31 CFR part 35 (SLFRF; annual edition 2025)
Summary
Part 35 of title 31 of the Code of Federal Regulations, Pandemic Relief Programs, as printed in the 7–1–25 Edition, with its source given as 86 FR 13455, Mar. 9, 2021. Subpart A covers the Coronavirus State and Local Fiscal Recovery Funds under sections 602 and 603 of the Social Security Act, including recoupment and payments to States. Later subparts cover compensation and capital distributions, small business owner data collection and State residual market insurance entities. An appendix gives a model excessive or luxury expenditures policy. The definitions set premium pay at up to $13 per hour on top of wages for essential work, capped at $25,000 in total for any single eligible worker. A low-income household is one with income at or below 185 percent of the federal poverty guidelines.
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“31 CFR part 35 (SLFRF; annual edition 2025).”
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§ 34.805 31 CFR Subtitle A (7–1–25 Edition)
funds for an activity that meets the re- Subpart C—State Small Business Credit Ini-
quirements of the Act. tiative Small Business Owners Demo-
(b) If Treasury determines that a graphics Data Collection
Gulf Coast State, coastal political sub-
35.26 Authority, scope, and purpose.
division, or coastal zone parish has ma-
35.27 Definitions.
terially violated a grant agreement 35.28 Annual report requirements.
under the Direct Component, Com- 35.29 Format.
prehensive Plan Component, or Spill APPENDIX A TO PART 35—EMERGENCY CAPITAL
Impact Component, Treasury will INVESTMENT PROGRAM MODEL EXCESSIVE
make no additional funds available to OR LUXURY EXPENDITURES POLICY
that recipient from any part of the
AUTHORITY: 42 U.S.C. 802(f); 42 U.S.C. 803(f);
Trust Fund until the recipient corrects 31 U.S.C. 321; 12 U.S.C. 5701–5710; Division N,
the violation. Title V, Subtitle B, Pub. L. 116–260, 134 Stat.
(c) As a condition of receiving funds, 1182 (12 U.S.C. 4703a); Section 104A, Pub. L.
recipients and subrecipients shall 103–325, 108 Stat. 2160, as amended (12 U.S.C.
make available their records and per- 4701 et seq.); Pub. L. 117–2, 135 Stat. 4 (42
sonnel to Treasury in order to carry U.S.C. 802 et seq.).
out the purposes of this section. SOURCE: 86 FR 13455, Mar. 9, 2021, unless
otherwise noted.
§ 34.805 Treasury Inspector General.
In addition to other authorities Subpart A—Coronavirus State and
available under the Act, the Office of Local Fiscal Recovery Funds
the Inspector General of the Depart-
ment of the Treasury is authorized to
AUTHORITY: 42 U.S.C. 802(f); 42 U.S.C. 803(f);
conduct, supervise, and coordinate au- section 102(c) of Division LL of the Consoli-
dits and investigations of activities dated Appropriations Act, 2023 (Pub. L. 117–
funded through grants under the Act. 328).
SOURCE: 88 FR 65026, Sept. 20, 2023, unless
PART 35—PANDEMIC RELIEF otherwise noted.
PROGRAMS
§ 35.1 Purpose.
Subpart A—Coronavirus State and Local This part implements sections 602
Fiscal Recovery Funds and 603 of the Social Security Act, as
Sec. added by section 9901 of the American
35.1 Purpose. Rescue Plan Act (Subtitle M of Title
35.2 Applicability. IX of Pub. L. 117–2) and amended by
35.3 Definitions. section 102 of Division LL of the Con-
35.4 Reservation of authority, reporting. solidated Appropriations Act, 2023
35.5 Use of funds. (Pub. L. 117–328).
35.6 Eligible uses.
35.7 Pensions. § 35.2 Applicability.
35.8 Tax.
35.9 Compliance with applicable laws. This part applies to states, terri-
35.10 Recoupment. tories, Tribal governments, metropoli-
35.11 Payments to States. tan cities, nonentitlement units of
35.12 Distributions to nonentitlement units local government, counties, and units
of local government and units of general of general local government that ac-
local government. cept a payment or transfer of funds
made under section 602 or 603 of the So-
Subpart B—Compensation and Capital
cial Security Act.
Distributions
35.20 Purpose, applicability, and general § 35.3 Definitions.
provisions. Baseline means tax revenue of the re-
35.21 Definitions. cipient for its fiscal year ending in
35.22 Restrictions on compensation.
2019, adjusted for inflation in each re-
35.23 Restrictions on dividends, share
buybacks, and other capital distribu- porting year using the Bureau of Eco-
nomic Analysis’s Implicit Price
jspears on DSK121TN23PROD with CFR
tions.
35.24 Annual certification. Deflator for the gross domestic product
35.25 Exemptive relief. of the United States.
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Office of the Secretary of the Treasury § 35.3
Capital expenditures has the same ployer to pension funds as part of the
meaning given in 2 CFR 200.1. employer’s obligations related to pay-
County means a county, parish, or roll, such as either a pension contribu-
other equivalent county division (as tion consisting of a normal cost compo-
defined by the Census Bureau). nent related to current employees or a
Covered benefits include, but are not component addressing the amortiza-
limited to, the costs of all types of tion of unfunded liabilities calculated
leave (vacation, family-related, sick, by reference to the employer’s payroll
military, bereavement, sabbatical, jury costs.
duty), employee insurance (health, life, Disaster loss means a loss suffered as
dental, vision), retirement (pensions, a result of a major disaster or emer-
401(k)), unemployment benefit plans gency declared under section 401 of the
(Federal and State), workers’ com-
Robert T. Stafford Disaster Relief and
pensation insurance, and Federal In-
Emergency Assistance Act (42 U.S.C.
surance Contributions Act taxes (which
5170).
includes Social Security and Medicare
taxes). Eligible employer means an employer
Covered change means a change in of an eligible worker who performs es-
law, regulation, or administrative in- sential work.
terpretation that reduces any tax (by Eligible workers means workers need-
providing for a reduction in a rate, a ed to maintain continuity of oper-
rebate, a deduction, a credit, or other- ations of essential critical infrastruc-
wise) or delays the imposition of any ture sectors, including health care;
tax or tax increase. A change in law in- emergency response; sanitation, dis-
cludes any final legislative or regu- infection, and cleaning work; mainte-
latory action, a new or changed admin- nance work; grocery stores, res-
istrative interpretation, and the phase- taurants, food production, and food de-
in or taking effect of any statute or livery; pharmacy; biomedical research;
rule if the phase-in or taking effect was behavioral health work; medical test-
not prescribed prior to the start of the ing and diagnostics; home- and commu-
covered period. nity-based health care or assistance
Covered period means, with respect to with activities of daily living; family
a state or territory, the period that: or childcare; social services work; pub-
(1) Begins on March 3, 2021; and lic health work; vital services to
(2) Ends on the last day of the fiscal Tribes; any work performed by an em-
year of such State or territory in ployee of a State, local, or Tribal gov-
which all funds received by the State ernment; educational work, school nu-
or territory from a payment made trition work, and other work required
under section 602 or 603 of the Social to operate a school facility; laundry
Security Act have been expended or re- work; elections work; solid waste or
turned to, or recovered by, the Sec-
hazardous materials management, re-
retary.
sponse, and cleanup work; work requir-
COVID–19 means the Coronavirus
ing physical interaction with patients;
Disease 2019.
COVID–19 public health emergency dental care work; transportation and
means the period beginning on January warehousing; work at hotel and com-
27, 2020, and lasting until the termi- mercial lodging facilities that are used
nation of the national emergency con- for COVID–19 mitigation and contain-
cerning the COVID–19 outbreak de- ment; work in a mortuary; and work in
clared pursuant to the National Emer- critical clinical research, development,
gencies Act (50 U.S.C. 1601 et seq.). and testing necessary for COVID–19 re-
Delivery sequence means the order in sponse.
which disaster relief agencies and orga- (1) With respect to a recipient that is
nizations provide assistance pursuant a metropolitan city, nonentitlement
to 44 CFR 206.191. unit of local government, or county,
Deposit means an extraordinary pay- workers in any additional non-public
ment of an accrued, unfunded liability. sectors as each chief executive officer
jspears on DSK121TN23PROD with CFR
The term deposit does not refer to rou- of such recipient may designate as crit-
tine contributions made by an em- ical to protect the health and well-
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§ 35.3 31 CFR Subtitle A (7–1–25 Edition)
being of the residents of their metro- enue from Tribal business enterprises
politan city, nonentitlement unit of must be included in general revenue.
local government, or county; or Infrastructure Investment and Jobs Act
(2) With respect to a State, territory, means the Infrastructure Investment
or Tribal government, workers in any and Jobs Act, Public Law 117–58, 135
additional non-public sectors as each Stat. 429 (Nov. 15, 2021).
Governor of a State or territory, or Intergovernmental transfers means
each Tribal government, may designate money received from other govern-
as critical to protect the health and ments, including grants and shared
well-being of the residents of their taxes.
State, territory, or Tribal government. Low-income household means a house-
Emergency relief means assistance hold with:
that is needed to save lives and to pro- (1) Income at or below 185 percent of
tect property and public health and the Federal Poverty Guidelines for the
safety, or to lessen or avert the threat size of its household based on the pov-
of catastrophe. erty guidelines published most re-
Essential work means work that: cently by the Department of Health
and Human Services; or
(1) Is not performed while tele-
(2) Income at or below 40 percent of
working from a residence; and
the Area Median Income for its county
(2) Involves: and size of household based on data
(i) Regular in-person interactions published most recently by the Depart-
with patients, the public, or coworkers ment of Housing and Urban Develop-
of the individual that is performing the ment.
work; or Micro-business means a small business
(ii) Regular physical handling of that has five or fewer employees, one
items that were handled by, or are to or more of whom owns the small busi-
be handled by patients, the public, or ness.
coworkers of the individual that is per- Moderate-income household means a
forming the work. household with:
Funds means, with respect to a re- (1) Income at or below 300 percent of
cipient, amounts provided to the re- the Federal Poverty Guidelines for the
cipient pursuant to a payment made size of its household based on poverty
under section 602(b) or 603(b) of the So- guidelines published most recently by
cial Security Act or transferred to the the Department of Health and Human
recipient pursuant to section 603(c)(4) Services; or
of the Social Security Act. (2) Income at or below 65 percent of
General revenue means money that is the Area Median Income for its county
received from tax revenue, current and size of household based on data
charges, and miscellaneous general published most recently by the Depart-
revenue, excluding refunds and other ment of Housing and Urban Develop-
correcting transactions and proceeds ment.
from issuance of debt or the sale of in- Metropolitan city has the meaning
vestments, agency or private trust given that term in section 102(a)(4) of
transactions, and intergovernmental the Housing and Community Develop-
transfers from the Federal Govern- ment Act of 1974 (42 U.S.C. 5302(a)(4))
ment, including transfers made pursu- and includes cities that relinquish or
ant to section 9901 of the American defer their status as a metropolitan
Rescue Plan Act. General revenue also city for purposes of receiving alloca-
includes revenue from liquor stores tions under section 106 of such Act (42
that are owned and operated by state U.S.C. 5306) for fiscal year 2021.
and local governments. General rev- Natural disaster means any hurricane,
enue does not include revenues from tornado, storm, flood, high water,
utilities, except recipients may choose wind-driven water, tidal wave, tsu-
to include revenue from utilities that nami, earthquake, volcanic eruption,
are part of their own government as landslide, mudslide, snowstorm,
general revenue provided the recipient drought, or fire, in each case attrib-
jspears on DSK121TN23PROD with CFR
does so consistently over the remain- utable to natural causes, that causes or
der of the period of performance. Rev- may cause substantial damage, injury,
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Office of the Secretary of the Treasury § 35.3
or imminent threat to civilian prop- ble worker, in addition to wages or re-
erty or persons. ‘‘Natural disaster’’ muneration the eligible worker other-
may also include another type of nat- wise receives, for all work performed
ural catastrophe, attributable to nat- by the eligible worker during the
ural causes, that causes or may cause COVID–19 public health emergency.
substantial damage, injury, or immi- Such amount may not exceed $25,000 in
nent threat to civilian property or per- total over the period of performance
sons. with respect to any single eligible
Net reduction in total spending is worker. Premium pay may be awarded
measured as the State or territory’s to non-hourly and part-time eligible
total spending for a given reporting workers performing essential work.
