Coronavirus State & Local Fiscal Recovery Funds: Overview (August 2023, Treasury)
Summary
This Treasury document is an overview of the 2023 interim final rule (IFR) amending the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, dated August 2023. It states that the Consolidated Appropriations Act, 2023 amended the program to give recipients more flexibility to use SLFRF funds for emergency relief from natural disasters, Surface Transportation projects and Title I projects. Recipients must obligate SLFRF funds for the new eligible uses by December 31, 2024, and expend funds obligated for emergency relief from natural disasters by December 31, 2026. Funds obligated for Surface Transportation projects and Title I projects must be expended by September 30, 2026. Mitigation activities with capital expenditures of $1 million or greater require a Written Justification.
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Coronavirus State & Local
Fiscal Recovery Funds:
Overview of the Interim Final Rule
August 2023
CONTENTS
Introduction................................................................................................... 2
Emergency Relief from Natural Disasters. ......................................... 4
Surface Transportation and Title I Projects....................................... 9
Surface Transportation Projects. ................................................... 10
Title I Projects....................................................................................... 16
Program Administration. .......................................................................... 19
ii
This Overview of the 2023 Interim Final Rule provides a summary of major provisions of the State and
Local Fiscal Recovery Funds (SLFRF) 2023 interim final rule for informational purposes and is intended as
a brief, simplified user guide to the interim final rule provisions.
The descriptions provided in this document summarize key provisions of the 2023 interim final rule but are
non-exhaustive, do not describe all terms and conditions associated with the use of SLFRF funds, and do not
describe all requirements that may apply to this funding. Recipients should refer to the 2023 interim final rule
for a complete description of the new eligible uses and associated requirements. Any SLFRF funds received
are also subject to the terms and conditions of the agreement entered into by Treasury and the respective
jurisdiction, which incorporate the provisions of the 2023 interim final rule, the 2022 final rule, and the guidance
that implements this program. Recipients seeking information about the eligible uses discussed in the 2022 final
rule should reference the Overview of the 2022 Final Rule and the 2022 final rule.
1
Introduction
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), established by the American Rescue Plan,
delivers $350 billion to state, local, territorial, and Tribal governments across the country to support their
response to and recovery from the COVID-19 public health emergency.
On May 10, 2021, Treasury issued an interim final rule implementing the SLFRF program. On January 6, 2022,
Treasury subsequently issued a final rule that responded to public comments. On April 1, 2022, the final rule
became effective. On December 29, 2022, the Consolidated Appropriations Act, 2023 was enacted, amending the
SLFRF program to provide additional flexibility for recipients to use SLFRF funds to respond to natural disasters,
build critical infrastructure, and support community development.
Treasury has issued an interim final rule (IFR) implementing the amendments to the SLFRF program and
is seeking feedback from the public on all aspects of the IFR. Comments on the IFR may be submitted
electronically through the Federal eRulemaking Portal at http://www.regulations.gov or by mailing comments
to the address provided in the IFR. Refer to the IFR for additional information about the comment process.
The existing eligible uses, as discussed in the 2022 final rule, remain unchanged. Recipients may continue to
use SLFRF funds in alignment with the 2022 final rule.
EMERGENCY RELIEF FROM NATURAL DISASTERS
The IFR provides a framework for using SLFRF funds to provide emergency relief from natural disasters or their
negative economic impacts. Specifically, the IFR discusses the standard for providing emergency relief from
natural disasters, using a two-step process. Recipients must first identify a natural disaster that has occurred or
is expected to occur imminently, or a natural disaster that is threatened to occur in the future, and then identify
emergency relief that responds to the physical or negative economic impacts, or potential physical or negative
economic impacts of the identified natural disaster. The emergency relief must be related and reasonably
proportional to the impact identified.
SURFACE TRANSPORTATION PROJECTS
The IFR provides a framework for using SLFRF funds for projects eligible under the 26 surface transportation
programs specified in the 2023 CAA (Surface Transportation projects). This eligible use category is broken
out into three pathways. Pathway One outlines how recipients may use SLFRF funds for projects receiving
funding from DOT. Pathway Two outlines how recipients may use SLFRF funds for projects that are not receiving
funding from DOT. Pathway Three outlines how recipients may use SLFRF funds to satisfy non-federal share
requirements for certain Surface Transportation projects or to repay a loan provided under the Transportation
Infrastructure Finance and Innovation Act (TIFIA) program. The requirements of titles 23, 40, and 49 of the U.S.
code generally apply to this eligible use category.
