costs incurred dur-
Unemployment trust fund means an ing the period beginning March 3, 2021,
unemployment trust fund established and ending December 31, 2024, for one
under section 904 of the Social Security or more of the purposes enumerated in
Act (42 U.S.C. 1104). sections 602(c)(1) and 603(c)(1) of the So-
Unit of general local government has cial Security Act, as applicable, includ-
the meaning given to that term in sec- ing those enumerated in § 35.6, subject
tion 102(a)(1) of the Housing and Com- to the restrictions set forth in sections
munity Development Act of 1974 (42 602(c)(2) and 603(c)(2) of the Social Se-
U.S.C. 5302(a)(1)). curity Act, as applicable.
(b) Costs incurred. A cost shall be con-
§ 35.4 Reservation of authority, report- sidered to have been incurred for pur-
ing. poses of paragraph (a) of this section if
(a) Reservation of authority. Nothing the recipient has incurred an obliga-
kpayne on VMOFRWIN702 with $$_JOB
in this part shall limit the authority of tion with respect to such cost by De-
the Secretary to take action to enforce cember 31, 2024.
401
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00411 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.6 31 CFR Subtitle A (7–1–22 Edition)
(c) Return of funds. A recipient must beneficiaries presumptively impacted
return any funds not obligated by De- or disproportionately impacted by the
cember 31, 2024. A recipient must also public health emergency or its nega-
return funds obligated by December 31, tive economic impacts for the purpose
2024 but not expended by December 31, of providing a response under para-
2026. graph (b)(1) or (b)(3) of this section:
(i) Households or populations that ex-
§ 35.6 Eligible uses.
perienced unemployment; experienced
(a) In general. Subject to §§ 35.7 and increased food or housing insecurity;
35.8, a recipient may use funds for one qualify for the Children’s Health Insur-
or more of the purposes described in ance Program (42 U.S.C. 1397aa et seq.),
paragraphs (b) through (f) of this sec- Childcare Subsidies through the Child
tion. Care and Development Fund Program
(b) Responding to the public health (42 U.S.C. 9857 et seq. and 42 U.S.C. 618),
emergency or its negative economic im- or Medicaid (42 U.S.C. 1396 et seq.); if
pacts. A recipient may use funds to re- funds are to be used for affordable
spond to the public health emergency housing programs, qualify for the Na-
or its negative economic impacts if the tional Housing Trust Fund (12 U.S.C.
use meets the criteria provided in para- 4568) or the Home Investment Partner-
graph (b)(1) of this section or is enu- ships Program (42 U.S.C. 12721 et seq.);
merated in paragraph (b)(3) of this sec- if funds are to be used to address im-
tion; provided that, in the case of a use pacts of lost instructional time for stu-
of funds for a capital expenditure under dents in kindergarten through twelfth
paragraphs (b)(1) or (b)(3) of this sec- grade, any student who did not have
tion, the use of funds must also meet access to in-person instruction for a
the criteria provided in paragraph significant period of time; and low- and
(b)(4) of this section. Treasury may moderate-income households and popu-
also articulate additional eligible pro- lations are presumed to be impacted by
grams, services, or capital expendi- the public health emergency or its neg-
tures from time to time that satisfy ative economic impacts;
the eligibility criteria of this para-
(ii) The general public is presumed to
graph (b), which shall be eligible under
be impacted by the public health emer-
this paragraph (b).
gency for the purposes of providing the
(1) Identifying eligible responses to the
uses set forth in subparagraphs
public health emergency or its negative
economic impacts. (i) A program, serv- (b)(3)(i)(A) and (b)(3)(i)(C); and
ice, or capital expenditure is eligible (iii) The following households, com-
under this paragraph (b)(1) if a recipi- munities, small businesses, and non-
ent identifies a harm or impact to a profit organizations are presumed to be
beneficiary or class of beneficiaries disproportionately impacted by the
caused or exacerbated by the public public health emergency or its nega-
health emergency or its negative eco- tive economic impacts:
nomic impacts and the program, serv- (A) Households and populations resid-
ice, or capital expenditure responds to ing in a qualified census tract; house-
such harm. holds and populations receiving serv-
(ii) A program, service, or capital ex- ices provided by Tribal governments;
penditure responds to a harm or impact households and populations residing in
experienced by an identified bene- the territories; households and popu-
ficiary or class of beneficiaries if it is lations receiving services provided by
reasonably designed to benefit the ben- territorial governments; low-income
eficiary or class of beneficiaries that households and populations; house-
experienced the harm or impact and is holds that qualify for Temporary As-
related and reasonably proportional to sistance for Needy Families (42 U.S.C.
the extent and type of harm or impact 601 et seq.), the Supplemental Nutrition
experienced. Assistance Program (7 U.S.C. 2011 et
(2) Identified harms: Presumptions of seq.), Free and Reduced Price School
impacted and disproportionately impacted Lunch and/or Breakfast programs (42
kpayne on VMOFRWIN702 with $$_JOB
beneficiaries. A recipient may rely on U.S.C. 1751 et seq. and 42 U.S.C. 1773),
the following presumptions to identify Medicare Part D Low-income Subsidies
402
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00412 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.6
(42 U.S.C. 1395w–114), Supplemental Se- (B) Medical expenses related to test-
curity Income (42 U.S.C. 1381 et seq.), ing and treating COVID–19 that are
Head Start (42 U.S.C. 9831 et seq.), Early provided in a manner consistent with
Head Start (42 U.S.C. 9831 et seq.), the recommendations and guidance from
Special Supplemental Nutrition Pro- the Centers for Disease Control and
gram for Women, Infants, and Children Prevention, including emergency med-
(42 U.S.C. 1786), Section 8 Vouchers (42 ical response expenses, treatment of
U.S.C. 1437f), the Low-Income Home long-term symptoms or effects of
Energy Assistance Program (42 U.S.C. COVID–19, and costs to medical pro-
8621 et seq.), Pell Grants (20 U.S.C. viders or to individuals for testing or
1070a), and, if SLFRF funds are to be treating COVID–19;
used for services to address educational (C) Behavioral health care, including
disparities, Title I eligible schools; prevention, treatment, emergency or
(B) Small businesses operating in a first-responder programs, harm reduc-
qualified census tract, operated by tion, supports for long-term recovery,
Tribal governments or on Tribal lands, and behavioral health facilities and
or operating in the territories; and equipment; and
(C) Nonprofit organizations operating (D) Preventing and responding to in-
in a qualified census tract, operated by creased violence resulting from the
Tribal governments or on Tribal lands, public health emergency, including
or operating in the territories. community violence intervention pro-
(3) Enumerated eligible uses: Responses grams, or responding to increased gun
presumed reasonably proportional. A re- violence resulting from the public
cipient may use funds to respond to the health emergency, including payroll
public health emergency or its nega- and covered benefits associated with
tive economic impacts on a beneficiary community policing strategies; en-
or class of beneficiaries for one or more forcement efforts to reduce gun vio-
of the following purposes unless such lence; and investing in technology and
use is grossly disproportionate to the equipment;
harm caused or exacerbated by the (ii) Responding to the negative eco-
public health emergency or its nega- nomic impacts of the public health
tive economic impacts: emergency for purposes including:
(i) Responding to the public health (A) Assistance to households and in-
impacts of the public health emergency dividuals, including:
for purposes including: (1) Assistance for food; emergency
(A) COVID–19 mitigation and preven- housing needs; burials, home repairs,
tion in a manner that is consistent or weatherization; internet access or
with recommendations and guidance digital literacy; cash assistance; and
from the Centers for Disease Control assistance accessing public benefits;
and Prevention, including vaccination (2) Paid sick, medical, or family
programs and incentives; testing pro- leave programs, or assistance to ex-
grams; contact tracing; isolation and pand access to health insurance;
quarantine; mitigation and prevention (3) Childcare, early learning services,
practices in congregate settings; acqui- home visiting, or assistance for child
sition and distribution of medical welfare-involved families or foster
equipment for prevention and treat- youth;
ment of COVID–19, including personal (4) Programs to address the impacts
protective equipment; COVID–19 pre- of lost instructional time for students
vention and treatment expenses for in kindergarten through twelfth grade;
public hospitals or health care facili- (5) Development, repair, and oper-
ties, including temporary medical fa- ation of affordable housing and services
cilities; establishing or enhancing pub- or programs to increase long-term
lic health data systems; installation housing security;
and improvement of ventilation sys- (6) Financial services that facilitate
tems in congregate settings, health fa- the delivery of Federal, State, or local
cilities, or other public facilities; and benefits for unbanked and underbanked
assistance to small businesses, non- individuals;
kpayne on VMOFRWIN702 with $$_JOB
profits, or impacted industries to im- (7) Benefits for the surviving family
plement mitigation measures; members of individuals who have died
403
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00413 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.6 31 CFR Subtitle A (7–1–22 Edition)
from COVID–19, including cash assist- facilities, and programs that increase
ance to surviving spouses or depend- access to healthy foods;
ents of individuals who died of COVID– (iv) Capital expenditures and other
19; services to address vacant or aban-
(8) Assistance for individuals who doned properties;
want and are available for work, in- (v) Services to address educational
cluding those who are unemployed, disparities; and
have looked for work sometime in the (vi) Facilities and equipment related
past 12 months, who are employed part to the provision of these services to the
time but who want and are available disproportionately impacted house-
for full-time work, or who are em- hold, population, or community.