year excluding its spending of funds, Premium pay will be considered to be
subtracted from its total spending for in addition to wages or remuneration
its fiscal year ending in 2019, adjusted the eligible worker otherwise receives
for inflation using the Bureau of Eco- if, as measured on an hourly rate, the
nomic Analysis’s Implicit Price premium pay is:
Deflator for the gross domestic product (1) With regard to work that the eli-
of the United States for that reporting gible worker previously performed, pay
year. and remuneration equal to the sum of
Nonentitlement unit of local government all wages and remuneration previously
means a ‘‘city,’’ as that term is defined received plus up to $13 per hour with no
in section 102(a)(5) of the Housing and reduction, substitution, offset, or other
Community Development Act of 1974 diminishment of the eligible worker’s
(42 U.S.C. 5302(a)(5)), that is not a met- previous, current, or prospective wages
ropolitan city. or remuneration; or
Nonprofit means a nonprofit organiza- (2) With regard to work that the eli-
tion that is exempt from Federal in- gible worker continues to perform, pay
come taxation and that is described in of up to $13 per hour that is in addition
section 501(c)(3) or 501(c)(19) of the In- to the eligible worker’s regular rate of
ternal Revenue Code. wages or remuneration, with no reduc-
Obligation means an order placed for tion, substitution, offset, or other di-
property and services and entering into minishment of the worker’s current
contracts, subawards, and similar and prospective wages or remunera-
transactions that require payment. An tion.
obligation also means a requirement Qualified census tract has the same
under federal law or regulation or pro- meaning given in 26 U.S.C.
vision of the award terms and condi- 42(d)(5)(B)(ii)(I).
tions to which a recipient becomes sub- Recipient means a State, territory,
ject as a result of receiving or expend- Tribal government, metropolitan city,
ing funds. nonentitlement unit of local govern-
Operating expenses means costs nec- ment, county, or unit of general local
essary to operate and manage a public government that receives a payment
transportation system, including driv- made under section 602(b) or 603(b) of
er salaries, fuel, and items having a the Social Security Act or transfer
useful life of less than one year. Oper- pursuant to section 603(c)(4) of the So-
ating expenses do not include preven- cial Security Act.
tive maintenance activities. Reporting year means a single year or
Pension fund means a defined benefit partial year within the covered period,
plan and does not include a defined aligned to the current fiscal year of the
contribution plan. State or territory during the covered
Period of performance means the time period.
period described in § 35.5 during which a Secretary means the Secretary of the
recipient may obligate and expend Treasury.
funds in accordance with sections State means each of the 50 States and
602(c)(1), 602(c)(5)(E), 603(c)(1), and the District of Columbia.
603(c)(6)(D) of the Social Security Act Small business means a business con-
and this subpart. cern or other organization that:
jspears on DSK121TN23PROD with CFR
Premium pay means an amount of up (1) Has no more than 500 employees
to $13 per hour that is paid to an eligi- or, if applicable, the size standard in
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§ 35.3 31 CFR Subtitle A (7–1–25 Edition)
number of employees established by palachian Development Highway Sys-
the Administrator of the Small Busi- tem under 40 U.S.C. 14501;
ness Administration for the industry in (20) A project eligible under 49 U.S.C.
which the business concern or organi- 5307;
zation operates, and (21) A project eligible under 49 U.S.C.
(2) Is a small business concern as de- 5309;
fined in section 3 of the Small Business (22) A project eligible under 49 U.S.C.
Act (15 U.S.C. 632). 5311;
Surface Transportation project means (23) A project eligible under 49 U.S.C.
any of the following: 5337;
(1) A project eligible under 23 U.S.C. (24) A project eligible under 49 U.S.C.
117; 5339;
(2) A project eligible under 23 U.S.C. (25) A project eligible under 49 U.S.C.
119; 6703, as added by the Infrastructure In-
(3) A project eligible under 23 U.S.C. vestment and Jobs Act;
124, as added by the Infrastructure In- (26) A project eligible under the
vestment and Jobs Act; bridge replacement, rehabilitation,
(4) A project eligible under 23 U.S.C. preservation, protection, and construc-
133; tion program under paragraph (1) under
(5) An activity to carry out 23 U.S.C. the heading ’HIGHWAY INFRASTRUC-
134; TURE PROGRAM’ under the heading
(6) A project eligible under 23 U.S.C. ’FEDERAL HIGHWAY ADMINISTRA-
148; TION’ under the heading ’DEPART-
(7) A project eligible under 23 U.S.C. MENT OF TRANSPORTATION’ under
149; title VIII of division J of the Infra-
(8) A project eligible under 23 U.S.C. structure Investment and Jobs Act;
151(f), as added by the Infrastructure and
Investment and Jobs Act; (27) A project eligible under 49 U.S.C.
(9) A project eligible under 23 U.S.C. 6701 for the purpose set forth in
165; § 35.6(h)(1)(i)(C).
(10) A project eligible under 23 U.S.C. Tax revenue means revenue received
167; from a compulsory contribution that is
(11) A project eligible under 23 U.S.C. exacted by a government for public
173, as added by the Infrastructure In- purposes excluding refunds and correc-
vestment and Jobs Act; tions and, for purposes of § 35.8, inter-
(12) A project eligible under 23 U.S.C. governmental transfers. Tax revenue
175, as added by the Infrastructure In- does not include payments for a special
vestment and Jobs Act; privilege granted or service rendered,
(13) A project eligible under 23 U.S.C. employee or employer assessments and
176, as added by the Infrastructure In- contributions to finance retirement
vestment and Jobs Act; and social insurance trust systems, or
(14) A project eligible under 23 U.S.C. special assessments to pay for capital
202; improvements.
(15) A project eligible under 23 U.S.C. Territory means the Commonwealth
203; of Puerto Rico, the United States Vir-
(16) A project eligible under 23 U.S.C. gin Islands, Guam, the Commonwealth
204; of the Northern Mariana Islands, or
(17) A project eligible under the pro- American Samoa.
gram for national infrastructure in- Title I eligible schools means schools
vestments commonly known as the eligible to receive services under sec-
‘‘Rebuilding American Infrastructure tion 1113 of Title I, Part A of the Ele-
with Sustainability and Equity’’ grant mentary and Secondary Education Act
program; of 1965, as amended (20 U.S.C. 6313), in-
(18) A project eligible for credit as- cluding schools served under section
sistance under the Transportation In- 1113(b)(1)(C) of that Act.
frastructure Finance and Innovation Title I project means an activity eligi-
Act program under 23 U.S.C. chapter 6; ble under section 105(a) of the Housing
jspears on DSK121TN23PROD with CFR
(19) A project that furthers the com- and Community Development Act of
pletion of a designated route of the Ap- 1974 (42 U.S.C. 5305(a)).
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Office of the Secretary of the Treasury § 35.5
Tribal enterprise means a business propriate. In determining whether an
concern: extension or acceleration is appro-
(1) That is wholly owned by one or priate, the Secretary will consider the
more Tribal governments, or by a cor- period of time that would be extended
poration that is wholly owned by one or accelerated and how the modified
or more Tribal governments; or timeline would facilitate compliance
(2) That is owned in part by one or with this subpart.
more Tribal governments, or by a cor- (c) Reporting and requests for other in-
poration that is wholly owned by one formation. During the period of per-
or more Tribal governments, if all formance, recipients shall provide to
other owners are either United States the Secretary or her delegate, as appli-
citizens or small business concerns, as cable, periodic reports providing de-
these terms are used and consistent tailed accounting of the uses of funds,
with the definitions in 15 U.S.C. modifications to a State or Territory’s
657a(b)(2)(D). tax revenue sources, and such other in-
Tribal government means the recog- formation as the Secretary or her dele-
nized governing body of any Indian or gate, as applicable, may require for the
Alaska Native Tribe, band, nation,
administration of this section. In addi-
pueblo, village, community, component
tion to regular reporting requirements,
band, or component reservation, indi-
the Secretary may request other addi-
vidually identified (including par-
tional information as may be necessary
enthetically) in the list published on
or appropriate, including as may be
January 29, 2021, pursuant to section
necessary to prevent evasions of the re-
104 of the Federally Recognized Indian
quirements of this subpart. False state-
Tribe List Act of 1994 (25 U.S.C. 5131).
ments or claims made to the Secretary
Unemployment rate means the U–3 un-
employment rate provided by the Bu- may result in criminal, civil, or admin-
reau of Labor Statistics as part of the istrative sanctions, including fines, im-
Local Area Unemployment Statistics prisonment, civil damages and pen-
program, measured as total unemploy- alties, debarment from participating in
ment as a percentage of the civilian Federal awards or contracts, and/or
labor force. any other remedy available by law.
Unemployment trust fund means an
§ 35.5 Use of funds.
unemployment trust fund established
under section 904 of the Social Security (a) In general. A recipient may only
Act (42 U.S.C. 1104). use funds for the purposes enumerated
Unit of general local government has in § 35.6 (b) through (f) to cover costs
the meaning given to that term in sec- incurred during the period beginning
tion 102(a)(1) of the Housing and Com- March 3, 2021, and ending December 31,
munity Development Act of 1974 (42 2024, subject to the restrictions set
U.S.C. 5302(a)(1)). forth in sections 602(c)(2) and 603(c)(2)
[88 FR 65026, Sept. 20, 2023, as amended at 88
of the Social Security Act, as applica-
FR 80589, Nov. 20, 2023] ble. A recipient may only use funds for
the purposes enumerated in § 35.6 (g)
§ 35.4 Reservation of authority, report- through (h) to cover costs incurred dur-
ing. ing the period beginning December 29,
(a) Reservation of authority. Nothing 2022, and ending December 31, 2024, sub-
in this part shall limit the authority of ject to the restrictions set forth in sec-
the Secretary to take action to enforce tions 602(c)(2), 602(c)(5)(C), 603(c)(2), and
conditions or violations of law, includ- 603(c)(6)(B) of the Social Security Act,
ing actions necessary to prevent eva- as applicable.
sions of this subpart. (b) Costs incurred. A cost shall be con-
(b) Extensions or accelerations of tim- sidered to have been incurred for pur-
ing. The Secretary may extend or ac- poses of paragraph (a) of this section if
celerate any deadline or compliance the recipient has incurred an obliga-
date of this part, including reporting tion with respect to such cost by De-
requirements that implement this sub- cember 31, 2024.
jspears on DSK121TN23PROD with CFR
part, if the Secretary determines that (c) Return of funds. A recipient must
such extension or acceleration is ap- return any funds that have not been
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§ 35.6 31 CFR Subtitle A (7–1–25 Edition)
obligated by December 31, 2024, pursu- (i) A program, service, or capital ex-
ant to orders placed for property and penditure is eligible under this para-
services or entry into contracts, sub- graph (b)(1) if a recipient identifies a
awards, and similar transactions that harm or impact to a beneficiary or
require payment other than funds in class of beneficiaries caused or exacer-
the amount reported to Treasury by bated by the public health emergency
April 30, 2024, as the estimate of funds or its negative economic impacts and
that the recipient will expend to com- the program, service, or capital ex-
ply with a requirement under federal penditure responds to such harm.
law or regulation or provision of the (ii) A program, service, or capital ex-
award terms and conditions to which a penditure responds to a harm or impact
recipient becomes subject as a result of experienced by an identified bene-
receiving or expending funds. A recipi- ficiary or class of beneficiaries if it is
ent must return funds obligated for a reasonably designed to benefit the ben-
use identified in § 35.6(b) through (g) by eficiary or class of beneficiaries that
December 31, 2024, but not expended by experienced the harm or impact and is
December 31, 2026. A recipient must re- related and reasonably proportional to
turn funds obligated for a use identi- the extent and type of harm or impact
fied in § 35.6(h) by December 31, 2024, experienced.