TITLE I PROJECTS
The IFR outlines how recipients may use SLFRF funds for activities that are eligible under section 105(a) of
the Housing and Community Development Act of 1974 (Title I projects), which are the eligible activities under
the Community Development Block Grant (CDBG) and Indian Community Development Block Grant (ICDBG)
programs. The eligible activities under the Title I projects eligible use category are broad and enable recipients
to undertake a wide range of projects. The requirements of title I of the Housing and Community Development
Act of 1974 generally apply to this eligible use category.
2
INTERIM FINAL RULE EFFECTIVE DATE AND TIMELINE FOR USE OF FUNDS
The IFR was submitted for publication in August 2023 and will become effective when published. Recipients
may use SLFRF funds for the new eligible uses for costs incurred beginning December 29, 2022. Consistent with
the existing eligible uses, recipients must obligate SLFRF funds for the new eligible uses by December 31, 2024.
Recipients must expend SLFRF funds obligated to provide emergency relief from natural disasters by December
31, 2026. Recipients must expend SLFRF funds obligated for Surface Transportation projects and Title I projects
by September 30, 2026.
3
Emergency Relief from Natural Disasters
Recipients may use SLFRF funds to provide emergency relief from natural disasters or the negative economic
effects of natural disasters. Recipients seeking to use SLFRF funds for this eligible use category should undertake
the following two-step process:
1. Identify a natural disaster that has occurred or is expected to occur imminently, or a natural disaster that is
threatened to occur in the future.
2. Identify emergency relief that responds to the physical or negative economic impacts, or potential physical
or negative economic impacts, of the natural disaster. The emergency relief must be related and reasonably
proportional to the impact identified.
IDENTIFYING NATURAL DISASTERS
The IFR defines a natural disaster as a hurricane, tornado, storm, flood, high water, wind-driven water, tidal
wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, drought, or fire, in each
case attributable to natural causes, that causes or may cause substantial damage, injury, or imminent threat
to civilian property or persons. A natural disaster may also include another type of natural catastrophe,
attributable to natural causes, that causes or may cause substantial damage, injury, or imminent threat to
civilian property or persons.
IDENTIFYING EMERGENCY RELIEF
The IFR defines emergency relief as assistance that is needed to save lives and to protect property and public
health and safety, or to lessen or avert the threat of catastrophe. The assistance must be related and reasonably
proportional to the physical or negative economic impacts of the natural disaster that has occurred or is
expected to occur imminently, or to the potential physical or negative economic impacts of a natural disaster
that is threatened to occur in the future.
If responding to a natural disaster that has occurred or is expected to occur imminently, recipients must identify
a natural disaster that meets Treasury’s definition above and an emergency declaration or designation for the
recipient’s geography and jurisdiction in the form of:
• An emergency declaration pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act;
• An emergency declaration by the Governor of a state pursuant to respective state law;
• An emergency declaration by a Tribal government; or
• A designation of an event of a natural disaster by the chief executive (or equivalent) of a recipient government
as long as the chief executive documents the event satisfies the definition of natural disaster provided above.
If providing assistance to lessen or avert the threat of a future natural disaster, recipients should document
evidence of historical patterns or predictions of natural disasters that would reasonably demonstrate the
likelihood of future occurrence of a natural disaster in its community.1 Recipients should use this evidence to
support its determination that mitigation measures would be related and reasonably proportional to the threat
of a natural disaster.