ployed but seeking a position with (B) Assistance to small businesses,
greater opportunities for economic ad- including:
vancement;
(1) Programs, services, or capital ex-
(9) Facilities and equipment related
penditures that respond to the negative
to the provision of services to house-
economic impacts of the COVID–19 pub-
holds provided in subparagraphs
lic health emergency, including loans
(b)(3)(ii)(A)(1)–(8);
or grants to mitigate financial hard-
(10) The following expenses related to
ship such as declines in revenues or im-
Unemployment Trust Funds:
pacts of periods of business closure, or
(i) Contributions to a recipient Un-
providing technical assistance; and
employment Trust Fund and repay-
(2) A program, service, capital ex-
ment of principal amounts due on ad-
penditure, or other assistance that re-
vances received under Title XII of the
sponds to disproportionately impacted
Social Security Act (42 U.S.C. 1321) up
small businesses, including rehabilita-
to an amount equal to the difference
tion of commercial properties; store-
between the balance in the recipient’s
front and façade improvements; tech-
Unemployment Trust Fund as of Janu-
nical assistance, business incubators,
ary 27, 2020 and the balance of such ac-
and grants for start-ups or expansion
count as of May 17, 2021 plus the prin-
costs for small businesses; and pro-
cipal amount outstanding as of May 17,
grams or services to support micro-
2021 on any advances received under
businesses;
Title XII of the Social Security Act be-
tween January 27, 2020 and May 17, (C) Assistance to nonprofit organiza-
2021; provided that if a recipient repays tions including programs, services, or
principal on Title XII advances or capital expenditures, including loans
makes a contribution to an Unemploy- or grants to mitigate financial hard-
ment Trust Fund after April 1, 2022, ship such as declines in revenues or in-
such recipient shall not reduce average creased costs, or technical assistance;
weekly benefit amounts or maximum (D) Assistance to tourism, travel,
benefit entitlements prior to December hospitality, and other impacted indus-
31, 2024; and tries for programs, services, or capital
(ii) Any interest due on such ad- expenditures, including support for
vances received under Title XII of the payroll costs and covered benefits for
Social Security Act (42 U.S.C. 1321); employees, compensating returning
and employees, support for operations and
(11) A program, service, capital ex- maintenance of existing equipment and
penditure, or other assistance that is facilities, and technical assistance; and
provided to a disproportionately im- (E) Expenses to support public sector
pacted household, population, or com- capacity and workforce, including:
munity, including: (1) Payroll and covered benefit ex-
(i) Services to address health dispari- penses for public safety, public health,
ties of the disproportionately impacted health care, human services, and simi-
household, population, or community; lar employees to the extent that the
(ii) Housing vouchers and relocation employee’s time is spent mitigating or
assistance; responding to the COVID–19 public
(iii) Investments in communities to health emergency;
kpayne on VMOFRWIN702 with $$_JOB
promote improved health outcomes and (2) Payroll, covered benefit, and
public safety such as parks, recreation other costs associated with programs
404
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00414 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.6
or services to support the public sector grams addressing the public health
workforce and with the recipient: emergency or its negative economic
(i) Hiring or rehiring staff to fill impacts; and
budgeted full-time equivalent positions (4) Costs associated with addressing
that existed on January 27, 2020 but administrative needs of recipient gov-
that were unfilled or eliminated as of ernments that were caused or exacer-
March 3, 2021; or bated by the pandemic.
(ii) Increasing the number of its (4) Capital expenditures. A recipient,
budgeted full-time equivalent employ- other than a Tribal government, must
ees by up to the difference between the
prepare a written justification for cer-
number of its budgeted full-time equiv-
tain capital expenditures according to
alent employees on January 27, 2020,
Table 1 to paragraph (b)(4) of this sec-
multiplied by 1.075, and the number of
its budgeted full-time equivalent em- tion. Such written justification must
ployees on March 3, 2021, provided that include the following elements:
funds shall only be used for additional (i) Describe the harm or need to be
budgeted full-time equivalent employ- addressed;
ees above the recipient’s number of (ii) Explain why a capital expendi-
budgeted full-time equivalent employ- ture is appropriate; and
ees as of March 3, 2021; (iii) Compare the proposed capital ex-
(3) Costs to improve the design and penditure to at least two alternative
execution of programs responding to capital expenditures and demonstrate
the COVID–19 pandemic and to admin- why the proposed capital expenditure
ister or improve the efficacy of pro- is superior.
TABLE 1 TO PARAGRAPH (b)(4)
If a project has total expected and the use is enumerated in (b)(3), then and the use is not enumerated in (b)(3), then
capital expenditures of
Less than $1 million ................. No Written Justification required ...................... No Written Justification required.
Greater than or equal to $1 Written Justification required but recipients are Written Justification required and recipients
million, but less than $10 mil- not required to submit as part of regular re- must submit as part of regular reporting to
lion. porting to Treasury. Treasury.
$10 million or more .................. Written Justification required and recipients
must submit as part of regular reporting to
Treasury.
(c) Providing premium pay to eligible tions as defined by the Bureau of Labor
workers. A recipient may use funds to Statistics’ Occupational Employment
provide premium pay to eligible work- and Wage Statistics;
ers of the recipient who perform essen- (2) The eligible worker is not exempt
tial work or to provide grants to eligi- from the Fair Labor Standards Act
ble employers that have eligible work- overtime provisions (29 U.S.C. 207); or
ers who perform essential work, pro- (3) The recipient has submitted to
vided that any premium pay or grants the Secretary a written justification
provided under this paragraph (c) must that explains how providing premium
respond to eligible workers performing pay to the eligible worker is responsive
essential work during the COVID–19 to the eligible worker performing es-
public health emergency. A recipient sential work during the COVID–19 pub-
uses premium pay or grants provided lic health emergency (such as a de-
under this paragraph (c) to respond to scription of the eligible workers’ du-
eligible workers performing essential ties, health, or financial risks faced
work during the COVID–19 public due to COVID–19, and why the recipient
health emergency if: determined that the premium pay was
(1) The eligible worker’s total wages responsive despite the worker’s higher
and remuneration, including the pre- income).
mium pay, is less than or equal to 150 (d) Providing government services. A re-
percent of the greater of such eligible cipient may use funds for the provision
kpayne on VMOFRWIN702 with $$_JOB
worker’s residing State’s or county’s of government services to the extent of
average annual wage for all occupa- the reduction in the recipient’s general
405
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00415 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.6 31 CFR Subtitle A (7–1–22 Edition)
revenue due to the public health emer- in paragraph (d)(2)(i) of this section,
gency, calculated according to this except:
paragraph (d). A recipient must make a (1) For purposes of all calculation
one-time election to calculate the dates on or after April 1, 2022, in the
amount of the reduction in the recipi- case of any change made after January
ent’s general revenue due to the public 6, 2022 to any law, regulation, or ad-
health emergency according to either ministrative interpretation that re-
paragraph (d)(1) or (d)(2) of this sec- duces any tax (by providing for a re-
tion: duction in a rate, a rebate, a deduction,
(1) Standard allowance. The reduction a credit, or otherwise) or delays the
in the recipient’s general revenue due imposition of any tax or tax increase
to the public health emergency over and that the recipient assesses has had
the period of performance will be the effect of decreasing the amount of
deemed to be ten million dollars; or tax revenue collected during the 12-
(2) Formula. The reduction in the re- month period ending on the calculation
cipient’s general revenue due to the date relative to the amount of tax rev-
public health emergency over the pe- enue that would have been collected in
riod of performance equals the sum of the absence of such change, the recipi-
the reduction in revenue, calculated as ent must add to actual general revenue
of each date identified in paragraph the amount of such decrease in tax rev-
(d)(2)(i) of this section and according to enue;
the formula in paragraph (d)(2)(ii) of (2) For purposes of any calculation
this section: date on or after April 1, 2022, in the
(i) A recipient must make a one-time case of any change made after January
election to calculate the reduction in 6, 2022 to any law, regulation, or ad-
its general revenue using information ministrative interpretation that in-
as of either: creases any tax (by providing for an in-
(A) December 31, 2020, December 31, crease in a rate, the reduction of a re-
2021, December 31, 2022, and December bate, a deduction, or a credit, or other-
31, 2023; or wise) or accelerates the imposition of
(B) The last day of each of the recipi- any tax or tax increase and that the re-
ent’s fiscal years ending in 2020, 2021, cipient assesses has had the effect of
2022, and 2023. increasing the amount of tax revenue
(ii) A reduction in a recipient’s gen- collected during the 12-month period
eral revenue for each date identified in ending on the calculation date relative
paragraph (d)(2)(i) of this section to the amount of tax revenue that
equals: would have been collected in the ab-
Max {[Base Year Revenue * (1 + Growth Adjust- sence of such change, the recipient
ment)∧(nt/12)]¥Actual General Revenue; 0} must subtract from actual general rev-
Where: enue the amount of such increase in
(A) Base Year Revenue is the recipi- tax revenue;
ent’s general revenue for the most re- (3) If the recipient makes a one-time
cent full fiscal year prior to the election to adjust general revenue to
COVID–19 public health emergency; reflect tax changes made during the pe-
(B) Growth Adjustment is equal to riod beginning on January 27, 2020 and
the greater of 5.2 percent (or 0.052) and ending on January 6, 2022, for purposes
the recipient’s average annual revenue of each calculation date identified in
growth over the three full fiscal years paragraph (d)(2)(i) of this section:
prior to the COVID–19 public health (i) In the case of any change made
emergency; during such prior period to any law,
(C) n equals the number of months regulation, or administrative interpre-
elapsed from the end of the base year tation that reduces any tax (by pro-
to the calculation date; viding for a reduction in a rate, a re-
(D) Subscript t denotes the specific bate, a deduction, a credit, or other-
calculation date; and wise) or delays the imposition of any
(E) Actual General Revenue is a re- tax or tax increase and that the recipi-
cipient’s actual general revenue col- ent assesses has had the effect of de-
kpayne on VMOFRWIN702 with $$_JOB
lected during the 12-month period end- creasing the amount of tax revenue
ing on each calculation date identified collected during the 12-month period
406
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00416 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.6
ending on the calculation date relative Pollution Control Act (33 U.S.C.