but not expended by September 30, 2026. (2) Identified harms: presumptions of
A recipient must return funds in the impacted and disproportionately impacted
amount reported to Treasury by April beneficiaries. A recipient may rely on
30, 2024, as referenced above, but not the following presumptions to identify
expended by December 31, 2026, other beneficiaries presumptively impacted
than administrative expenses nec- or disproportionately impacted by the
essary to close out the award. public health emergency or its nega-
[88 FR 65026, Sept. 20, 2023, as amended at 88 tive economic impacts for the purpose
FR 80589, Nov. 20, 2023] of providing a response under para-
graph (b)(1) or (b)(3) of this section:
§ 35.6 Eligible uses. (i) Households or populations that ex-
(a) In general. Subject to §§ 35.7 and perienced unemployment; experienced
35.8, a recipient may use funds for one increased food or housing insecurity;
or more of the purposes described in qualify for the Children’s Health Insur-
paragraphs (b) through (h) of this sec- ance Program (42 U.S.C. 1397aa et seq.),
tion. Childcare Subsidies through the Child
(b) Responding to the public health Care and Development Fund Program
emergency or its negative economic im- (42 U.S.C. 9857 et seq. and 42 U.S.C. 618),
pacts. A recipient may use funds to re- or Medicaid (42 U.S.C. 1396 et seq.); if
spond to the public health emergency funds are to be used for affordable
or its negative economic impacts if the housing programs, qualify for the Na-
use meets the criteria provided in para- tional Housing Trust Fund (12 U.S.C.
graph (b)(1) of this section or is enu- 4568) or the Home Investment Partner-
merated in paragraph (b)(3) of this sec- ships Program (42 U.S.C. 12721 et seq.);
tion; provided that, in the case of a use if funds are to be used to address im-
of funds for a capital expenditure under pacts of lost instructional time for stu-
paragraph (b)(1) or (b)(3) of this sec- dents in kindergarten through twelfth
tion, the use of funds must also meet grade, any student who did not have
the criteria provided in paragraph access to in-person instruction for a
(b)(4) of this section. Treasury may significant period of time; and low- and
also articulate additional eligible pro- moderate-income households and popu-
grams, services, or capital expendi- lations are presumed to be impacted by
tures from time to time that satisfy the public health emergency or its neg-
the eligibility criteria of this para- ative economic impacts;
graph (b), which shall be eligible under (ii) The general public is presumed to
this paragraph (b). be impacted by the public health emer-
(1) Identifying eligible responses to the gency for the purposes of providing the
jspears on DSK121TN23PROD with CFR
public health emergency or its negative uses set forth in paragraphs (b)(3)(i)(A)
economic impacts. and (b)(3)(i)(C) of this section; and
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Office of the Secretary of the Treasury § 35.6
(iii) The following households, com- (A) COVID–19 mitigation and preven-
munities, small businesses, and non- tion in a manner that is consistent
profit organizations are presumed to be with recommendations and guidance
disproportionately impacted by the from the Centers for Disease Control
public health emergency or its nega- and Prevention, including vaccination
tive economic impacts: programs and incentives; testing pro-
(A) Households and populations resid- grams; contact tracing; isolation and
ing in a qualified census tract; house- quarantine; mitigation and prevention
holds and populations receiving serv- practices in congregate settings; acqui-
ices provided by Tribal governments; sition and distribution of medical
households and populations residing in equipment for prevention and treat-
the territories; households and popu- ment of COVID–19, including personal
lations receiving services provided by protective equipment; COVID–19 pre-
territorial governments; low-income vention and treatment expenses for
households and populations; house- public hospitals or health care facili-
holds that qualify for Temporary As- ties, including temporary medical fa-
sistance for Needy Families (42 U.S.C. cilities; establishing or enhancing pub-
601 et seq.), the Supplemental Nutrition lic health data systems; installation
Assistance Program (7 U.S.C. 2011 et and improvement of ventilation sys-
seq.), Free and Reduced Price School tems in congregate settings, health fa-
Lunch and/or Breakfast programs (42 cilities, or other public facilities; and
U.S.C. 1751 et seq. and 42 U.S.C. 1773), assistance to small businesses, non-
Medicare Part D Low-income Subsidies profits, or impacted industries to im-
(42 U.S.C. 1395w-114), Supplemental Se- plement mitigation measures;
curity Income (42 U.S.C. 1381 et seq.), (B) Medical expenses related to test-
Head Start (42 U.S.C. 9831 et seq.), Early ing and treating COVID–19 that are
Head Start (42 U.S.C. 9831 et seq.), the provided in a manner consistent with
Special Supplemental Nutrition Pro- recommendations and guidance from
gram for Women, Infants, and Children the Centers for Disease Control and
(42 U.S.C. 1786), Section 8 Vouchers (42 Prevention, including emergency med-
U.S.C. 1437f), the Low-Income Home ical response expenses, treatment of
Energy Assistance Program (42 U.S.C. long-term symptoms or effects of
8621 et seq.), Pell Grants (20 U.S.C. COVID–19, and costs to medical pro-
1070a), and, if SLFRF funds are to be viders or to individuals for testing or
used for services to address educational treating COVID–19;
disparities, Title I eligible schools; (C) Behavioral health care, including
(B) Small businesses operating in a prevention, treatment, emergency or
qualified census tract, operated by first-responder programs, harm reduc-
Tribal governments or on Tribal lands, tion, supports for long-term recovery,
or operating in the territories; and and behavioral health facilities and
(C) Nonprofit organizations operating equipment; and
in a qualified census tract, operated by (D) Preventing and responding to in-
Tribal governments or on Tribal lands, creased violence resulting from the
or operating in the territories. public health emergency, including
(3) Enumerated eligible uses: responses community violence intervention pro-
presumed reasonably proportional. A re- grams, or responding to increased gun
cipient may use funds to respond to the violence resulting from the public
public health emergency or its nega- health emergency, including payroll
tive economic impacts on a beneficiary and covered benefits associated with
or class of beneficiaries for one or more community policing strategies; en-
of the following purposes unless such forcement efforts to reduce gun vio-
use is grossly disproportionate to the lence; and investing in technology and
harm caused or exacerbated by the equipment;
public health emergency or its nega- (ii) Responding to the negative eco-
tive economic impacts: nomic impacts of the public health
(i) Responding to the public health emergency for purposes including:
jspears on DSK121TN23PROD with CFR
impacts of the public health emergency (A) Assistance to households and in-
for purposes including: dividuals, including:
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§ 35.6 31 CFR Subtitle A (7–1–25 Edition)
(1) Assistance for food; emergency Act between January 27, 2020, and May
housing needs; burials, home repairs, 17, 2021; provided that if a recipient re-
or weatherization; internet access or pays principal on Title XII advances or
digital literacy; cash assistance; and makes a contribution to an Unemploy-
assistance accessing public benefits; ment Trust Fund after April 1, 2022,
(2) Paid sick, medical, or family such recipient shall not reduce average
leave programs, or assistance to ex- weekly benefit amounts or maximum
pand access to health insurance; benefit entitlements prior to December
(3) Childcare, early learning services, 31, 2024; and
home visiting, or assistance for child (ii) Any interest due on such ad-
welfare-involved families or foster vances received under Title XII of the
youth; Social Security Act (42 U.S.C. 1321);
(4) Programs to address the impacts and
of lost instructional time for students (11) A program, service, capital ex-
in kindergarten through twelfth grade; penditure, or other assistance that is
(5) Development, repair, and oper- provided to a disproportionately im-
ation of affordable housing and services pacted household, population, or com-
or programs to increase long-term munity, including:
housing security; (i) Services to address health dispari-
(6) Financial services that facilitate ties of the disproportionately impacted
the delivery of Federal, State, or local household, population, or community;
benefits for unbanked and underbanked (ii) Housing vouchers and relocation
individuals; assistance;
(7) Benefits for the surviving family
(iii) Investments in communities to
members of individuals who have died
promote improved health outcomes and
from COVID–19, including cash assist-
public safety such as parks, recreation
ance to surviving spouses or depend-
facilities, and programs that increase
ents of individuals who died of COVID–
access to healthy foods;
19;
(8) Assistance for individuals who (iv) Capital expenditures and other
want and are available for work, in- services to address vacant or aban-
cluding those who are unemployed, doned properties;
have looked for work sometime in the (v) Services to address educational
past 12 months, who are employed part disparities; and
time but who want and are available (vi) Facilities and equipment related
for full-time work, or who are em- to the provision of these services to the
ployed but seeking a position with disproportionately impacted house-
greater opportunities for economic ad- hold, population, or community.
vancement; (B) Assistance to small businesses,
(9) Facilities and equipment related including:
to the provision of services to house- (1) Programs, services, or capital ex-
holds provided in paragraphs penditures that respond to the negative
(b)(3)(ii)(A)(1) through(8) of this sec- economic impacts of the COVID–19 pub-
tion; lic health emergency, including loans
(10) The following expenses related to or grants to mitigate financial hard-
Unemployment Trust Funds: ship such as declines in revenues or im-
(i) Contributions to a recipient Un- pacts of periods of business closure, or
employment Trust Fund and repay- providing technical assistance; and
ment of principal amounts due on ad- (2) A program, service, capital ex-
vances received under Title XII of the penditure, or other assistance that re-
Social Security Act (42 U.S.C. 1321) up sponds to disproportionately impacted
to an amount equal to (a) the dif- small businesses, including rehabilita-
ference between the balance in the re- tion of commercial properties; store-
cipient’s Unemployment Trust Fund as front and façade improvements; tech-
of January 27, 2020, and the balance of nical assistance, business incubators,
such account as of May 17, 2021, plus (b) and grants for start-ups or expansion
the principal amount outstanding as of costs for small businesses; and pro-
jspears on DSK121TN23PROD with CFR
May 17, 2021, on any advances received grams or services to support micro-
under Title XII of the Social Security businesses;
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Office of the Secretary of the Treasury § 35.6
(C) Assistance to nonprofit organiza- alent employees on January 27, 2020,
tions including programs, services, or multiplied by 1.075, and the number of
capital expenditures, including loans its budgeted full-time equivalent em-
or grants to mitigate financial hard- ployees on March 3, 2021, provided that
ship such as declines in revenues or in- funds shall only be used for additional
creased costs, or technical assistance; budgeted full-time equivalent employ-
(D) Assistance to tourism, travel, ees above the recipient’s number of
hospitality, and other impacted indus- budgeted full-time equivalent employ-
tries for programs, services, or capital ees as of March 3, 2021;
expenditures, including support for (3) Costs to improve the design and
payroll costs and covered benefits for execution of programs responding to
employees, compensating returning the COVID–19 pandemic and to admin-
employees, support for operations and ister or improve the efficacy of pro-
maintenance of existing equipment and grams addressing the public health
facilities, and technical assistance; and emergency or its negative economic
(E) Expenses to support public sector impacts; and
capacity and workforce, including:
(4) Costs associated with addressing
(1) Payroll and covered benefit ex-
administrative needs of recipient gov-
penses for public safety, public health,
ernments that were caused or exacer-
health care, human services, and simi-
bated by the pandemic.
lar employees to the extent that the
employee’s time is spent mitigating or (4) Capital expenditures. A recipient,
responding to the COVID–19 public other than a Tribal government, must
health emergency; prepare a written justification for cer-
(2) Payroll, covered benefit, and tain capital expenditures according to
other costs associated with programs Table 1 of paragraph (b) of this section.
or services to support the public sector Such written justification must in-
workforce and with the recipient: clude the following elements:
(i) Hiring or rehiring staff to fill (i) Describe the harm or need to be
budgeted full-time equivalent positions addressed;
that existed on January 27, 2020, but (ii) Explain why a capital expendi-
that were unfilled or eliminated as of ture is appropriate; and
March 3, 2021; or (iii) Compare the proposed capital ex-
(ii) Increasing the number of its penditure to at least two alternative
budgeted full-time equivalent employ- capital expenditures and demonstrate
ees by up to the difference between the why the proposed capital expenditure
number of its budgeted full-time equiv- is superior.
TABLE 1 TO PARAGRAPH (b)
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 essential work during the COVID–19
workers. A recipient may use funds to public health emergency. A recipient
provide premium pay to eligible work- uses premium pay or grants provided
ers of the recipient who perform essen- under this paragraph (c) to respond to
tial work or to provide grants to eligi- eligible workers performing essential
ble employers that have eligible work- work during the COVID–19 public
ers who perform essential work, pro- health emergency if:
vided that any premium pay or grants (1) The eligible worker’s total wages
jspears on DSK121TN23PROD with CFR
provided under this paragraph (c) must and remuneration, including the pre-
respond to eligible workers performing mium pay, is less than or equal to 150
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§ 35.6 31 CFR Subtitle A (7–1–25 Edition)
percent of the greater of such eligible the recipient’s average annual revenue
worker’s residing State’s or county’s growth over the three full fiscal years
average annual wage for all occupa- prior to the COVID–19 public health
tions as defined by the Bureau of Labor emergency;
Statistics’ Occupational Employment (C) n equals the number of months
and Wage Statistics; elapsed from the end of the base year
(2) The eligible worker is not exempt to the calculation date;
from the Fair Labor Standards Act (D) Subscript t denotes the specific
overtime provisions (29 U.S.C. 207); or calculation date; and
(3) The recipient has submitted to (E) Actual General Revenue is a re-
the Secretary a written justification cipient’s actual general revenue col-
that explains how providing premium lected during the 12-month period end-
pay to the eligible worker is responsive ing on each calculation date identified
to the eligible worker performing es- in paragraph (d)(2)(i) of this section,
sential work during the COVID–19 pub- except:
lic health emergency (such as a de- (1) For purposes of all calculation
scription of the eligible workers’ du- dates on or after April 1, 2022, in the
ties, health, or financial risks faced case of any change made after January
due to COVID–19, and why the recipient 6, 2022, to any law, regulation, or ad-
determined that the premium pay was ministrative interpretation that re-
responsive despite the worker’s higher duces any tax (by providing for a re-
income). duction in a rate, a rebate, a deduction,
(d) Providing government services. A re- a credit, or otherwise) or delays the
cipient may use funds for the provision imposition of any tax or tax increase
of government services up to an and that the recipient assesses has had
amount equal to the greater of: the effect of decreasing the amount of
(1) $10,000,000; or tax revenue collected during the 12-
(2) the amount of the reduction in month period ending on the calculation
the recipient’s general revenue due to date relative to the amount of tax rev-
the COVID–19 public health emergency, enue that would have been collected in
which equals the sum of the reduction the absence of such change, the recipi-
in revenue, calculated as of each date ent must add to actual general revenue
identified in paragraph (d)(2)(i) of this the amount of such decrease in tax rev-
section and according to the formula in enue;
paragraph (d)(2)(ii) of this section: (2) For purposes of any calculation
(i) A recipient must make a one-time date on or after April 1, 2022, in the
election to calculate the reduction in case of any change made after January
its general revenue using information 6, 2022, to any law, regulation, or ad-
as of either: ministrative interpretation that in-
(A) December 31, 2020, December 31, creases any tax (by providing for an in-
2021, December 31, 2022, and December crease in a rate, the reduction of a re-
31, 2023; or bate, a deduction, or a credit, or other-
(B) The last day of each of the recipi- wise) or accelerates the imposition of
ent’s fiscal years ending in 2020, 2021, any tax or tax increase and that the re-
2022, and 2023. cipient assesses has had the effect of
(ii) A reduction in a recipient’s gen- increasing the amount of tax revenue
eral revenue for each date identified in collected during the 12-month period
paragraph (d)(2)(i) equals: ending on the calculation date relative
Max {[Base Year Revenue* (1 + Growth to the amount of tax revenue that
Adjustment)∧(nt/12)]¥Actual General would have been collected in the ab-
Revenue; 0} sence of such change, the recipient
must subtract from actual general rev-
Where: enue the amount of such increase in
(A) Base Year Revenue is the recipi- tax revenue; and
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-
jspears on DSK121TN23PROD with CFR
(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
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Office of the Secretary of the Treasury § 35.6
of each calculation date identified in projects. Projects or activities of the
paragraph (d)(2)(i) of this section: type that meet the eligibility require-
(i) In the case of any change made ments of section 603(c) of the Federal
during such prior period to any law, Water Pollution Control Act (33 U.S.C.
regulation, or administrative interpre- 1383(c));
tation that reduces any tax (by pro- (ii) Additional stormwater projects.
viding for a reduction in a rate, a re- Projects to manage, reduce, treat, or
bate, a deduction, a credit, or other- recapture stormwater or subsurface
wise) or delays the imposition of any drainage water regardless of whether
tax or tax increase and that the recipi- such projects would improve water
ent assesses has had the effect of de- quality if such projects would other-
creasing the amount of tax revenue wise meet the eligibility requirements
collected during the 12-month period of section 603(c)(5) of the Federal Water
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
January 6, 2022, and ending on March the programs the EPA is authorized to
31, 2022, if the recipient makes the elec- establish under sections 1459A(b)(2),
tion in paragraph (d)(3) of this section, 1459B(b)(1), 1464(d)(2), and 1465 of the
the recipient must also make the ad- Safe Drinking Water Act (42 U.S.C.
justments referenced in paragraph 300j–19a(b)(2), 300j–19b(b)(1), 300j–
(d)(3) of this section with respect to 24(d)(2), and 300j–25), provided that:
any such changes in law, regulation, or (A) In the case of lead service line re-
administrative interpretation during placement projects, the recipient must
the period beginning on January 6, replace the full length of the service
2022, and ending on such calculation line and may not replace only a partial
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
jspears on DSK121TN23PROD with CFR
(1) Water and sewer investments—(i) served by lead service line replacement
Clean Water State Revolving Fund projects in its discretion.
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§ 35.6 31 CFR Subtitle A (7–1–25 Edition)
(v) Drinking water projects to support (E) The project is a cost-effective
increased population. Projects of the means for achieving the desired level of
type that meet the eligibility require- service.
ments of 40 CFR 35.3520 other than the (vii) Private wells. Rehabilitation of
requirement of 40 CFR 35.3520(b)(1) to private wells, testing initiatives to
address present or prevent future viola- identify contaminants in private wells,
tions of health-based drinking water and treatment activities and remedi-
standards, if the following conditions ation projects that address contamina-
are met: tion in private wells, if the project
(A) The project is needed to support meets the requirements of 40 CFR
increased population, with need as- 35.3520 other than the limitation to cer-
sessed as of the time the project is un- tain eligible systems under paragraph
dertaken; (a) of 40 CFR 35.3520.
(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;
(C) The project is a cost-effective (A) The broadband infrastructure is
means for achieving the desired level of designed to provide service to house-
service; and holds and businesses with an identified
(D) The project is projected to con- need, as determined by the recipient,
tinue to provide an adequate level of for such infrastructure;
drinking water over its estimated use- (B) The broadband infrastructure is
ful life. designed to, upon completion:
(vi) Dams and reservoirs. Rehabilita- (1) Reliably meet or exceed symmet-
tion of dams and reservoirs if the fol- rical 100 Mbps download speed and
lowing conditions are met: upload speeds; or
(A) The project meets the require- (2) In cases where it is not prac-
ments of 40 CFR 35.3520 other than the ticable, because of the excessive cost of
following requirements: the project or geography or topography
(1) The prohibition on the rehabilita- of the area to be served by the project,
tion of dams and reservoirs in para- to provide service reliably meeting or
graphs (e)(1) and (e)(3) of 40 CFR exceeding symmetrical 100 Mbps
35.3520; and download speed and upload speeds:
(2) The requirement in paragraph (i) Reliably meet or exceed 100 Mbps
(b)(1) of 40 CFR 35.3520 that the project download speed and between at least 20
is needed to address present or prevent Mbps and 100 Mbps upload speed; and
future violations of health-based drink- (ii) Be scalable to a minimum of 100
ing water standards, provided that if Mbps download speed and 100 Mbps
the dam or reservoir project does not upload speed; and
meet this requirement, the project
(C) The service provider for a com-
must be needed to support increased
pleted broadband infrastructure invest-
population, with need assessed as of
ment project that provides service to
the time the project is undertaken, and
households is required, for as long as
the project must be projected to con-
tinue to provide an adequate level of the SLFRF-funded broadband infra-
drinking water over its estimated use- structure is in use, by the recipient to:
ful 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
jspears on DSK121TN23PROD with CFR
jected increased need, whether due to provided under the ACP through the
population growth or otherwise; and lifetime of the ACP.
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Office of the Secretary of the Treasury § 35.6
(ii) Cybersecurity infrastructure invest- future occurrence of a natural disaster
ments. Cybersecurity infrastructure in- in the recipient’s jurisdiction; and
vestments that are designed to improve (ii) Provides emergency relief that
the reliability and resiliency of new responds to and is related and reason-
and existing broadband infrastructure. ably proportional to:
Such investments may include the ad- (A) the physical or negative eco-
dition or modernization of network se- nomic impacts of the natural disaster
curity hardware and software tools de- identified in paragraph (g)(1)(i)(A) of
signed to strengthen cybersecurity for this section, or
the end-users of these networks. (B) the potential physical or negative
(f) Meeting the non-Federal matching economic impacts of the natural dis-
requirements for Bureau of Reclamation aster identified in paragraph (g)(1)(i)(B)
projects. A recipient may use funds to of this section.
meet the non-Federal matching re- (2) Enumerated eligible uses. A recipi-
quirements of any authorized Bureau ent may use funds to provide emer-
of Reclamation project. gency relief from
(g) Natural Disaster Emergency Relief. (i) the physical or negative economic
Subject to paragraph (g)(3) of this sec- impacts of natural disasters identified
tion, a recipient may use funds to pro- under paragraph (g)(1)(i)(A) of this sec-
vide emergency relief from the phys- tion by engaging in one of the fol-
ical impacts or negative economic im- lowing activities, provided that the
pacts of a natural disaster, including emergency relief is related and reason-
the forms of emergency relief identi- ably proportional to the physical or
fied in paragraph (g)(2) of this section, negative economic impacts of the nat-
if the use meets the criteria provided ural disaster identified:
in paragraph (g)(1) of this section. (A) Temporary emergency housing,
(1) Identifying emergency relief from the food assistance, and financial assist-
physical or negative economic impacts of ance for lost wages;
a natural disaster. A recipient provides (B) Emergency protective measures,
emergency relief from the physical im- including assistance for emergency ac-
pacts or negative economic impacts of cess, medical care and transport, emer-
a natural disaster when the recipient: gency operations center related costs,
(i) Identifies either: and other activities traditionally un-
(A) a natural disaster that has oc- dertaken as part of emergency re-
curred or is expected to occur immi- sponse;
nently and that has been the subject of (C) Debris removal activities, includ-
an emergency declaration or designa- ing the clearance, removal, and dis-
tion applicable to the recipient’s geog- posal of vegetative debris, construction
raphy and jurisdiction in the form of: and demolition debris, sand, mud, silt,
(1) an emergency declaration pursu- gravel, rocks, boulders, white goods,
ant to the Stafford Act; and vehicle and vessel wreckage;
(2) an emergency declaration by the (D) Restoration of public infrastruc-
Governor of a state pursuant to state ture damaged by a natural disaster, in-
law; cluding roads, bridges, and utilities;
(3) an emergency declaration made (E) Increased operational costs, in-
by a Tribal government; or cluding payroll costs and costs for gov-
(4) a designation as a natural disaster ernment facilities and government
by the chief executive (or equivalent) services;
of the recipient, provided that the chief (F) Cash assistance for uninsured or
executive (or equivalent) documents underinsured expenses, and cash assist-
that the event meets the definition of ance serving low-income households; or
natural disaster; or (G) Home repairs for uninhabitable
(B) a natural disaster that is threat- primary residences; or
ened to occur in the future, provided (ii) the potential physical or negative
that the recipient documents evidence economic impacts of natural disasters
of historical patterns or predictions of identified under paragraph (g)(1)(i)(B)
jspears on DSK121TN23PROD with CFR
natural disasters that would reason- of this section by using funds for miti-
ably demonstrate the likelihood of the gation activities, provided that the
371
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§ 35.6 31 CFR Subtitle A (7–1–25 Edition)
emergency relief is related and reason- received for the same disaster losses
ably proportional to the potential prior to receiving assistance under this
physical or negative economic impacts paragraph (g).
of the natural disaster identified, and (C) Funds shall be used last in the de-
provided further that if funds are used livery sequence unless the recipient, in
for capital expenditures under this consultation with the appropriate Re-
paragraph, a recipient, other than a gional Administrator of the Federal
Tribal government, must prepare a Emergency Management Agency or
written justification for activities state disaster-assistance adminis-
under this paragraph (g)(2)(ii) with trator, determines that another se-
total capital expenditures of $1 million quence is appropriate.
or greater. Such written justification (h) Certain infrastructure projects. A
must include the following elements: recipient may use funds for Surface
(A) Describe the emergency relief Transportation projects as set forth in
provided by the mitigation activity paragraph (h)(1) of this section and for
and why it is needed to lessen or avert Title I projects as set forth in para-
the potential impacts of the natural graph (h)(2) of this section, subject to
disaster that is threatened to occur in the requirements set forth in para-
the future; graph (h)(3) of this section.