to the amount of tax revenue that 1383(c)(5));
would have been collected in the ab- (iii) Drinking Water State Revolving
sence of such change, the recipient Fund projects. Projects or activities of
must add to actual general revenue the the type that meet the eligibility re-
amount of such decrease in tax rev- quirements of section 1452 of the Safe
enue; and Drinking Water Act (42 U.S.C. 300j–12)
(ii) In the case of any change made as implemented by the regulations
during such prior period to any law, adopted by the Environmental Protec-
regulation, or administrative interpre- tion Agency (EPA) under 40 CFR
tation that increases any tax (by pro- 35.3520, provided that:
viding for an increase in a rate, the re- (A) The recipient is not required to
duction of a rebate, a deduction, or a comply with the limitation under 40
credit, or otherwise) or accelerates the CFR 35.3520(c)(2) to acquisitions of land
imposition of any tax or tax increase from willing sellers or the prohibition
and that the recipient assesses has had under 40 CFR 35.3520(e)(6) on uses of
the effect of increasing the amount of funds for certain Tribal projects; and
tax revenue collected during the 12- (B) In the case of lead service line re-
month period ending on the calculation placement projects, the recipient must
date relative to the amount of tax rev- replace the full length of the service
enue that would have been collected in line and may not replace only a partial
the absence of such change, the recipi- portion of the service line.
ent must subtract from actual general (iv) Additional lead remediation and
revenue the amount of such increase in household water quality testing. Projects
tax revenue; and or activities to address lead in drinking
(4) With respect to any calculation water or provide household water qual-
date during the period beginning on ity testing that are within the scope of
the programs the EPA is authorized to
January 6, 2022 and ending on March 31,
establish under sections 1459A(b)(2),
2022, if the recipient makes the elec-
1459B(b)(1), 1464(d)(2), and 1465 of the
tion in paragraph (d)(3) of this section,
Safe Drinking Water Act (42 U.S.C.
the recipient must also make the ad-
300j–19a(b)(2), 300j–19b(b)(1), 300j–
justments referenced in paragraph
24(d)(2), and 300j–25), provided that:
(d)(3) of this section with respect to
(A) In the case of lead service line re-
any such changes in law, regulation, or
placement projects, the recipient must
administrative interpretation during
replace the full length of the service
the period beginning on January 6, 2022
line and may not replace only a partial
and ending on such calculation date.
portion of the service line; and
(e) Making necessary investments in (B) In the case of projects within the
water, sewer, and broadband infrastruc- scope of the program the EPA is au-
ture. A recipient may use funds to thorized to establish under section
make the following investments in 1459B(b)(1) of the Safe Drinking Water
water, sewer, and broadband infra- Act, the recipient may determine the
structure. income eligibility of homeowners
(1) Water and sewer investments—(i) served by lead service line replacement
Clean Water State Revolving Fund projects in its discretion.
projects. Projects or activities of the (v) Drinking water projects to support
type that meet the eligibility require- increased population. Projects of the
ments of section 603(c) of the Federal type that meet the eligibility require-
Water Pollution Control Act (33 U.S.C. ments of 40 CFR 35.3520 other than the
1383(c)); requirement of subparagraph (b)(1) of
(ii) Additional stormwater projects. such regulation to address present or
Projects to manage, reduce, treat, or prevent future violations of health-
recapture stormwater or subsurface based drinking water standards, if the
drainage water regardless of whether following conditions are met:
such projects would improve water (A) The project is needed to support
quality if such projects would other- increased population, with need as-
kpayne on VMOFRWIN702 with $$_JOB
wise meet the eligibility requirements sessed as of the time the project is un-
of section 603(c)(5) of the Federal Water dertaken;
407
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00417 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.6 31 CFR Subtitle A (7–1–22 Edition)
(B) The project is designed to support (2) Broadband investments—(i) General.
no more than a reasonable level of pro- Broadband infrastructure if the fol-
jected increased need, whether due to lowing conditions are met:
population growth or otherwise; (A) The broadband infrastructure is
(C) The project is a cost-effective designed to provide service to house-
means for achieving the desired level of holds and businesses with an identified
service; and need, as determined by the recipient,
(D) The project is projected to con- for such infrastructure;
tinue to provide an adequate level of (B) The broadband infrastructure is
drinking water over its estimated use- designed to, upon completion:
ful life. (1) Reliably meet or exceed symmet-
(vi) Dams and reservoirs. Rehabilita- rical 100 Mbps download speed and
tion of dams and reservoirs if the fol- upload speeds; or
lowing conditions are met: (2) In cases where it is not prac-
(A) The project meets the require- ticable, because of the excessive cost of
ments of 40 CFR 35.3520 other than the the project or geography or topography
following requirements: of the area to be served by the project,
(1) The prohibition on the rehabilita- to provide service reliably meeting or
tion of dams and reservoirs in 40 CFR exceeding symmetrical 100 Mbps
35.3520(e)(1) and (3); and download speed and upload speeds:
(2) The requirement in 40 CFR (i) Reliably meet or exceed 100 Mbps
35.3520(b)(1) that the project is needed download speed and between at least 20
to address present or prevent future Mbps and 100 Mbps upload speed; and
violations of health-based drinking (ii) Be scalable to a minimum of 100
water standards, provided that if the Mbps download speed and 100 Mbps
dam or reservoir project does not meet upload speed; and
this requirement, the project must be (C) The service provider for a com-
needed to support increased popu- pleted broadband infrastructure invest-
lation, with need assessed as of the ment project that provides service to
time the project is undertaken, and the households is required, for as long as
project must be projected to continue the SLFRF-funded broadband infra-
to provide an adequate level of drink- structure is in use, by the recipient to:
ing water over its estimated useful life; (1) Participate in the Federal Com-
(B) The primary purpose of the dam munications Commission’s Affordable
or reservoir is for drinking water sup- Connectivity Program (ACP) through
ply; the lifetime of the ACP; or
(C) The project is needed for the pro- (2) Otherwise provide access to a
vision of drinking water supply, with broad-based affordability program to
need assessed as of the time the project low-income consumers in the proposed
is initiated; service area of the broadband infra-
(D) The project is designed to support structure that provides benefits to
no more than a reasonable level of pro- households commensurate with those
jected increased need, whether due to provided under the ACP through the
population growth or otherwise; and lifetime of the ACP.
(E) The project is a cost-effective (ii) Cybersecurity infrastructure invest-
means for achieving the desired level of ments. Cybersecurity infrastructure in-
service. vestments that are designed to improve
(vii) Private wells. Rehabilitation of the reliability and resiliency of new
private wells, testing initiatives to and existing broadband infrastructure.
identify contaminants in private wells, Such investments may include the ad-
and treatment activities and remedi- dition or modernization of network se-
ation projects that address contamina- curity hardware and software tools de-
tion in private wells, if the project signed to strengthen cybersecurity for
meets the requirements of 40 CFR the end-users of these networks.
35.3520 other than the limitation to cer- (f) Meeting the non-federal matching re-
kpayne on VMOFRWIN702 with $$_JOB
tain eligible systems under 40 CFR quirements for Bureau of Reclamation
35.3520(a). projects. A recipient may use funds to
408
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00418 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.10
meet the non-federal matching require- or based on projections that use rea-
ments of any authorized Bureau of Rec- sonable assumptions and do not incor-
lamation project. porate the effects of macroeconomic
growth to reduce or increase the pro-
§ 35.7 Pensions. jected impact of the covered change,
A recipient (other than a Tribal gov- the State or Territory assesses has had
ernment) may not use funds for deposit or predicts to have the effect of in-
into any pension fund. creasing tax revenue; and
(ii) Reductions in spending, up to the
§ 35.8 Tax. amount of the State’s or Territory’s
(a) Restriction. A State or Territory net reduction in total spending, that
shall not use funds to either directly or are in:
indirectly offset a reduction in the net (A) Departments, agencies, or au-
tax revenue of the State or Territory thorities in which the State or Terri-
resulting from a covered change during tory is not using funds; and
the covered period. (B) Departments, agencies, or au-
(b) Violation. Treasury will consider a thorities in which the State or Terri-
State or Territory to have used funds tory is using funds, in an amount equal
to offset a reduction in net tax revenue to the value of the spending cuts in
if, during a reporting year: those departments, agencies, or au-
(1) Covered change. The State or Ter- thorities, minus funds used.
ritory has made a covered change that, (c) Amount and revenue reduction cap.
either based on a reasonable statistical If a State or Territory is considered to
methodology to isolate the impact of be in violation pursuant to paragraph
the covered change in actual revenue (b) of this section, the amount used in
or based on projections that use rea- violation of paragraph (a) of this sec-
sonable assumptions and do not incor- tion is equal to the lesser of:
porate the effects of macroeconomic (1) The reduction in net tax revenue
growth to reduce or increase the pro- of the State or Territory for the re-
jected impact of the covered change, porting year, measured as the dif-
the State or Territory assesses has had ference between the State’s or Terri-
or predicts to have the effect of reduc- tory’s baseline and its actual tax rev-
ing tax revenue relative to current law; enue, each measured as of the end of
(2) Exceeds the de minimis threshold. the reporting year; and,
The aggregate amount of the measured
(2) The aggregate amount of the re-
or predicted reductions in tax revenue
ductions in tax revenues caused by cov-
caused by covered changes identified
ered changes identified in paragraph
under paragraph (b)(1) of this section,
(b)(1) of this section, minus the sum of
in the aggregate, exceeds 1 percent of
the amounts in identified in para-
the State’s or Territory’s baseline;
graphs (b)(4)(i) and (ii) of this section.