(B) Explain why the capital expendi- (1) Surface Transportation projects. A
ture is appropriate to address the need recipient may use funds for Surface
for emergency relief; and Transportation projects in the manner
(C) Compare the proposed capital ex- set forth in paragraph (h)(1)(i) of this
penditure to at least two alternative section, subject to the requirements
capital expenditures and demonstrate and limitations set forth in paragraph
why the proposed capital expenditure (h)(1)(ii) of this section.
is superior. (i)(A) A recipient may use funds to
(3) Duplication of benefits. (A) A re- expand the scope of, to cover additional
cipient may not provide financial as- costs associated with, or to otherwise
sistance under this paragraph (g) to a supplement funding for a project re-
person, business concern, or other enti- ceiving funding from the Department
ty with respect to disaster losses for of Transportation at the time that the
which such beneficiary will receive fi- funds are obligated and expended for
nancial assistance under any other pro- the project.
gram or from insurance or any other (B) A recipient may use funds for a
source. Surface Transportation project that is
(B) A recipient may provide assist- not funded by the Department of
ance with respect to disaster losses to Transportation at the time the funds
a person, business concern, or other en- are obligated and expended.
tity that is or may be entitled to re- (C) A recipient may use funds to sat-
ceive assistance for those losses from isfy non-Federal share requirements
another source, if such person, business for a project eligible under the provi-
concern, or other entity has not re- sions identified in paragraphs (1), (18),
ceived the other benefits by the time of (21), and (27) of the definition of ‘‘Sur-
application for assistance and the per- face Transportation project’’ in § 35.3 or
son, business concern, or other entity to repay a loan provided under the
agrees to repay any duplicative assist- Transportation Infrastructure Finance
ance to the recipient. A recipient pro- and Innovation Act program under 23
viding assistance with respect to dis- U.S.C. chapter 6.
aster losses shall coordinate with the (ii) The following limitations and re-
relevant Regional Administrator of the quirements apply to funds used for Sur-
Federal Emergency Management Agen- face Transportation projects under
cy and state disaster-assistance admin- paragraphs (h)(1)(i)(A) and (h)(1)(i)(B)
istrator. Recipients shall notify sub- of this section.
recipients and contractors that, when (A) Funds used for Surface Transpor-
providing assistance with respect to tation projects eligible under the pro-
disaster losses, those entities are re- visions set forth in paragraphs (20)
jspears on DSK121TN23PROD with CFR
sponsible for ensuring that bene- through (24) of the definition of ‘‘Sur-
ficiaries disclose any other assistance face Transportation projects’’ in § 35.3
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Office of the Secretary of the Treasury § 35.6
shall not be used for operating ex- provement program or transportation
penses of such a project. improvement program shall not apply
(B) Except as otherwise determined to Surface Transportation projects un-
by the Secretary or the head of the dertaken pursuant to paragraph
Federal agency to which the Secretary (h)(1)(i)(B) of this section except in cir-
has delegated authority, the require- cumstances when the project is region-
ments of titles 23, 40, and 49 of the U.S. ally significant and requires action by
Code, and the associated implementing an office of the Department of Trans-
regulations, apply to Surface Transpor- portation pursuant to 23 CFR 450.218.
tation projects, including but not lim- (C) Except as otherwise determined
ited to the following: by the Secretary or the head of the
(1) Project eligibility requirements; Federal agency to which the Secretary
(2) Project approval requirements, has delegated authority, the require-
provided that such requirements shall ments of the National Environmental
not apply to Surface Transportation Policy Act of 1969 (42 U.S.C. 4321 et
projects undertaken pursuant to para- seq.), and the associated implementing
graph (h)(1)(i)(B) of this section that regulations, apply to Surface Transpor-
meet the following criteria: tation projects.
(i) The project qualifies as an ‘‘eligi- (D) When a State uses funds for a
ble project’’ under the program de- Surface Transportation project eligible
scribed in paragraph (17) of the defini- under title 23 of the U.S. Code or that
tion of Surface Transportation project otherwise would be subject to the re-
set forth in § 35.3; quirements of title 23, the project must
(ii) The recipient does not use more either:
than $10 million in funds for the (1) Demonstrate progress in achiev-
project; and ing a state of good repair as required
(iii) The entire project scope, includ- by the State’s asset management plan
ing for avoidance of doubt any portion under 23 U.S.C. 119(e), or
of the project funded through other (2) Support the achievement of one or
sources, is limited to the actions or ac- more performance targets of the State
tivities listed under 23 CFR 771.116(c)(1) established under 23 U.S.C. 150.
through(22), 23 CFR 771.117(c)(1) (2) Title I projects. A recipient may
through(30), and 23 CFR 771.118(c)(1) use funds for Title I projects, subject to
through(16), provided that the actions the following limitations and require-
or activities do not involve unusual ments:
circumstances, as described in 23 CFR (i) Except as otherwise determined by
771.116(b), 23 CFR 771.117(b), and 23 CFR the Secretary or the head of the Fed-
771.118(b). eral agency to which the Secretary has
(3) Wage and employee protection re- delegated authority, the requirements
quirements, including the require- of Title I of the Housing and Commu-
ments set forth at 23 U.S.C. 113 and 49 nity Development Act of 1974 (42 U.S.C.
U.S.C. 5333(a) and (b); 5301 et seq.), and the associated imple-
(4) Domestic preference procurement menting regulations, apply to Title I
requirements, including the require- projects, including:
ments set forth at 23 U.S.C. 313, 49 (A) At least 70 percent of funds used
U.S.C. 5323(j), 49 CFR part 661, and 23 for such projects, in the aggregate,
CFR 635.410, provided that such re- must be used for projects that prin-
quirements shall not apply to Surface cipally benefit low- and moderate-in-
Transportation projects undertaken come persons, in accordance with the
pursuant to paragraph (h)(1)(i)(B) of definitions and requirements set forth
this section that meet the criteria set at 24 CFR 570.3, 24 CFR 570.200(a)(3),
forth in paragraph (h)(1)(ii)(B)(2)(i) and 24 CFR 570.208(a) for recipients
through (iii) of this section; that are not Tribal governments, and
(5) Project design, planning, con- at 24 CFR 1003.4 and 1003.208 for Tribal
struction, operation, maintenance, ve- government recipients; provided, how-
hicle weight limit, and toll require- ever, that Tribal governments may
ments, provided that the requirement demonstrate that beneficiaries of Title
jspears on DSK121TN23PROD with CFR
to include Surface Transportation I assistance are ‘‘low and moderate in-
projects in a state transportation im- come beneficiaries,’’ as defined at 24
373
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§ 35.7 31 CFR Subtitle A (7–1–25 Edition)
CFR 1003.4, based on an attestation by funds made under section 602 or 603 of
the Tribal government that these bene- the Social Security Act.
ficiaries are receiving or are eligible to (ii) Funds used for the projects set
receive services administered by the forth in paragraph (h) of this section
Tribal government on the basis of an must supplement, and not supplant,
individual’s income. other Federal, State, territorial, Trib-
(B) In the case of recipients that are al, and local government funds (as ap-
not Tribal governments, funds used for plicable) that
projects must satisfy at least one of (A) in the case of non-Federal funds,
the national objectives as set forth in have been obligated for activities or
24 CFR 570.208. projects that are eligible as part of any
(C) Not more than 15 percent of funds Surface Transportation project or Title
used for such projects, in the aggre- I project, as applicable, or
gate, may be used for public services (B) in the case of Federal funds, a
activities and projects eligible under 42 Federal agency has committed to a
U.S.C. 5305(a)(8). particular project pursuant to an
award agreement or otherwise.
(D) Not more than 20 percent of funds
used for such projects, in the aggre- § 35.7 Pensions.
gate, may be used for planning and ad-
ministrative costs, as described at 24 A recipient (other than a Tribal gov-
ernment) may not use funds for deposit
CFR 570.200(g), 570.205, and 570.206 with
into any pension fund.
respect to recipients that are not Trib-
al governments, and as described at 24 § 35.8 Tax.
CFR 1003.205 and 1003.206 with respect
to recipients that are Tribal govern- (a) Restriction. A State or Territory
ments. shall not use funds to either directly or
indirectly offset a reduction in the net
(E) In the case of recipients that are
tax revenue of the State or Territory
not Tribal governments, funds used for
resulting from a covered change during
such projects must satisfy the require-
the covered period.
ments set forth at 42 U.S.C. 5310 and 24 (b) Violation. Treasury will consider a
CFR 570.603. State or Territory to have used funds
(F) Prior to commencing a Title I to offset a reduction in net tax revenue
project, a recipient must comply with if, during a reporting year:
the environmental protection measures (1) Covered change. The State or Ter-
set forth at 42 U.S.C. 5304(g) and the ritory has made a covered change that,
implementing regulations set forth at either based on a reasonable statistical
24 CFR 570.604, 24 CFR 1003.605, and 24 methodology to isolate the impact of
CFR part 58, provided that the certifi- the covered change in actual revenue
cation contemplated by 42 U.S.C. or based on projections that use rea-
5304(g) shall be submitted to the Sec- sonable assumptions and do not incor-
retary and not the Secretary of the De- porate the effects of macroeconomic
partment of Housing and Urban Devel- growth to reduce or increase the pro-
opment. jected impact of the covered change,
(ii) To the extent a Title I project re- the State or Territory assesses has had
lates to broadband infrastructure, the or predicts to have the effect of reduc-
requirements of section 60102 of the In- ing tax revenue relative to current law;
frastructure Investment and Jobs Act (2) Exceeds the de minimis threshold.
shall apply. The aggregate amount of the measured
(3) Requirements applicable to Surface or predicted reductions in tax revenue
Transportation projects and Title I caused by covered changes identified
projects. (i) The total amount of funds under paragraph (b)(1) of this section,
that a recipient may use for costs in- in the aggregate, exceeds 1 percent of
curred for projects set forth in para- the State’s or Territory’s baseline;
graphs (h)(1) and (h)(2) of this section, (3) Reduction in net tax revenue. The
taken together, shall not exceed the State or Territory reports a reduction
greater of $10,000,000 and 30 percent of in net tax revenue, measured as the dif-
jspears on DSK121TN23PROD with CFR
the recipient’s total award received ference between actual tax revenue and
pursuant to payment or transfer of the State’s or Territory’s baseline,
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Office of the Secretary of the Treasury § 35.10
each measured as of the end of the re- ulations, and executive orders, and a
porting year; and recipient shall provide for compliance
(4) Consideration of other changes. The with the American Rescue Plan Act,
aggregate amount of measured or pre- this subpart, and any interpretive guid-
dicted reductions in tax revenue caused ance by other parties in any agree-
by covered changes is greater than the ments it enters into with other parties
sum of the following, in each case, as relating to these funds.
calculated for the reporting year:
(i) The aggregate amount of the ex- § 35.10 Recoupment.
pected increases in tax revenue caused (a) Identification of violations—(1) In
by one or more covered changes that, general. Any amount used in violation
either based on a reasonable statistical of § 35.5, § 35.6, or § 35.7 may be identi-
methodology to isolate the impact of fied at any time prior to December 31,
the covered change in actual revenue 2026.
or based on projections that use rea- (2) Annual reporting of amounts of vio-
sonable assumptions and do not incor- lations. On an annual basis, a recipient
porate the effects of macroeconomic that is a State or territory must cal-
growth to reduce or increase the pro- culate and report any amounts used in
jected impact of the covered change, violation of § 35.8.
the State or Territory assesses has had
(b) Calculation of amounts subject to
or predicts to have the effect of in-
recoupment—(1) In general. Except as
creasing tax revenue; and
provided in paragraph (b)(2) of this sec-
(ii) Reductions in spending, up to the
tion, the Secretary will calculate any
amount of the State’s or Territory’s
amounts subject to recoupment result-
net reduction in total spending, that
ing from a violation of § 35.5, § 35.6 or
are in:
§ 35.7 as the amounts used in violation
(A) Departments, agencies, or au-
of such restrictions.
thorities in which the State or Terri-
(2) Violations of § 35.8. The Secretary
tory is not using funds; and
will calculate any amounts subject to
(B) Departments, agencies, or au-
recoupment resulting from a violation
thorities in which the State or Terri-
of § 35.8, equal to the lesser of:
tory is using funds, in an amount equal
to the value of the spending cuts in (i) The amount set forth in § 35.8(c);
those departments, agencies, or au- and,
thorities, minus funds used. (ii) The amount of funds received by
(c) Amount and revenue reduction cap. such recipient.