(3) Reduction in net tax revenue. The
State or Territory reports a reduction § 35.9 Compliance with applicable
in net tax revenue, measured as the dif- laws.
ference between actual tax revenue and
the State’s or Territory’s baseline, A recipient must comply with all
each measured as of the end of the re- other applicable Federal statutes, reg-
porting year; and ulations, and executive orders, and a
(4) Consideration of other changes. The recipient shall provide for compliance
aggregate amount of measured or pre- with the American Rescue Plan Act,
dicted reductions in tax revenue caused this subpart, and any interpretive guid-
by covered changes is greater than the ance by other parties in any agree-
sum of the following, in each case, as ments it enters into with other parties
calculated for the reporting year: relating to these funds.
(i) The aggregate amount of the ex-
pected increases in tax revenue caused § 35.10 Recoupment.
by one or more covered changes that, (a) Identification of violations—(1) In
either based on a reasonable statistical general. Any amount used in violation
kpayne on VMOFRWIN702 with $$_JOB
methodology to isolate the impact of of § 35.5, 35.6, or 35.7 may be identified
the covered change in actual revenue at any time prior to December 31, 2026.
409
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00419 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.11 31 CFR Subtitle A (7–1–22 Edition)
(2) Annual reporting of amounts of vio- to affirm, withdraw, or modify the no-
lations. On an annual basis, a recipient tice of recoupment. Such notification
that is a State or territory must cal- will include an explanation of the deci-
culate and report any amounts used in sion, including responses to the recipi-
violation of § 35.8. ent’s supporting reasons and consider-
(b) Calculation of amounts subject to ation of additional information pro-
recoupment—(1) In general. Except as vided. A recipient must invoke and ex-
provided in paragraph (b)(2) of this sec- haust the procedures available under
tion, the Secretary will calculate any this subpart prior to seeking judicial
amounts subject to recoupment result- review of a decision under § 35.10.
ing from a violation of § 35.5, 35.6 or 35.7 (f) Repayment of funds. Unless the
as the amounts used in violation of Secretary extends or accelerates the
such restrictions. time period, a recipient shall repay to
(2) Violations of § 35.8. The Secretary the Secretary any amounts subject to
will calculate any amounts subject to recoupment in accordance with in-
recoupment resulting from a violation structions provided by the Secretary:
of § 35.8, equal to the lesser of: (1) Within 120 calendar days of re-
(i) The amount set forth in § 35.8(c); ceipt of the notice of recoupment pro-
and, vided under paragraph (c) of this sec-
(ii) The amount of funds received by tion, in the case of a recipient that
such recipient. does not submit a request for reconsid-
(c) Initial notice. If the Secretary cal- eration in accordance with the require-
culates an amount subject to ments of paragraph (d) of this section;
recoupment under paragraph (b) of this or
section, Treasury will provide the re- (2) Within 120 calendar days of re-
cipient an initial written notice of the ceipt of the Secretary’s decision under
amount subject to recoupment along paragraph (e) of this section, in the
with an explanation of such amounts. case of a recipient that submits a re-
(d) Request for reconsideration. Unless quest for reconsideration in accordance
the Secretary extends or accelerates with the requirements of paragraph (d)
the time period, within 60 calendar of this section.
days of receipt of an initial notice of (g) Other remedial actions. Prior to
recoupment provided under paragraph seeking recoupment or taking other
(c) of this section, a recipient may sub- appropriate action pursuant to para-
mit a written request to the Secretary graph (c), (d), (e), or (f) of this section,
requesting reconsideration of any the Secretary may notify the recipient
amounts subject to recoupment under of potential violations and provide the
paragraph (b) of this section. To re- recipient an opportunity for informal
quest reconsideration of any amounts consultation and remediation.
subject to recoupment, a recipient
must submit to the Secretary a written § 35.11 Payments to States.
request that includes: (a) In general. With respect to any
(1) An explanation of why the recipi- State or Territory that has an unem-
ent believes all or some of the amount ployment rate as of the date that it
should not be subject to recoupment; submits an initial certification for pay-
and ment of funds pursuant to section
(2) A discussion of supporting rea- 602(d)(1) of the Social Security Act that
sons, along with any additional infor- is less than two percentage points
mation. above its unemployment rate in Feb-
(e) Final amount subject to recoupment. ruary 2020, the Secretary will withhold
Unless the Secretary extends or accel- 50 percent of the amount of funds allo-
erates the time period, within 60 cal- cated under section 602(b) of the Social
endar days of receipt of the recipient’s Security Act to such State or territory
request for reconsideration provided until at least May 10, 2022 and not more
pursuant to paragraph (d) of this sec- than twelve months from the date such
tion or the expiration of the period for initial certification is provided to the
requesting reconsideration provided Secretary.
kpayne on VMOFRWIN702 with $$_JOB
under paragraph (d), the recipient will (b) Payment of withheld amount. In
be notified of the Secretary’s decision order to receive the amount withheld
410
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00420 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.20
under paragraph (a) of this section, the (c) Units of general local government.
State or Territory must submit to the Each State or Territory that receives a
Secretary the following information: payment from the Secretary pursuant
(1) A certification, in the form pro- to section 603(b)(3)(B)(ii) of the Social
vided by the Secretary, that such State Security Act, in the case of an amount
or Territory requires the payment to to be paid to a county that is not a
carry out the activities specified in unit of general local government, shall
section 602(c) of the Social Security distribute the amount of the payment
Act and will use the payment in com- to units of general local government
pliance with section 602(c) of the Social within such county in accordance with
Security Act; and the requirements set forth in section
(2) Any reports required to be filed by 603(b)(3)(B)(ii) of the Social Security
that date pursuant to this part that Act and without offsetting any debt
have not yet been filed. owed by such units of general local
government against such payments.
§ 35.12 Distributions to nonentitlement (d) Additional conditions. A State or
units of local government and units Territory may not place additional
of general local government. conditions or requirements on distribu-
(a) Nonentitlement units of local gov- tions to nonentitlement units of local
ernment. Each State or Territory that government or units of general local
receives a payment from the Secretary government beyond those required by
pursuant to section 603(b)(2)(B) of the section 603 of the Social Security Act
Social Security Act shall distribute the or this subpart.
amount of the payment to nonentitle-
ment units of local government in such Subpart B—Compensation and
State or Territory in accordance with Capital Distributions
the requirements set forth in section
603(b)(2)(C) of the Social Security Act § 35.20 Purpose, applicability, and gen-
and without offsetting any debt owed eral provisions.
by such nonentitlement units of local (a) Purpose. Pursuant Section 104A of
governments against such payments. the Community Development Banking
(b) Budget cap. A State or Territory and Financial Institutions Act of 1994
may not make a payment to a non- (Act), as added by the Consolidated Ap-
entitlement unit of local government propriations Act, 2021 (Pub. L. 116–260),
pursuant to section 603(b)(2)(C) of the this subpart establishes restrictions on
Social Security Act and paragraph (a) executive compensation, dividend pay-
of this section in excess of the amount ments, and share buybacks for recipi-
equal to 75 percent of the most recent ents of capital investments under the
budget for the nonentitlement unit of Department of the Treasury’s Emer-
local government as of January 27, gency Capital Investment Program
2020. For purposes of this section 35.12, (ECIP or Program), as well as addi-
a nonentitlement unit of local govern- tional criteria for participation in the
ment’s most recent budget shall mean Program that the Secretary has deter-
the nonentitlement unit of local gov- mined are appropriate in furtherance of
ernment’s total annual budget, includ- the Program goals.
ing both operating and capital expendi- (b) Applicability. This subpart applies
ture budgets, in effect as of January 27, on a consolidated basis to any insured
2020. A State or Territory shall permit depository institution, bank holding
a nonentitlement unit of local govern- company, savings and loan holding
ment without a formal budget as of company, or federally insured credit
January 27, 2020, to provide a certifi- union that issues preferred stock or a
cation from an authorized officer of the subordinated debt instrument to the
nonentitlement unit of local govern- Department of the Treasury under the
ment of its most recent annual expend- Program (an ECIP recipient, as defined
itures as of January 27, 2020, and a in § 35.21 of this subpart). An ECIP re-
State or Territory may rely on such cipient must comply with the require-
kpayne on VMOFRWIN702 with $$_JOB
certification for purposes of complying ments of this subpart during the ECIP
with this section 35.12. period.