If a State or Territory is considered to (c) Initial notice. If the Secretary cal-
be in violation pursuant to paragraph culates an amount subject to
(b) of this section, the amount used in recoupment under paragraph (b) of this
violation of paragraph (a) of this sec- section, Treasury will provide the re-
tion is equal to the lesser of: cipient an initial written notice of the
(1) The reduction in net tax revenue amount subject to recoupment along
of the State or Territory for the re- with an explanation of such amounts.
porting year, measured as the dif- (d) Request for reconsideration. Unless
ference between the State’s or Terri- the Secretary extends or accelerates
tory’s baseline and its actual tax rev- the time period, within 60 calendar
enue, each measured as of the end of days of receipt of an initial notice of
the reporting year; and, recoupment provided under paragraph
(2) The aggregate amount of the re- (c) of this section, a recipient may sub-
ductions in tax revenues caused by cov- mit a written request to the Secretary
ered changes identified in paragraph requesting reconsideration of any
(b)(1) of this section, minus the sum of amounts subject to recoupment under
the amounts in identified in para- paragraph (b) of this section. To re-
graphs (b)(4)(i) and (ii) of this section. quest reconsideration of any amounts
subject to recoupment, a recipient
§ 35.9 Compliance with applicable must submit to the Secretary a written
laws. request that includes:
jspears on DSK121TN23PROD with CFR
A recipient must comply with all (1) An explanation of why the recipi-
other applicable Federal statutes, reg- ent believes all or some of the amount
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§ 35.11 31 CFR Subtitle A (7–1–25 Edition)
should not be subject to recoupment; ployment rate as of the date that it
and submits an initial certification for pay-
(2) A discussion of supporting rea- ment of funds pursuant to section
sons, along with any additional infor- 602(d)(1) of the Social Security Act that
mation. is less than two percentage points
(e) Final amount subject to recoupment. above its unemployment rate in Feb-
Unless the Secretary extends or accel- ruary 2020, the Secretary will withhold
erates the time period, within 60 cal- 50 percent of the amount of funds allo-
endar days of receipt of the recipient’s cated under section 602(b) of the Social
request for reconsideration provided Security Act to such State or territory
pursuant to paragraph (d) of this sec- until at least May 10, 2022 and not more
tion or the expiration of the period for than twelve months from the date such
requesting reconsideration provided initial certification is provided to the
under paragraph (d) of this section, the Secretary.
recipient will be notified of the Sec- (b) Payment of withheld amount. In
retary’s decision to affirm, withdraw, order to receive the amount withheld
or modify the notice of recoupment. under paragraph (a) of this section, the
Such notification will include an expla- State or Territory must submit to the
nation of the decision, including re- Secretary the following information:
sponses to the recipient’s supporting (1) A certification, in the form pro-
reasons and consideration of additional vided by the Secretary, that such State
information provided. A recipient must or Territory requires the payment to
invoke and exhaust the procedures carry out the activities specified in
available under this subpart prior to section 602(c) of the Social Security
seeking judicial review of a decision Act and will use the payment in com-
under § 35.10. pliance with section 602(c) of the Social
(f) Repayment of funds. Unless the Security Act; and
Secretary extends or accelerates the (2) Any reports required to be filed by
time period, a recipient shall repay to that date pursuant to this part that
the Secretary any amounts subject to have not yet been filed.
recoupment in accordance with in-
structions provided by the Secretary: § 35.12 Distributions to nonentitlement
(1) Within 120 calendar days of re- units of local government and units
ceipt of the notice of recoupment pro- of general local government.
vided under paragraph (c) of this sec- (a) Nonentitlement units of local gov-
tion, in the case of a recipient that ernment. Each State or Territory that
does not submit a request for reconsid- receives a payment from the Secretary
eration in accordance with the require- pursuant to section 603(b)(2)(B) of the
ments of paragraph (d) of this section; Social Security Act shall distribute the
or amount of the payment to nonentitle-
(2) Within 120 calendar days of re- ment units of local government in such
ceipt of the Secretary’s decision under State or Territory in accordance with
paragraph (e) of this section, in the the requirements set forth in section
case of a recipient that submits a re- 603(b)(2)(C) of the Social Security Act
quest for reconsideration in accordance and without offsetting any debt owed
with the requirements of paragraph (d) by such nonentitlement units of local
of this section. governments against such payments.
(g) Other remedial actions. Prior to (b) Budget cap. A State or Territory
seeking recoupment or taking other may not make a payment to a non-
appropriate action pursuant to para- entitlement unit of local government
graphs (c), (d), (e), or (f) of this section, pursuant to section 603(b)(2)(C) of the
the Secretary may notify the recipient Social Security Act and paragraph (a)
of potential violations and provide the of this section in excess of the amount
recipient an opportunity for informal equal to 75 percent of the most recent
consultation and remediation. budget for the nonentitlement unit of
local government as of January 27,
§ 35.11 Payments to States. 2020. For purposes of this section 35.12,
jspears on DSK121TN23PROD with CFR
(a) In general. With respect to any a nonentitlement unit of local govern-
State or Territory that has an unem- ment’s most recent budget shall mean
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Office of the Secretary of the Treasury § 35.21
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-
certification for purposes of complying ments of this subpart during the ECIP
with this section 35.12. period.
(c) Units of general local government. (c) Limitation of authority. Nothing in
Each State or Territory that receives a this subpart shall be interpreted to
payment from the Secretary pursuant limit the authority of the appropriate
to section 603(b)(3)(B)(ii) of the Social Federal banking agency to take action
Security Act, in the case of an amount under other provisions of law, includ-
to be paid to a county that is not a ing action to address unsafe or unsound
unit of general local government, shall practices or conditions, deficient cap-
distribute the amount of the payment ital levels, or violations of law or regu-
to units of general local government lation, under section 8 of the Federal
within such county in accordance with Deposit Insurance Act, section 8 of the
the requirements set forth in section Bank Holding Company Act, or section
603(b)(3)(B)(ii) of the Social Security 10 of the Home Owners’ Loan Act, or
Act and without offsetting any debt the Federal Credit Union Act, as may
owed by such units of general local be applicable.
government against such payments.
(d) Additional conditions. A State or § 35.21 Definitions.
Territory may not place additional Except as modified in this regulation
conditions or requirements on distribu- or unless the context otherwise re-
tions to nonentitlement units of local quires, the terms used in this regula-
government or units of general local tion have the same meaning as set
government beyond those required by forth in the relevant statutes. For pur-
section 603 of the Social Security Act poses of this subpart:
or this subpart A. Act means the Community Develop-
ment Banking and Financial Institu-
Subpart B—Compensation and tions Act of 1994, as amended (12 U.S.C.
Capital Distributions 4701 et seq.).
Appropriate Federal banking agency
§ 35.20 Purpose, applicability, and gen- has the same meaning as in 12 U.S.C.
eral provisions. 1813 and also includes the NCUA with
(a) Purpose. Pursuant Section 104A of respect to a federally insured credit
the Community Development Banking union.
and Financial Institutions Act of 1994 Capital distributions means:
(Act), as added by the Consolidated Ap- (1) Dividends, including discretionary
propriations Act, 2021 (Pub. L. 116–260), dividends, on non-senior securities and
this subpart establishes restrictions on any other payments on a share of stock
executive compensation, dividend pay- or other equity or equivalent interest;
ments, and share buybacks for recipi- (2) Payments, including interest pay-
ents of capital investments under the ments, on non-senior securities, that
Department of the Treasury’s Emer- the issuer has full discretion to perma-
gency Capital Investment Program nently or temporarily suspend without
(ECIP or Program), as well as addi- triggering a default;
jspears on DSK121TN23PROD with CFR
tional criteria for participation in the (3) Redemptions or repurchases of
Program that the Secretary has deter- non-senior securities; or
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§ 35.21 31 CFR Subtitle A (7–1–25 Edition)
(4) Any similar transaction that the ECIP investment date means the date
Department of the Treasury deter- on which an ECIP recipient first issued
mines to be in substance a capital dis- an ECIP investment.
tribution; ECIP period means the period from
(5) Provided, that a ‘‘capital distribu- the ECIP investment date until the
tion’’ does not include: earliest of:
(i) Redemptions or repurchases of (1) The date on which the ECIP re-
shares that are part of an employee cipient has fully redeemed or repaid
stock ownership plan for an ECIP re- the ECIP investment received under
cipient that is not publicly traded, pro- ECIP;
vided that the repurchase is required (2) The date on which the investment
solely by virtue of the Employee Re- the ECIP recipient received under the
tirement Income Security Act of 1974, ECIP is no longer held, in full or in
as amended; part, by the Department of the Treas-
(ii) In the case of federally insured ury or any affiliate thereof; and
credit unions: (3) Ten years after the ECIP invest-
ment date.
(A) Payments of dividends and inter-
ECIP recipient means any entity that
est (as defined by 12 CFR 707.2(h) and
has received a capital investment
(o)) on accounts held by their members;
under the ECIP.
provided that this exclusion does not
Excessive or luxury expenditures
apply to any extraordinary or special
means:
dividend by a credit union; or
(1) Excessive expenditures on any of
(B) Redemptions of membership
the following to the extent such ex-
share interests upon voluntary or in-
penditures are not reasonable expendi-
voluntary terminations of membership tures for staff development, reasonable
by a credit union or its members, as performance incentives, or other simi-
applicable; and lar reasonable measures conducted in
(iii) Solely in the case of § 35.23(b) the normal course of the ECIP recipi-
(Limit on amount of capital distribu- ent’s business operations:
tions), redemptions or repurchases of (i) Entertainment or events;
non-senior securities if the issuer of (ii) Office and facility renovations;
the non-senior securities being repur- (iii) Aviation or other transportation
chased or redeemed fully funds the re- services;
demption or repurchase by issuing at (iv) Tax gross-ups; and
least a corresponding amount of new
(v) Other similar items, activities, or
non-senior securities that rank equally
events for which the ECIP recipient
in liquidation with, receive the same may reasonably anticipate incurring
capital treatment as and, if applicable, expenses, or reimbursing an employee
have a stated maturity date no earlier for incurring expenses;
than the non-senior securities being re-
(2) Provided, that reasonable capital
deemed or repurchased. investments in technology, equipment,
ECIP means the Emergency Capital and similar items that expand the
Investment Program established under long-term capability of an ECIP recipi-
Section 104A of the Community Devel- ent to provide products and services to
opment Banking and Financial Institu- its customers and community are not
tions Act of 1994, as amended. excessive or luxury expenditures.
ECIP investment means any preferred Excessive or luxury expenditures policy
stock, subordinated debt, or other in- means written standards applicable to
strument (including any successor to the ECIP recipient and its employees
any such instrument) issued by an that address the five categories of ex-
ECIP recipient to the Department of penses set forth in the definition of
the Treasury under the ECIP. ‘‘excessive or luxury expenditures,’’
ECIP investment agreement means the and that are reasonably designed to
agreement between an ECIP recipient eliminate excessive and luxury expend-
and the Department of the Treasury itures. Such written standards must:
jspears on DSK121TN23PROD with CFR
with respect to the ECIP investment in (1) Identify the types or categories of
that ECIP recipient. expenditures which are prohibited
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Office of the Secretary of the Treasury § 35.22
(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
activity or event); Senior executive officer means an ECIP
(3) Provide reasonable approval pro- recipient’s president, any vice presi-
cedures for expenditures requiring dent in charge of a principal business
prior approval; unit, division or function, any other of-
(4) Require the ECIP recipient to de- ficer who performs a policy making
liver a certification, executed by two function, or any other person who per-
senior executive officers (one of which forms similar policy making functions.
must be its principal executive officer Severance payment means any pay-
or principal financial officer) certifying ment or benefit provided to an officer
that the approval of any expenditure or employee of an ECIP recipient in
requiring the prior approval of any sen- connection with any termination of
ior executive officer, any executive of- such officer or employee’s employment
ficer of a substantially similar level of with the ECIP recipient (including res-
responsibility, or the ECIP recipient’s ignation, severance, retirement, or
board of directors (or a committee of constructive termination), except for
such board of directors), was properly payment for services performed or ben-
obtained with respect to each such ex- efits accrued. A severance payment in-
penditure; cludes cash payments, health care ben-
(5) Require the prompt internal re- efits, perquisites, the enhancement or
porting of violations to an appropriate acceleration of any payment or vesting
person or persons identified in this pol- of any payment or benefit, or any other
icy; and in-kind benefit payable or provided in
(6) Mandate accountability for adher- connection with any termination of an
ence to the policy. officer or employee of the ECIP recipi-
FDIC means the Federal Deposit In- ent.
surance Corporation. Total compensation means all com-
Federal Reserve Board means the pensation, other than any severance
Board of Governors of the Federal Re- payment, provided by an ECIP recipi-
serve System. ent to an officer or employee, including
NCUA means the National Credit salary, wages, bonuses, awards of
Union Administration.
stock, deferred compensation, and
Non-senior security means any equity
other financial benefits.
interest or equivalent interest (includ-
ing but not limited to membership § 35.22 Restrictions on compensation.
share interests in the case of a credit
union) or any other interest in, or in- (a) Restriction on executive compensa-
strument issued by, an ECIP recipient tion. An ECIP recipient must ensure
that is pari passu with, or junior to, the that the total compensation paid to its
ECIP investment with respect to cap- senior executive officers is appropriate
ital distributions or ranking in liquida- and not excessive. Unless informed oth-
tion, including but not limited to the erwise by the Department of the Treas-
common stock (or equivalent equity ury, an ECIP recipient is considered to
interest) of the ECIP recipient, or any have satisfied the requirements regard-
equity interest or equivalent interest ing executive compensation in this sec-
jspears on DSK121TN23PROD with CFR
or any other interest in or instrument tion if it, and, if applicable, all insured
issued by a depository institution hold- depository institution subsidiaries of
379
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§ 35.22 31 CFR Subtitle A (7–1–25 Edition)
the ECIP recipient, maintains compli- its and prohibitions on the ability of
ance with the following (or any suc- federally insured credit unions to enter
cessor requirement, as applicable): into contracts to pay and to make
(1) For an ECIP recipient or sub- golden parachute and indemnification
sidiary of an ECIP recipient that is an payments to institution-affiliated par-
insured depository institution, except ties as issued by the NCUA at 12 CFR
for federally insured credit unions, the 750.1.