411
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00421 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.21 31 CFR Subtitle A (7–1–22 Edition)
(c) Limitation of authority. Nothing in (A) Payments of dividends and inter-
this subpart shall be interpreted to est (as defined by 12 CFR 707.2(h) and
limit the authority of the appropriate (o)) on accounts held by their members;
Federal banking agency to take action provided that this exclusion does not
under other provisions of law, includ- apply to any extraordinary or special
ing action to address unsafe or unsound dividend by a credit union; or
practices or conditions, deficient cap- (B) Redemptions of membership
ital levels, or violations of law or regu- share interests upon voluntary or in-
lation, under section 8 of the Federal voluntary terminations of membership
Deposit Insurance Act, section 8 of the by a credit union or its members, as
Bank Holding Company Act, or section applicable; and
10 of the Home Owners’ Loan Act, or (iii) Solely in the case of § 35.23(b)
the Federal Credit Union Act, as may (Limit on amount of capital distribu-
be applicable. tions), redemptions or repurchases of
non-senior securities if the issuer of
§ 35.21 Definitions.
the non-senior securities being repur-
Except as modified in this regulation chased or redeemed fully funds the re-
or unless the context otherwise re- demption or repurchase by issuing at
quires, the terms used in this regula- least a corresponding amount of new
tion have the same meaning as set non-senior securities that rank equally
forth in the relevant statutes. For pur- in liquidation with, receive the same
poses of this subpart: capital treatment as and, if applicable,
Act means the Community Develop- have a stated maturity date no earlier
ment Banking and Financial Institu- than the non-senior securities being re-
tions Act of 1994, as amended (12 U.S.C. deemed or repurchased.
4701 et seq.). ECIP means the Emergency Capital
Appropriate Federal banking agency Investment Program established under
has the same meaning as in 12 U.S.C. Section 104A of the Community Devel-
1813 and also includes the NCUA with opment Banking and Financial Institu-
respect to a federally insured credit tions Act of 1994, as amended.
union. ECIP investment means any preferred
Capital distributions means: stock, subordinated debt, or other in-
(1) Dividends, including discretionary strument (including any successor to
dividends, on non-senior securities and any such instrument) issued by an
any other payments on a share of stock ECIP recipient to the Department of
or other equity or equivalent interest; the Treasury under the ECIP.
(2) Payments, including interest pay-
ECIP investment agreement means the
ments, on non-senior securities, that
agreement between an ECIP recipient
the issuer has full discretion to perma-
and the Department of the Treasury
nently or temporarily suspend without
with respect to the ECIP investment in
triggering a default;
that ECIP recipient.
(3) Redemptions or repurchases of
non-senior securities; or ECIP investment date means the date
(4) Any similar transaction that the on which an ECIP recipient first issued
Department of the Treasury deter- an ECIP investment.
mines to be in substance a capital dis- ECIP period means the period from
tribution; the ECIP investment date until the
(5) Provided, that a ‘‘capital distribu- earliest of:
tion’’ does not include: (1) The date on which the ECIP re-
(i) Redemptions or repurchases of cipient has fully redeemed or repaid
shares that are part of an employee the ECIP investment received under
stock ownership plan for an ECIP re- ECIP;
cipient that is not publicly traded, pro- (2) The date on which the investment
vided that the repurchase is required the ECIP recipient received under the
solely by virtue of the Employee Re- ECIP is no longer held, in full or in
tirement Income Security Act of 1974, part, by the Department of the Treas-
as amended; ury or any affiliate thereof; and
kpayne on VMOFRWIN702 with $$_JOB
(ii) In the case of federally insured (3) Ten years after the ECIP invest-
credit unions: ment date.
412
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00422 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.21
ECIP recipient means any entity that (4) Require the ECIP recipient to de-
has received a capital investment liver a certification, executed by two
under the ECIP. senior executive officers (one of which
Excessive or luxury expenditures must be its principal executive officer
means: or principal financial officer) certifying
(1) Excessive expenditures on any of that the approval of any expenditure
the following to the extent such ex- requiring the prior approval of any sen-
penditures are not reasonable expendi- ior executive officer, any executive of-
tures for staff development, reasonable ficer of a substantially similar level of
performance incentives, or other simi- responsibility, or the ECIP recipient’s
lar reasonable measures conducted in board of directors (or a committee of
the normal course of the ECIP recipi- such board of directors), was properly
ent’s business operations: obtained with respect to each such ex-
(i) Entertainment or events; penditure;
(ii) Office and facility renovations; (5) Require the prompt internal re-
porting of violations to an appropriate
(iii) Aviation or other transportation
person or persons identified in this pol-
services;
icy; and
(iv) Tax gross-ups; and
(6) Mandate accountability for adher-
(v) Other similar items, activities, or ence to the policy.
events for which the ECIP recipient FDIC means the Federal Deposit In-
may reasonably anticipate incurring surance Corporation.
expenses, or reimbursing an employee Federal Reserve Board means the
for incurring expenses; Board of Governors of the Federal Re-
(2) Provided, that reasonable capital serve System.
investments in technology, equipment, NCUA means the National Credit
and similar items that expand the Union Administration.
long-term capability of an ECIP recipi- Non-senior security means any equity
ent to provide products and services to interest or equivalent interest (includ-
its customers and community are not ing but not limited to membership
excessive or luxury expenditures. share interests in the case of a credit
Excessive or luxury expenditures policy union) or any other interest in, or in-
means written standards applicable to strument issued by, an ECIP recipient
the ECIP recipient and its employees that is pari passu with, or junior to, the
that address the five categories of ex- ECIP investment with respect to cap-
penses set forth in the definition of ital distributions or ranking in liquida-
‘‘excessive or luxury expenditures,’’ tion, including but not limited to the
and that are reasonably designed to common stock (or equivalent equity
eliminate excessive and luxury expend- interest) of the ECIP recipient, or any
itures. Such written standards must: equity interest or equivalent interest
(1) Identify the types or categories of or any other interest in or instrument
expenditures which are prohibited issued by a depository institution hold-
(which may include a threshold expend- ing company of which the ECIP recipi-
iture amount per item, activity, or ent is a subsidiary.
event or a threshold expenditure OCC means the Office of the Comp-
amount per employee receiving the troller of the Currency.
item or participating in the activity or Principal executive officer means the
event); chief executive officer of an ECIP re-
(2) Identify the types or categories of cipient (or individual performing a
expenditures for which prior approval similar function).
is required (which may include a Principal financial officer means the
threshold expenditure amount per chief financial officer of an ECIP re-
item, activity, or event or a threshold cipient (or individual performing a
expenditure amount per employee re- similar function).
ceiving the item or participating in the Senior executive officer means an ECIP
activity or event); recipient’s president, any vice presi-
(3) Provide reasonable approval pro- dent in charge of a principal business
kpayne on VMOFRWIN702 with $$_JOB
cedures for expenditures requiring unit, division or function, any other of-
prior approval; ficer who performs a policy making
413
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00423 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.22 31 CFR Subtitle A (7–1–22 Edition)
function, or any other person who per- (2) For an ECIP recipient that is a
forms similar policy making functions. bank holding company, the require-
Severance payment means any pay- ments for corporate practices of bank
ment or benefit provided to an officer holding companies as issued by the
or employee of an ECIP recipient in Federal Reserve Board at 12 CFR 225.4;
connection with any termination of (3) For an ECIP recipient that is a
such officer or employee’s employment savings and loan holding company, the
with the ECIP recipient (including res- requirements regarding safe and sound
ignation, severance, retirement, or operations of savings and loan holding
constructive termination), except for companies as issued by the Federal Re-
payment for services performed or ben- serve Board at 12 CFR 238.8; and
efits accrued. A severance payment in- (4) For an ECIP recipient that is a
cludes cash payments, health care ben- federally insured credit union, the re-
efits, perquisites, the enhancement or quirements on compensation and bene-
acceleration of any payment or vesting fits for federally insured credit unions
of any payment or benefit, or any other as issued by the NCUA at 12 CFR
in-kind benefit payable or provided in 701.19(a); 12 CFR 701.21(c)(8); 12 CFR
connection with any termination of an 702.203(b)(10); and 12 CFR 702.204(b)(10).
officer or employee of the ECIP recipi- (b) Restriction on severance payments.
ent. An ECIP recipient shall not make ex-
Total compensation means all com- cessive severance payments to any sen-
pensation, other than any severance ior executive officer. Unless informed
payment, provided by an ECIP recipi- otherwise by the Department of the
ent to an officer or employee, including Treasury, an ECIP is considered to
salary, wages, bonuses, awards of have satisfied the requirements regard-
stock, deferred compensation, and ing severance payments in this section
other financial benefits. if it maintains compliance with the fol-
lowing (or any successor requirement,
§ 35.22 Restrictions on compensation. as applicable):
(a) Restriction on executive compensa- (1) For an ECIP recipient that is an
tion. An ECIP recipient must ensure insured depository institution, a bank
that the total compensation paid to its holding company or a savings and loan
senior executive officers is appropriate holding company, the limits and prohi-
and not excessive. Unless informed oth- bitions to enter into contracts to pay
erwise by the Department of the Treas- and to make golden parachute and in-
ury, an ECIP recipient is considered to demnification payments to institution-
have satisfied the requirements regard- affiliated parties to the extent applica-
ing executive compensation in this sec- ble to the ECIP recipient, as issued by
tion if it, and, if applicable, all insured the FDIC at 12 CFR part 359; and
depository institution subsidiaries of (2) For an ECIP recipient that is a
the ECIP recipient, maintains compli- federally insured credit union, the lim-
ance with the following (or any suc- its and prohibitions on the ability of
cessor requirement, as applicable): federally insured credit unions to enter
(1) For an ECIP recipient or sub- into contracts to pay and to make
sidiary of an ECIP recipient that is an golden parachute and indemnification
insured depository institution, except payments to institution-affiliated par-
for federally insured credit unions, the ties as issued by the NCUA at 12 CFR
Interagency Guidelines Establishing 750.1.