Interagency Guidelines Establishing (c) Excessive or luxury expenditures. (1)
Standards for Safety and Soundness as Ninety days after an ECIP investment
issued by the appropriate Federal date with respect to an ECIP recipient,
banking agency for the ECIP recipient the board of directors of the ECIP re-
or subsidiary (i.e., for national banks cipient must adopt an excessive or lux-
and Federal savings associations, 12
ury expenditures policy, provide such
CFR part 30, appendix A; state member
policy to the Department of the Treas-
banks, 12 CFR part 208, appendix D–1;
ury and the ECIP recipient’s appro-
insured state nonmember banks and
priate Federal banking agency, and
state savings associations, 12 CFR part
364, appendix A); post the text of such policy on its
(2) For an ECIP recipient that is a internet website, if the ECIP recipient
bank holding company, the require- maintains an internet website.
ments for corporate practices of bank (2) If, after adopting an excessive or
holding companies as issued by the luxury expenditures policy, the board
Federal Reserve Board at 12 CFR 225.4; of directors of the ECIP recipient
(3) For an ECIP recipient that is a makes any material amendments to
savings and loan holding company, the such policy, within ninety days of the
requirements regarding safe and sound adoption of the amended policy the
operations of savings and loan holding board of directors must provide the
companies as issued by the Federal Re- amended policy to the Department of
serve Board at 12 CFR 238.8; and the Treasury and the ECIP recipient’s
(4) For an ECIP recipient that is a appropriate Federal banking agency
federally insured credit union, the re- and post the amended policy on its
quirements on compensation and bene- internet website, if the ECIP recipient
fits for federally insured credit unions maintains an internet website.
as issued by the NCUA at 12 CFR (3) The ECIP recipient must main-
701.19(a); 12 CFR 701.21(c)(8); 12 CFR tain, and continue the disclosure of
702.203(b)(10); and 12 CFR 702.204(b)(10). any material amendments to, the ex-
(b) Restriction on severance payments. cessive or luxury expenditures policy
An ECIP recipient shall not make ex- during the ECIP period, unless the De-
cessive severance payments to any sen- partment of the Treasury determines
ior executive officer. Unless informed that discontinuation of the policy
otherwise by the Department of the
would not be contrary to the public in-
Treasury, an ECIP is considered to
terest.
have satisfied the requirements regard-
ing severance payments in this section (d) Material changes in policies or pro-
if it maintains compliance with the fol- cedures. An ECIP recipient must obtain
lowing (or any successor requirement, prior approval from the Department of
as applicable): the Treasury before making any mate-
(1) For an ECIP recipient that is an rial change to the policies or proce-
insured depository institution, a bank dures that it maintains for purposes of
holding company or a savings and loan compliance with paragraph (a), (b), or
holding company, the limits and prohi- (c) of this section. A change to the
bitions to enter into contracts to pay compensation, severance pay, or exces-
and to make golden parachute and in- sive or luxury expenditures policies or
demnification payments to institution- procedures will be considered material
affiliated parties to the extent applica- for purposes of this section if the
ble to the ECIP recipient, as issued by change is likely to have a negative ef-
the FDIC at 12 CFR part 359; and fect on the financial condition of the
jspears on DSK121TN23PROD with CFR
(2) For an ECIP recipient that is a ECIP recipient, limit the ability of the
federally insured credit union, the lim- ECIP recipient to make payments
380
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Office of the Secretary of the Treasury § 35.23
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
(2) The request will be deemed ap-
recent calendar quarter and the two
proved thirty days after the ECIP re-
cipient has provided a complete re- preceding calendar years, where each
quest to the Department of the Treas- amount is calculated in accordance
ury, unless, prior to the expiration of with the instructions to the Call Re-
the thirty-day period, the Department port or applicable reporting form.
of the Treasury objects to the proposed (2) If the ECIP recipient is federally
change or notifies the ECIP recipient insured credit union, the ECIP recipi-
that additional time is required in ent shall obtain the Department of the
order to complete review of the pro- Treasury’s prior approval to make any
posed change to policy or procedures capital distributions if the distribution
would:
§ 35.23 Restrictions on dividends, (i) In the case of a dividend, be pay-
share buybacks, and other capital able from retained earnings (as defined
distributions.
in 12 CFR 702.2(f)) other than undivided
(a) Restriction on capital distributions earnings; or
due to nonpayment. An ECIP recipient (ii) Cause the ECIP recipient’s net
shall not make any capital distribution worth classification to fall below
on a non-senior security, unless: ‘‘adequately capitalized’’ (as defined in
(1) If the ECIP investment is in the 12 CFR 702.102(a)(2)).
form of preferred stock, the ECIP re-
(c) Exception for Subchapter S Corpora-
cipient has paid in full the dividends
tions and other pass-through entities.
for the last completed dividend period
Notwithstanding anything to the con-
on the preferred stock; or
trary in paragraphs (a) and (b) of this
(2) If the ECIP investment is in a
form other than preferred stock (in- section, any ECIP recipient that is an
cluding, subordinated debt), the ECIP S corporation, as defined in 26 U.S.C.
recipient has paid in full the principal, 1361(a), or other pass-through entity
interest, and other amounts due and may make capital distributions, to the
payable under the terms of the ECIP extent reasonably required to cover its
investment, and no amount that has owners’ tax obligations in respect to
been deferred remains unpaid. the entity’s earnings. Such distribu-
(b) Limit on amount of capital distribu- tions shall be subject to an annual rec-
tions. (1) If an ECIP recipient is an in- onciliation, with any surplus or defi-
sured depository institution, bank ciency to be deducted or added to dis-
holding company, or savings and loan tributions, as applicable, in the fol-
holding company, the ECIP recipient lowing year. Any tax-related distribu-
shall obtain the approval of the De- tions permitted under this paragraph
partment of the Treasury prior to mak- (c) must also comply with any applica-
ing any capital distribution if the total ble limitations or determinations es-
jspears on DSK121TN23PROD with CFR
of capital distributions made during tablished by an ECIP recipient’s Fed-
the calendar year, including the pro- eral regulators.
381
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§ 35.24 31 CFR Subtitle A (7–1–25 Edition)
§ 35.24 Annual certification. § 35.27 Definitions.
On an annual basis an ECIP recipient In this subpart:
shall, in accordance with the terms and (a) Controlling influence over a business
conditions of its ECIP investment means having the power to control,
agreement, submit to the Department manage, or direct the business. A per-
of the Treasury a certification exe- son is presumed to have a controlling
cuted by two senior executive officers influence over a business if the person
(one of which must be either its prin- is a senior executive officer or senior
cipal executive officer or principal fi- manager of the business (e.g., Chief Ex-
nancial officer) that the ECIP recipient ecutive Officer, Chief Financial Officer,
is in compliance with each of the ex- Chief Operating Officer), or any other
cessive compensation, severance pay, individual who regularly performs
and excessive or luxury expenditures similar functions.
requirements and restrictions on cap- (b) Jurisdiction means:
ital distributions set forth in §§ 35.22 (1) One of the fifty states of the
and 35.23. United States;
(2) The District of Columbia, the
§ 35.25 Exemptive relief. Commonwealth of Puerto Rico, the
Commonwealth of Northern Mariana
The Department of the Treasury may Islands, Guam, American Samoa, and
grant exemptions or waivers from some the United States Virgin Islands;
or all of the restrictions on share (3) When designated by one of the
buybacks and dividend payments under fifty states of the United States, a po-
this part if such exemption or waiver is litical subdivision of that state that
necessary or appropriate to effectuate the U.S. Department of the Treasury
the goals of the ECIP or to protect the determines has the capacity to partici-
public interest. Such exemptions or pate in the State Small Business Credit
waivers may be subject to such terms Initiative;
and conditions as deemed necessary or (4) Under the circumstances de-
appropriate by the Department of the scribed in 12 U.S.C. 5703(d), a munici-
Treasury. pality of one of the fifty states of the
United States to which the U.S. De-
Subpart C—State Small Business partment of the Treasury has given a
Credit Initiative Small Business special permission under 12 U.S.C.
Owners Demographics Data 5703(d); and
Collection (5) A Tribal government or a group of
Tribal governments that jointly apply
to be approved by the U.S. Department
SOURCE: 87 FR 13633, Mar. 10, 2022, unless of Treasury to participate in the State
otherwise noted.
Small Business Credit Initiative as a
§ 35.26 Authority, scope, and purpose. single participating jurisdiction.
(c) Minority individual means a nat-
(a) Authority and scope. This subpart ural person who identifies as American
is issued by the U.S. Department of the Indian or Alaska Native; Asian; Black
Treasury pursuant to Sections 3007 and or African American; Native Hawaiian
3010 of the Small Business Jobs Act of or Other Pacific Islander; or Hispanic
2010, as amended by the American Res- or Latino/a; or one or more than one of
cue Plan Act of 2021 (12 U.S.C. 5706, these groups.