Standards for Safety and Soundness as (c) Excessive or luxury expenditures. (1)
issued by the appropriate Federal Ninety days after an ECIP investment
banking agency for the ECIP recipient date with respect to an ECIP recipient,
or subsidiary (i.e., for national banks the board of directors of the ECIP re-
and Federal savings associations, 12 cipient must adopt an excessive or lux-
CFR part 30, appendix A; state member ury expenditures policy, provide such
banks, 12 CFR part 208, appendix D–1; policy to the Department of the Treas-
insured state nonmember banks and ury and the ECIP recipient’s appro-
kpayne on VMOFRWIN702 with $$_JOB
state savings associations, 12 CFR part priate Federal banking agency, and
364, appendix A); post the text of such policy on its
414
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00424 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.23
internet website, if the ECIP recipient cipient has provided a complete re-
maintains an internet website. quest to the Department of the Treas-
(2) If, after adopting an excessive or ury, unless, prior to the expiration of
luxury expenditures policy, the board the thirty-day period, the Department
of directors of the ECIP recipient of the Treasury objects to the proposed
makes any material amendments to change or notifies the ECIP recipient
such policy, within ninety days of the that additional time is required in
adoption of the amended policy the order to complete review of the pro-
board of directors must provide the posed change to policy or procedures
amended policy to the Department of
the Treasury and the ECIP recipient’s § 35.23 Restrictions on dividends,
appropriate Federal banking agency share buybacks, and other capital
and post the amended policy on its distributions.
internet website, if the ECIP recipient (a) Restriction on capital distributions
maintains an internet website. due to nonpayment. An ECIP recipient
(3) The ECIP recipient must main- shall not make any capital distribution
tain, and continue the disclosure of on a non-senior security, unless:
any material amendments to, the ex- (1) If the ECIP investment is in the
cessive or luxury expenditures policy form of preferred stock, the ECIP re-
during the ECIP period, unless the De- cipient has paid in full the dividends
partment of the Treasury determines for the last completed dividend period
that discontinuation of the policy on the preferred stock; or
would not be contrary to the public in- (2) If the ECIP investment is in a
terest. form other than preferred stock (in-
(d) Material changes in policies or pro- cluding, subordinated debt), the ECIP
cedures. An ECIP recipient must obtain recipient has paid in full the principal,
prior approval from the Department of interest, and other amounts due and
the Treasury before making any mate- payable under the terms of the ECIP
rial change to the policies or proce- investment, and no amount that has
dures that it maintains for purposes of been deferred remains unpaid.
compliance with paragraph (a), (b), or (b) Limit on amount of capital distribu-
(c) of this section. A change to the tions. (1) If an ECIP recipient is an in-
compensation, severance pay, or exces- sured depository institution, bank
sive or luxury expenditures policies or holding company, or savings and loan
procedures will be considered material holding company, the ECIP recipient
for purposes of this section if the shall obtain the approval of the De-
change is likely to have a negative ef- partment of the Treasury prior to mak-
fect on the financial condition of the ing any capital distribution if the total
ECIP recipient, limit the ability of the of capital distributions made during
ECIP recipient to make payments the calendar year, including the pro-
under the terms of an ECIP instru- posed capital distribution, exceeds its
ment, or otherwise impair the ECIP re- eligible distributable income; provided,
cipient’s ability to meet its obligations however, that any prior approval of a
to the Department of the Treasury capital distribution by the Department
under the ECIP. of the Treasury does not supersede any
(1) A request to make a material applicable regulatory requirements of
change to compensation, severance pay the ECIP recipient’s appropriate Fed-
or excessive luxury expenditures poli- eral banking agency, or other actions
cies or procedures, must be submitted taken by such agency. For purposes of
by an ECIP recipient in writing and re- this paragraph, ‘‘eligible distributable
ceived by the Department of the Treas- income’’ means the sum of the ECIP re-
ury at least thirty days prior to the ef- cipient’s reported year-to-date net in-
fective date of the policy change. The come as of the end of the most recent
request should describe the change, calendar quarter, plus net income for
reason for the change, and anticipated the two preceding calendar years, less
financial or other impact of the change any dividends or distributions for the
on the condition of the ECIP recipient. year to date as of the end of the most
kpayne on VMOFRWIN702 with $$_JOB
(2) The request will be deemed ap- recent calendar quarter and the two
proved thirty days after the ECIP re- preceding calendar years, where each
415
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00425 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.24 31 CFR Subtitle A (7–1–22 Edition)
amount is calculated in accordance or all of the restrictions on share
with the instructions to the Call Re- buybacks and dividend payments under
port or applicable reporting form. this part if such exemption or waiver is
(2) If the ECIP recipient is federally necessary or appropriate to effectuate
insured credit union, the ECIP recipi- the goals of the ECIP or to protect the
ent shall obtain the Department of the public interest. Such exemptions or
Treasury’s prior approval to make any waivers may be subject to such terms
capital distributions if the distribution and conditions as deemed necessary or
would: appropriate by the Department of the
(i) In the case of a dividend, be pay- Treasury.
able from retained earnings (as defined
in 12 CFR 702.2(f)) other than undivided
earnings; or
Subpart C—State Small Business
(ii) Cause the ECIP recipient’s net Credit Initiative Small Business
worth classification to fall below Owners Demographics Data
‘‘adequately capitalized’’ (as defined in Collection
12 CFR 702.102(a)(2)).
(c) Exception for Subchapter S Corpora- SOURCE: 87 FR 13633, Mar. 10, 2022, unless
tions and other pass-through entities. otherwise noted.
Notwithstanding anything to the con-
trary in paragraphs (a) and (b) of this § 35.26 Authority, scope, and purpose.
section, any ECIP recipient that is an (a) Authority and scope. This subpart
S corporation, as defined in 26 U.S.C. is issued by the U.S. Department of the
1361(a), or other pass-through entity Treasury pursuant to Sections 3007 and
may make capital distributions, to the 3010 of the Small Business Jobs Act of
extent reasonably required to cover its 2010, as amended by the American Res-
owners’ tax obligations in respect to cue Plan Act of 2021 (12 U.S.C. 5706,
the entity’s earnings. Such distribu- 5709).
tions shall be subject to an annual rec-
(b) Purpose. The U.S. Department of
onciliation, with any surplus or defi-
the Treasury is collecting demo-
ciency to be deducted or added to dis-
graphics-related data regarding those
tributions, as applicable, in the fol-
who own or control businesses that re-
lowing year. Any tax-related distribu-
ceive a loan, investment, other credit
tions permitted under this paragraph
or equity support, or technical assist-
(c) must also comply with any applica-
ance under the State Small Business
ble limitations or determinations es-
Credit Initiative for purposes of imple-
tablished by an ECIP recipient’s Fed-
mentation, compliance, and under-
eral regulators.
standing program outcomes.
§ 35.24 Annual certification.
§ 35.27 Definitions.
On an annual basis an ECIP recipient
shall, in accordance with the terms and In this subpart:
conditions of its ECIP investment (a) Controlling influence over a business
agreement, submit to the Department means having the power to control,
of the Treasury a certification exe- manage, or direct the business. A per-
cuted by two senior executive officers son is presumed to have a controlling
(one of which must be either its prin- influence over a business if the person
cipal executive officer or principal fi- is a senior executive officer or senior
nancial officer) that the ECIP recipient manager of the business (e.g., Chief Ex-
is in compliance with each of the ex- ecutive Officer, Chief Financial Officer,
cessive compensation, severance pay, Chief Operating Officer), or any other
and excessive or luxury expenditures individual who regularly performs
requirements and restrictions on cap- similar functions.
ital distributions set forth in §§ 35.22 (b) Jurisdiction means:
and 35.23. (1) One of the fifty states of the
United States;
§ 35.25 Exemptive relief. (2) The District of Columbia, the
kpayne on VMOFRWIN702 with $$_JOB
The Department of the Treasury may Commonwealth of Puerto Rico, the
grant exemptions or waivers from some Commonwealth of Northern Mariana
416
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00426 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury § 35.27
Islands, Guam, American Samoa, and ship or otherwise, 25 percent or more of
the United States Virgin Islands; the equity interests of the business,
(3) When designated by one of the the trustee is a principal owner.
fifty states of the United States, a po- (g) Socially and economically disadvan-
litical subdivision of that state that taged individual (SEDI) demographics-re-
the U.S. Department of the Treasury lated business means a business owned
determines has the capacity to partici- and controlled by individuals who have
pate in the State Small Business Credit had their access to credit on reasonable
Initiative; terms diminished compared to others
(4) Under the circumstances de- in comparable economic cir-
scribed in 12 U.S.C. 5703(d), a munici- cumstances, due to their:
pality of one of the fifty states of the (1) Membership of a group that has
United States to which the U.S. De- been subjected to racial or ethnic prej-
partment of the Treasury has given a udice or cultural bias within American
special permission under 12 U.S.C. society;
5703(d); and (2) Gender;
(5) A Tribal government or a group of (3) Veteran status;
Tribal governments that jointly apply (4) Limited English proficiency;
to be approved by the U.S. Department (5) Disability;
of Treasury to participate in the State (6) Long-term residence in an envi-
Small Business Credit Initiative as a ronment isolated from the mainstream
single participating jurisdiction. of American society;
(c) Minority individual means a nat- (7) Membership of a federally or
ural person who identifies as American state-recognized Indian Tribe;
Indian or Alaska Native; Asian; Black (8) Long-term residence in a rural
or African American; Native Hawaiian community;
or Other Pacific Islander; or Hispanic (9) Residence in a U.S. territory;
or Latino/a; or one or more than one of (10) Residence in a community under-
these groups. going economic transitions (including
(d) Minority-owned or controlled busi- communities impacted by the shift to-
ness means a business that: wards a net-zero economy or
(1) If privately owned, 51 percent or deindustrialization); or
more is owned by minority individuals; (11) Membership of an underserved
(2) If publicly owned, 51 percent or community.