5709). (d) Minority-owned or controlled busi-
(b) Purpose. The U.S. Department of ness means a business that:
the Treasury is collecting demo- (1) If privately owned, 51 percent or
graphics-related data regarding those more is owned by minority individuals;
who own or control businesses that re- (2) If publicly owned, 51 percent or
ceive a loan, investment, other credit more of the stock is owned by minority
or equity support, or technical assist- individuals;
ance under the State Small Business (3) In the case of a mutual institu-
Credit Initiative for purposes of imple- tion, a majority of the board of direc-
jspears on DSK121TN23PROD with CFR
mentation, compliance, and under- tors, account holders, and the commu-
standing program outcomes. nity which the institution services is
382
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Office of the Secretary of the Treasury § 35.27
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
directly, through any contract, ar- affected by persistent poverty or in-
rangement, understanding, relation- equality.
ship or otherwise, 25 percent or more of (12) For purposes of this paragraph
the equity interests of the business, (g), a business is ‘‘owned and con-
the trustee is a principal owner. trolled’’ by applicable individuals:
(g) Socially and economically disadvan- (i) If privately owned, 51 percent or
taged individual (SEDI) demographics-re- more is owned by such individuals;
lated business means a business owned (ii) If publicly owned, 51 percent
and controlled by individuals who have more or of the stock is owned by such
had their access to credit on reasonable individuals; and
terms diminished compared to others (ii) In the case of a mutual institu-
in comparable economic cir- tion, if a majority of the board of direc-
cumstances, due to their: tors, account holders, and the commu-
(1) Membership of a group that has nity which the institution services is
been subjected to racial or ethnic prej- predominantly comprised of such indi-
udice or cultural bias within American viduals.
society;
(h) Veteran-owned or controlled busi-
(2) Gender;
ness means a business that:
(3) Veteran status;
(1) If privately owned, 51 percent or
(4) Limited English proficiency;
more is owned by veterans;
(5) Disability;
(6) Long-term residence in an envi- (2) If publicly owned, 51 percent or
ronment isolated from the mainstream more of the stock is owned by veterans;
of American society; (3) In the case of a mutual institu-
(7) Membership of a federally or tion, a majority of the board of direc-
state-recognized Indian Tribe; tors, account holders, and the commu-
(8) Long-term residence in a rural nity which the institution services is
community; predominantly comprised of veterans;
(9) Residence in a U.S. territory; or
(10) Residence in a community under- (4) One or more individuals who are
going economic transitions (including veterans have the power to exercise a
communities impacted by the shift to- controlling influence over the business.
wards a net-zero economy or (i) Women-owned or controlled business
deindustrialization); or means a business that:
(11) Membership of an underserved (1) If privately owned, 51 percent or
community. more is owned by females;
(i) Underserved communities are popu- (2) If publicly owned, 51 percent or
lations sharing a particular char- more of the stock is owned by females;
acteristic, as well as geographic com- (3) In the case of a mutual institu-
munities, that have been systemati- tion, a majority of the board of direc-
jspears on DSK121TN23PROD with CFR
cally denied a full opportunity to par- tors, account holders, and the commu-
ticipate in aspects of economic, social, nity which the institution services is
383
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§ 35.28 31 CFR Subtitle A (7–1–25 Edition)
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-
the State Small Business Credit Initia- spond; or that the business did not an-
tive. For each business that receives a swer.
loan, investment, or other credit or eq- (c) Women-owned or controlled business
uity support under the State Small status. Indicate whether the business is
Business Credit Initiative, the reported a women-owned or controlled business.
data shall be based on the ownership The participating jurisdiction must in-
and control of the business imme- dicate yes; no; prefer not to respond; or
diately before the consummation of that the business did not answer.
such loan, investment, or other credit (d) Veteran-owned or controlled busi-
or equity support-related transaction. ness status. Indicate whether the busi-
For each business that receives tech- ness is a veteran-owned or controlled
nical assistance under the State Small business. The participating jurisdiction
Business Credit Initiative, the reported must indicate yes; no; prefer not to re-
data shall be based on the ownership spond; or that the business did not an-
and control of the business at the time swer.
it receives such technical assistance. (e) Race of principal owners. (1) For
(a) Self-certified SEDI demographics-re- each principal owner of the business,
lated business status. (1) Indicate which indicate which one or more of the fol-
one or more of the following categories lowing race categories (including the
apply: Self-certified due to membership Office of Management and Budget’s
of a group that has been subjected to minimum categories and the relevant
racial or ethnic prejudice or cultural disaggregated categories) with which
bias within American society; self-cer- the principal owner identifies: Amer-
tified due to gender; self-certified due ican Indian or Alaska Native; Asian;
to veteran status; self-certified due to Asian disaggregated categories: Indian,
limited English proficiency; self-cer- Chinese, Filipino, Japanese, Korean,
tified due to disability; self-certified Vietnamese, Asian (Other); Black or
due to long-term residence in an envi- African American; Native Hawaiian or
ronment isolated from the mainstream Other Pacific Islander; Native Hawai-
of American society; self-certified due ian or Other Pacific Islander
to membership of a federally or state- disaggregated categories: Guamanian
recognized Indian Tribe; self-certified or Chamorro, Native Hawaiian, Sa-
due to long-term residence in a rural moan, Pacific Islander (Other); White;
community; self-certified due to resi- prefer not to respond; or that the busi-
dence in a U.S. territory; self-certified ness did not answer.
due to residence in a community un- (2) The participating jurisdiction
dergoing economic transitions (includ- must permit each business to identify
ing communities impacted by the shift all of the Office of Management and
towards a net-zero economy or Budget’s minimum categories and
jspears on DSK121TN23PROD with CFR
deindustrialization); self-certified due disaggregated categories in paragraph
to membership of an ‘‘underserved (e)(1) of this section with which each
384
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Office of the Secretary of the Treasury Pt. 35, App. A
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- 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
rican; prefer not to respond; or that the services; (4) tax gross-ups; and (5) other simi-
lar items, activities, or events for which the
business did not answer. ECIP recipient may reasonably anticipate
(h) Gender of principal owners. For incurring expenses, or reimbursing an em-
each principal owner of the business, ployee for incurring expenses.
indicate which of the following gender (1) To facilitate compliance with this re-
categories the principal owner identi- quirement, the Department of the Treasury
fies with: Female; male; nonbinary; is making available a model excessive or lux-
ury expenditures policy. An ECIP recipient
prefer to self-describe, prefer not to re-
may refer to this model policy for guidance
spond; or that the business did not an- in satisfying the requirement at 31 CFR
swer. If the ‘‘prefer to self-describe’’ 35.22(c) to adopt and maintain an excessive
option is chosen, the participating ju- or luxury expenditures policy. Alternatively,
risdiction must provide an option for ECIP recipients may use other forms of, or
the business to write in the gender and existing policies relating to, excessive or
must report what the business writes luxury expenditures, provided that such
other forms or policies satisfy all the re-
in.
quirements of the regulation at 31 CFR
(i) Sexual orientation of principal own- 35.22(c).
ers. For each principal owner of the (2) An ECIP recipient’s luxury or excessive
business, indicate which of the fol- expenditure policy should be posted on the
lowing sexual orientation categories ECIP recipient’s website. Any material
the principal owner identifies with: amendments to an ECIP recipient’s excessive
Gay or lesbian; bisexual; straight, that or luxury expenditures policy must made in
accordance with the provisions set forth in
is, not gay, lesbian, or bisexual; some- 31 CFR 35.22(d) (Material changes in policies
thing else; prefer not to respond; or or procedures). If the ECIP recipient makes
that the business did not answer. any material amendments to this policy,
(j) Veteran status of principal owners. then the ECIP recipient must submit a copy
For each principal owner of the busi- of the amended policy to the Department of
ness, indicate which of the following the Treasury and post the amended policy on
the ECIP recipient’s website. ECIP recipi-
categories the principal owner identi- ents should refer to 31 CFR part 35, subpart
fies with: Veteran; non-veteran; prefer B for additional information regarding defi-
not to respond; or that the business did nitions of terms used in the model policy,
not answer. disclosure, material changes, certification,
and other compliance requirements.
§ 35.29 Format.
II. MODEL EXCESSIVE OR LUXURY
Participating jurisdictions must sub- EXPENDITURES POLICY
mit the information required under
§ 35.28 using the formats specified from A. Purpose
jspears on DSK121TN23PROD with CFR
time to time on the U.S. Department of The purpose of this policy is to establish
the Treasury’s website. parameters and internal controls governing
385
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Pt. 35, App. A 31 CFR Subtitle A (7–1–25 Edition)
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-
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 $___
ment Program regulations (31 CFR part 35), on an annual aggregate basis per individual,
and as may be required by other statutes and are exempt from this policy.
regulations. (ii) The principal executive officer may es-
tablish or delegate to an appropriate execu-
C. Responsibility tive officer the authority to establish proc-
esses for reimbursement of reasonable travel
This policy is the responsibility of the Or-
expenditures, which processes must be re-
ganization’s board of directors (board). The
viewed by executive management no less fre-
board has approved this policy and will re-
quently than annually.
view compliance with this policy no less fre-
(4) Tax gross-ups. This category includes
quently than annually, and summary data
any reimbursement of taxes owed with re-
on excessive or luxury expenditures will be
spect to any compensation. This category
reported to the board as part of the compli-
does not apply to tax equalization agree-
ance review.
ments for employees subject to tax from a
D. Scope non-U.S. jurisdiction.
(5) Other similar items, activities, or events for
This policy applies to all employees, offi- which the Organization may reasonably antici-
cers, and directors of the Organization with pate incurring expenses or reimbursing an em-
regard to any expenditure of the Organiza- ployee for incurring expenses. (i) Expenditures
tion. In making any expenditure on behalf of related to other items not listed in the pre-
the Organization, employees, officers, and di- ceding categories are exempt from this pol-
rectors should consider whether the expendi- icy in an amount less than $___ per instance,
ture is an excessive or luxury expenditure and together with all expenditures permitted
that is prohibited under this policy. under this policy, may not exceed $___ on an
annual aggregate basis per individual.
E. Excessive or Luxury Expenditures
(ii) For the avoidance of doubt, reasonable
‘‘Excessive or luxury expenditures’’ means capital investments in technology, equip-
excessive expenditures on any of the fol- ment, and similar items that expand the
lowing to the extent not reasonable or appro- long-term capability of an ECIP recipient to
priate expenditures for business develop- provide products and services to its cus-
ment, staff development, reasonable per- tomers and community are not excessive or
formance incentives, or other similar reason- luxury expenditures.
able measures conducted in the normal (iii) The principal executive officer may es-
course of the Organization’s business oper- tablish or delegate to an appropriate execu-
ations: tive officer the authority to establish proc-
(1) Entertainment or events. This category esses for the evaluation and approval of ex-
includes fees, dues, tickets costs related to penditures in the preceding categories that
social, athletic, artistic and dining clubs, ac- are not luxury or excessive expenditures and
tivities, celebrations or other events, and that are not otherwise exempt from this pol-
similar expenditures. Expenditures for chari- icy. These processes must be reviewed by ex-
table contributions and charitable events are ecutive management no less frequently than
jspears on DSK121TN23PROD with CFR
not prohibited under this policy. Entertain- annually, as well as any additional threshold
ment or events expenditures in an amount expenditure amounts per item, activity, or
less than $___ per instance, and $___ on an an- event, or a threshold expenditure amount per
386
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Office of the Secretary of the Treasury Pt. 50
employee receiving the item or participating PART 50—TERRORISM RISK
in the activity or event under this policy.
Such approvals must be reported to the INSURANCE PROGRAM
board of directors (which may be in an ap-
propriate summary form) no less frequently Subpart A—General Provisions
than annually.
Sec.
F. Exceptions or Violations 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
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.
employee or officer who violates this policy 50.11 Definition.
may be subject to disciplinary action up to 50.12 Clear and conspicuous disclosure.
and including termination of employment. 50.13 Offer and renewal.
(2) Any employee or officer that is aware of
50.14 Separate line item.
any circumstance that may indicate a viola-
50.15 Cap disclosure.
tion of this policy is required to report such
circumstance to their supervisor or the Or- 50.16 Use of model forms.
ganization’s principal compliance officer or 50.17 General disclosure requirements for
compliance group. The Organization pro- State residual market insurance entities
hibits retaliation against any employee or and State workers’ compensation funds.
officer for making a good faith report of ac-
tual or suspected violations of the Organiza- Subpart C—Mandatory Availability
tion’s code of conduct, laws, regulations, or
50.20 General mandatory availability re-
other Organization policies, including this
quirements.
policy. A finding of retaliation against any
such employee or officer may result in dis- 50.21 Make available.
ciplinary action up to and including termi- 50.22 No material difference from other cov-
nation. Failure to promptly report known erage.
violations by others may also be deemed a 50.23 Applicability of State law require-
violation of the Organization’s code of con- ments.
duct.
(3) Employees and officers may ask ques- Subpart D—State Residual Market Insur-
tions, raise concerns, or report instances of ance Entities; Workers’ Compensation
non-compliance with this policy and/or any Funds
of the existing underlying relevant policies
by contacting the following: [COMPLIANCE 50.30 General participation requirements.
HELP LINE OR E–MAIL]. 50.31 Entities that do not share profits and
losses with private sector insurers.
G. Certification 50.32 Entities that share profits and losses
On an annual basis, the ECIP recipient will with private sector insurers.
deliver to the Department of the Treasury a 50.33 Allocation of premium income associ-
certification, executed by two senior execu- ated with entities that do share profits
tive officers (one of which must be either the and losses with private sector insurers.
ECIP recipient’s principal executive officer
or principal financial officer) certifying that Subpart E [Reserved]
(i) the Organization is in compliance with
this policy and (ii) the approval of any ex- Subpart F—Data Collection
penditure requiring the prior approval of any
senior executive officer, any executive offi- 50.50 General.
cer of a substantially similar level of respon- 50.51 Annual data reporting.
jspears on DSK121TN23PROD with CFR
sibility, or the board of directors (or a com- 50.52 Small insurer data.
mittee of such board), was properly obtained 50.53 Collection of claims data.
with respect to each such expenditure. 50.54 Handling of data.
387
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