more of the stock is owned by minority (i) Underserved communities are popu-
individuals; lations sharing a particular char-
(3) In the case of a mutual institu- acteristic, as well as geographic com-
tion, a majority of the board of direc- munities, that have been systemati-
tors, account holders, and the commu- cally denied a full opportunity to par-
nity which the institution services is ticipate in aspects of economic, social,
predominantly comprised of minority and civic life, as exemplified by the list
individuals; or in the definition of equity in paragraph
(4) One or more minority individuals (g)(11)(ii) of this section; and
have the power to exercise a control- (ii) Equity is consistent and system-
ling influence over the business. atic fair, just, and impartial treatment
(e) Participating jurisdiction means a of all individuals, including individuals
jurisdiction that has been approved by who belong to underserved commu-
the U.S. Department of the Treasury nities that have been denied such
for participation in the State Small treatment, such as Black, Latino, and
Business Credit Initiative. Indigenous and Native American per-
(f) Principal owner of a business sons, Asian Americans and Pacific Is-
means a natural person who directly or landers, and other persons of color;
indirectly, through any contract, ar- members of religious minorities; les-
rangement, understanding, relation- bian, gay, bisexual, transgender, and
ship or otherwise, owns 25 percent or queer (LGBTQ+) persons; persons with
more of the equity interests of the disabilities; persons who live in rural
business. If a trust owns, directly or in- areas; and persons otherwise adversely
kpayne on VMOFRWIN702 with $$_JOB
directly, through any contract, ar- affected by persistent poverty or in-
rangement, understanding, relation- equality.
417
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00427 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
§ 35.28 31 CFR Subtitle A (7–1–22 Edition)
(12) For purposes of this paragraph loan, investment, or other credit or eq-
(g), a business is ‘‘owned and con- uity support under the State Small
trolled’’ by applicable individuals: Business Credit Initiative, the reported
(i) If privately owned, 51 percent or data shall be based on the ownership
more is owned by such individuals; and control of the business imme-
(ii) If publicly owned, 51 percent diately before the consummation of
more or of the stock is owned by such such loan, investment, or other credit
individuals; and or equity support-related transaction.
(ii) In the case of a mutual institu- For each business that receives tech-
tion, if a majority of the board of direc- nical assistance under the State Small
tors, account holders, and the commu- Business Credit Initiative, the reported
nity which the institution services is data shall be based on the ownership
predominantly comprised of such indi- and control of the business at the time
viduals. it receives such technical assistance.
(h) Veteran-owned or controlled busi- (a) Self-certified SEDI demographics-re-
ness means a business that: lated business status. (1) Indicate which
(1) If privately owned, 51 percent or one or more of the following categories
more is owned by veterans; apply: Self-certified due to membership
(2) If publicly owned, 51 percent or of a group that has been subjected to
more of the stock is owned by veterans; racial or ethnic prejudice or cultural
(3) In the case of a mutual institu- bias within American society; self-cer-
tion, a majority of the board of direc- tified due to gender; self-certified due
tors, account holders, and the commu- to veteran status; self-certified due to
nity which the institution services is limited English proficiency; self-cer-
predominantly comprised of veterans; tified due to disability; self-certified
or due to long-term residence in an envi-
(4) One or more individuals who are ronment isolated from the mainstream
veterans have the power to exercise a of American society; self-certified due
controlling influence over the business. to membership of a federally or state-
(i) Women-owned or controlled business recognized Indian Tribe; self-certified
means a business that: due to long-term residence in a rural
(1) If privately owned, 51 percent or community; self-certified due to resi-
more is owned by females; dence in a U.S. territory; self-certified
(2) If publicly owned, 51 percent or due to residence in a community un-
more of the stock is owned by females; dergoing economic transitions (includ-
(3) In the case of a mutual institu- ing communities impacted by the shift
tion, a majority of the board of direc- towards a net-zero economy or
tors, account holders, and the commu- deindustrialization); self-certified due
nity which the institution services is to membership of an ‘‘underserved
predominantly comprised of females; community’’ as defined in
or § 35.27(g)(11)(i); none of the preceding
(4) One or more individuals who are categories are applicable; prefer not to
females have the power to exercise a respond; or the business did not an-
controlling influence over the business. swer.
(2) The participating jurisdiction
§ 35.28 Annual report requirements. must permit each business to identify
By March 31 of each year beginning all of the categories that apply in the
March 31, 2023, and ending with the re- definition of SEDI demographics-re-
port to be submitted on March 31, 2028, lated business, and the participating
each participating jurisdiction shall jurisdiction must report to Treasury
submit to the U.S. Department of the all categories identified by the busi-
Treasury an annual report that in- ness.
cludes, with respect to the previous (b) Minority-owned or controlled busi-
calendar year, the following data for ness status. Indicate whether the busi-
each business that receives a loan, in- ness is a minority-owned or controlled
vestment, other credit or equity sup- business. The participating jurisdiction
port, or technical assistance as part of must indicate yes; no; prefer not to re-
kpayne on VMOFRWIN702 with $$_JOB
the State Small Business Credit Initia- spond; or that the business did not an-
tive. For each business that receives a swer.
418
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00428 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury Pt. 35, App. A
(c) Women-owned or controlled business rican; prefer not to respond; or that the
status. Indicate whether the business is business did not answer.
a women-owned or controlled business. (h) Gender of principal owners. For
The participating jurisdiction must in- each principal owner of the business,
dicate yes; no; prefer not to respond; or indicate which of the following gender
that the business did not answer. categories the principal owner identi-
(d) Veteran-owned or controlled busi- fies with: Female; male; nonbinary;
ness status. Indicate whether the busi- prefer to self-describe, prefer not to re-
ness is a veteran-owned or controlled spond; or that the business did not an-
business. The participating jurisdiction swer. If the ‘‘prefer to self-describe’’
must indicate yes; no; prefer not to re- option is chosen, the participating ju-
spond; or that the business did not an- risdiction must provide an option for
swer. the business to write in the gender and
(e) Race of principal owners. (1) For must report what the business writes
each principal owner of the business, in.
indicate which one or more of the fol- (i) Sexual orientation of principal own-
lowing race categories (including the ers. For each principal owner of the
Office of Management and Budget’s business, indicate which of the fol-
minimum categories and the relevant lowing sexual orientation categories
disaggregated categories) with which the principal owner identifies with:
the principal owner identifies: Amer- Gay or lesbian; bisexual; straight, that
ican Indian or Alaska Native; Asian; is, not gay, lesbian, or bisexual; some-
Asian disaggregated categories: Indian, thing else; prefer not to respond; or
Chinese, Filipino, Japanese, Korean, that the business did not answer.
Vietnamese, Asian (Other); Black or (j) Veteran status of principal owners.
African American; Native Hawaiian or For each principal owner of the busi-
Other Pacific Islander; Native Hawai- ness, indicate which of the following
ian or Other Pacific Islander categories the principal owner identi-
disaggregated categories: Guamanian fies with: Veteran; non-veteran; prefer
or Chamorro, Native Hawaiian, Sa- not to respond; or that the business did
moan, Pacific Islander (Other); White; not answer.
prefer not to respond; or that the busi-
ness did not answer. § 35.29 Format.
(2) The participating jurisdiction Participating jurisdictions must sub-
must permit each business to identify mit the information required under
all of the Office of Management and § 35.28 using the formats specified from
Budget’s minimum categories and time to time on the U.S. Department of
disaggregated categories in paragraph the Treasury’s website.
(e)(1) of this section with which each
principal owner of the business identi- APPENDIX A TO PART 35—EMERGENCY
fies, and the participating jurisdiction CAPITAL INVESTMENT PROGRAM
must report to Treasury all categories MODEL EXCESSIVE OR LUXURY EX-
identified by the business. PENDITURES POLICY
(f) Ethnicity of principal owners. For I. INTRODUCTION
each principal owner of the business,
indicate which of the following eth- A participant in the Emergency Capital In-
nicity categories the principal owner vestment Program (ECIP recipient, as de-
fined at 31 CFR 35.21) is required to establish
identifies with: Hispanic or Latino/a; and maintain policies designed to eliminate
not Hispanic or Latino/a; prefer not to excessive or luxury expenditures. The term
respond; or that the business did not ‘‘excessive or luxury expenditures’’ means
answer. excessive expenditures on any of the fol-
(g) Middle Eastern or North African lowing to the extent such expenditures are
Ancestry of principal owners. For each not reasonable expenditures for staff devel-
opment, reasonable performance incentives,
principal owner of the business, indi-
or other similar reasonable measures con-
cate which of the following ancestry ducted in the normal course of the ECIP re-
categories the principal owner identi-
kpayne on VMOFRWIN702 with $$_JOB
cipient’s business operations: (1) Entertain-
fies with: Middle Eastern or North Af- ment or events; (2) office and facility renova-
rican; not Middle Eastern or North Af- tions; (3) aviation or other transportation
419
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00429 Fmt 8010 Sfmt 8002 Q:\31\31V1.TXT PC31
Pt. 35, App. A 31 CFR Subtitle A (7–1–22 Edition)
services; (4) tax gross-ups; and (5) other simi- ment Program regulations (31 CFR part 35),
lar items, activities, or events for which the and as may be required by other statutes and
ECIP recipient may reasonably anticipate regulations.
incurring expenses, or reimbursing an em-
ployee for incurring expenses. C. Responsibility
(1) To facilitate compliance with this re- This policy is the responsibility of the Or-
quirement, the Department of the Treasury ganization’s board of directors (board). The
is making available a model excessive or lux- board has approved this policy and will re-
ury expenditures policy. An ECIP recipient view compliance with this policy no less fre-
may refer to this model policy for guidance quently than annually, and summary data
in satisfying the requirement at 31 CFR on excessive or luxury expenditures will be
35.22(c) to adopt and maintain an excessive reported to the board as part of the compli-
or luxury expenditures policy. Alternatively, ance review.
ECIP recipients may use other forms of, or
existing policies relating to, excessive or D. Scope
luxury expenditures, provided that such
This policy applies to all employees, offi-
other forms or policies satisfy all the re-
cers, and directors of the Organization with
quirements of the regulation at 31 CFR
regard to any expenditure of the Organiza-
35.22(c).
tion. In making any expenditure on behalf of
(2) An ECIP recipient’s luxury or excessive
the Organization, employees, officers, and di-
expenditure policy should be posted on the
rectors should consider whether the expendi-
ECIP recipient’s website. Any material
ture is an excessive or luxury expenditure
amendments to an ECIP recipient’s excessive
or luxury expenditures policy must made in that is prohibited under this policy.
accordance with the provisions set forth in E. Excessive or Luxury Expenditures
31 CFR 35.22(d) (Material changes in policies
or procedures). If the ECIP recipient makes ‘‘Excessive or luxury expenditures’’ means
any material amendments to this policy, excessive expenditures on any of the fol-
then the ECIP recipient must submit a copy lowing to the extent not reasonable or appro-
of the amended policy to the Department of priate expenditures for business develop-
the Treasury and post the amended policy on ment, staff development, reasonable per-
the ECIP recipient’s website. ECIP recipi- formance incentives, or other similar reason-
ents should refer to 31 CFR part 35, subpart able measures conducted in the normal
B for additional information regarding defi- course of the Organization’s business oper-
nitions of terms used in the model policy, ations:
disclosure, material changes, certification, (1) Entertainment or events. This category
and other compliance requirements. includes fees, dues, tickets costs related to
social, athletic, artistic and dining clubs, ac-
II. MODEL EXCESSIVE OR LUXURY tivities, celebrations or other events, and
EXPENDITURES POLICY similar expenditures. Expenditures for chari-
table contributions and charitable events are
A. Purpose
not prohibited under this policy. Entertain-
The purpose of this policy is to establish ment or events expenditures in an amount
parameters and internal controls governing less than $___ per instance, and $___ on an an-
the expenditures of [NAME OF ECIP RE- nual aggregate basis per individual, are ex-
CIPIENT] (together with its subsidiaries and empt from this policy.
controlled affiliates, referred to hereafter as (2) Office and facility renovations. This cat-
the Organization). Expenditures of the Orga- egory includes costs and allowances for of-
nization should be customary, prudent, con- fice renovation, including expenditures re-
sistent with applicable laws and regulations, lated to furniture, art, office personalization,
and reasonably related to the Organization’s interior finishing, design and decoration, and
business objectives and needs. This policy similar expenditures. Office and facility ren-
identifies expenditures that are excessive or ovations expenditures in an amount less
luxury expenditures, creates processes that than $___ per instance, and $___ on an annual
are reasonably designed to eliminate such aggregate basis per individual, are exempt
expenditures, and establishes accountability from this policy.
for compliance. Routine operating expenses, (3) Aviation or other transportation services.
capital expenditures, and other reasonable (i) This category includes charter fees, tick-
expenses are not prohibited by this policy. ets, slip or docking fees, vehicle installment
payments, reservation and travel agent ex-
B. Authority penses, and similar expenditures associated
The Organization has authority to provide with transportation services (e.g., airline,
compensation and benefits that are reason- train, rental cars, or vans). Mileage reim-
able. This policy establishes a prohibition on bursable according to current Internal Rev-
kpayne on VMOFRWIN702 with $$_JOB
expenditures that are excessive or luxury ex- enue Service mileage rates is exempt from
penditures as required by the Department of this policy. Transportation services in an
the Treasury’s Emergency Capital Invest- amount less than $___ per instance, and $___
420
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00430 Fmt 8010 Sfmt 8002 Q:\31\31V1.TXT PC31
Office of the Secretary of the Treasury Pt. 50
on an annual aggregate basis per individual, employee or officer who violates this policy
are exempt from this policy. may be subject to disciplinary action up to
(ii) The principal executive officer may es- and including termination of employment.
tablish or delegate to an appropriate execu- (2) Any employee or officer that is aware of
tive officer the authority to establish proc- any circumstance that may indicate a viola-
esses for reimbursement of reasonable travel tion of this policy is required to report such
expenditures, which processes must be re- circumstance to their supervisor or the Or-
viewed by executive management no less fre- ganization’s principal compliance officer or
quently than annually. compliance group. The Organization pro-
(4) Tax gross-ups. This category includes hibits retaliation against any employee or
any reimbursement of taxes owed with re- officer for making a good faith report of ac-
spect to any compensation. This category tual or suspected violations of the Organiza-
does not apply to tax equalization agree- tion’s code of conduct, laws, regulations, or
ments for employees subject to tax from a other Organization policies, including this
non-U.S. jurisdiction. policy. A finding of retaliation against any
(5) Other similar items, activities, or events for such employee or officer may result in dis-
which the Organization may reasonably antici- ciplinary action up to and including termi-
pate incurring expenses or reimbursing an em- nation. Failure to promptly report known
ployee for incurring expenses. (i) Expenditures violations by others may also be deemed a
related to other items not listed in the pre- violation of the Organization’s code of con-
ceding categories are exempt from this pol- duct.
icy in an amount less than $___ per instance, (3) Employees and officers may ask ques-
and together with all expenditures permitted tions, raise concerns, or report instances of
under this policy, may not exceed $___ on an non-compliance with this policy and/or any
annual aggregate basis per individual. of the existing underlying relevant policies
(ii) For the avoidance of doubt, reasonable by contacting the following: [COMPLIANCE
capital investments in technology, equip- HELP LINE OR E–MAIL].
ment, and similar items that expand the
long-term capability of an ECIP recipient to G. Certification
provide products and services to its cus-
On an annual basis, the ECIP recipient will
tomers and community are not excessive or
deliver to the Department of the Treasury a
luxury expenditures.
certification, executed by two senior execu-
(iii) The principal executive officer may es-
tive officers (one of which must be either the
tablish or delegate to an appropriate execu-
tive officer the authority to establish proc- ECIP recipient’s principal executive officer
esses for the evaluation and approval of ex- or principal financial officer) certifying that
penditures in the preceding categories that (i) the Organization is in compliance with
are not luxury or excessive expenditures and this policy and (ii) the approval of any ex-
that are not otherwise exempt from this pol- penditure requiring the prior approval of any
icy. These processes must be reviewed by ex- senior executive officer, any executive offi-
ecutive management no less frequently than cer of a substantially similar level of respon-
annually, as well as any additional threshold sibility, or the board of directors (or a com-
expenditure amounts per item, activity, or mittee of such board), was properly obtained
event, or a threshold expenditure amount per with respect to each such expenditure.
employee receiving the item or participating
in the activity or event under this policy. PART 50—TERRORISM RISK
Such approvals must be reported to the INSURANCE PROGRAM
board of directors (which may be in an ap-
propriate summary form) no less frequently
than annually. Subpart A—General Provisions
F. Exceptions or Violations Sec.
50.1 Authority, purpose, and scope.
(1) Any exception or violation of this pol- 50.2 Responsible office.
icy must be promptly reported to the Organi- 50.3 Mandatory participation in program.
zation’s (i) principal executive officer, (ii) of- 50.4 Definitions.
ficer with primary responsibility for the Or- 50.5 Rule of construction for dates.
ganization’s compliance function, or (iii) of- 50.6 Special rules for Interim Guidance safe
ficer designated with primary responsibility harbors.
for overseeing the administration, moni- 50.7 Procedure for requesting determina-
toring, and compliance with this policy. Ex- tions of controlling influence.
ceptions and violations must be reported to 50.8 Procedure for requesting general inter-
the board of directors no less frequently than pretations of statute.
annually, or more frequently as the nature
and severity of violation may warrant. All Subpart B—Disclosures as Conditions for
kpayne on VMOFRWIN702 with $$_JOB
employees, officers, and directors of the Or- Federal Payment
ganization must adhere to this policy and
will be held accountable for compliance. Any 50.10 General disclosure requirements.
421
VerDate Sep<11>2014 10:04 Sep 16, 2022 Jkt 256129 PO 00000 Frm 00431 Fmt 8010 Sfmt 8010 Q:\31\31V1.TXT PC31
File and source
- File
- CFR-2022-title31-vol1-part35.pdf
- Size
- 309,147 bytes
- SHA-256
- 3368e2dffbd639c11abac4f69c0f6b7067737c4a89f23615f13218bc546431d8
- Our copy
- CFR-2022-title31-vol1-part35.pdf
- Original
- www.govinfo.gov