1 For example, a recipient could utilize FEMA’s National Risk Index to establish the likelihood of a future hurricane, or a Tribal government
could cite Indigenous Traditional Ecological Knowledge to determine future risks
4
NON-EXHAUSTIVE LIST OF ELIGIBLE USES
Below, Treasury identifies a non-exhaustive list of eligible emergency relief, which means that the listed eligible
uses include some, but not all, of the uses of funds that could be eligible. The list distinguishes between
emergency relief provided from a declared or designated natural disaster that has occurred or is expected to
occur imminently, and emergency relief provided from the threat of a future natural disaster. To assess whether
additional types of emergency relief would be eligible under this category beyond the non-exhaustive list provided
below, recipients should first identify a natural disaster and then identify emergency relief that responds to the
natural disaster’s physical or negative economic impacts according to the standards discussed above.
Declared or Designated Natural Disasters
- Temporary housing:
• Rental assistance, reimbursement for hotel costs
• Temporary housing units when individuals are facing challenges finding permanent housing due to
shortages caused by a natural disaster
• Temporary emergency housing including congregate and non-congregate shelter
• Shelter following an evacuation
- Food assistance
• Financial assistance for lost wages:
Supplemental benefits for individuals participating in state unemployment insurance programs or the
Department of Labor’s DUA program at the time of the disaster or following the disaster. The supplemental
benefit may not exceed $400 a week for the duration of the need for emergency relief.
- Other immediate needs. Additional eligible uses to address other immediate needs:
Emergency protective measures, including:
99 Transportation and pre-positioning equipment 99 Storage and interment of unidentified human
and resources remains
99 Flood fighting 99 Mass mortuary services
99 Firefighting 99 Construction of emergency berms or temporary
99 Supplies and commodities levees to provide protection from floodwaters or
99 Medical care and transport landslides
99 Evacuation and sheltering 99 Emergency repairs necessary to prevent further
damages
99 Childcare
99 Buttressing, shoring or bracing facilities to
99 Demolition of structures
stabilize them or prevent collapse
99 Search and rescue to locate survivors, household
99 Emergency slope stabilization
pets and service animals
99 Mold remediation
99 Use or lease of temporary generators for facilities
that provide essential community services 99 Extracting water and clearing mud, silt, or other
accumulated debris
99 Dissemination of information to the public to
provide warnings and guidance about health and 99 Taking actions to save the lives of animals
safety hazards 99 Snow removal
99 Searching to locate and recover human remains
5
In addition to eligible uses summarized above, recipients may also use SLFRF funds to address other immediate
needs such as those listed below.
• Debris removal, including the clearance, removal, and disposal of vegetable debris (such as tree limbs,
branches, stumps, or tress), construction and demolition debris, sand, mud, silt, gravel, rocks, boulders,
white goods, and vehicle and vessel wreckage.
• Public infrastructure repair, including roads, bridges, and utilities damaged by a natural disaster, restoring
the infrastructure to its pre-disaster size, capacity, and function. Recipients may incorporate mitigation
measures into the repair project by following the requirements described in the mitigation section below.
• Increased operational costs including payroll costs and costs for government facilities and government
services used before, during or after a natural disaster.
• Cash assistance for uninsured or underinsured disaster-caused expenses such as repair or replacement
of personal property and vehicles, or funds for moving and storage, medical, dental, childcare, funeral
expenses, behavioral health services, and other miscellaneous items.
• Cash assistance for low-income households that have been impacted by a natural disaster.
Low-income households are ones with (i) income at or below 185 percent of the Federal Poverty
Guidelines for the size of the household based on the most recently published poverty guidelines by the
Department of Health and Human Services or (ii) income at or below 40 percent of area median income
for the county and size of household based on the most recently published data by the Department of
Housing and Urban Development.
• Home repairs for primary residences not covered by insurance that have become uninhabitable
because of natural disaster to make the residence habitable again. Recipients may incorporate mitigation
measures into the repair project by following the requirements described in the mitigation section below.
Threat of Future Natural Disasters
Mitigation Activities to lessen or avert the threat of a natural disaster and its potential physical or
negative economic impacts, including structure elevation, mitigation reconstruction, dry flood proofing,
structural retrofitting, non-structure retrofitting, wind retrofit, and infrastructure retrofit. Mitigation activities
may be stand-alone projects that reduce or eliminate the potential impacts of the threat of natural disaster and
may also be incorporated into repair or reconstruction projects that address the impacts of a natural disaster.
6
MITIGATION ACTIVITIES WITH CAPITAL EXPENDITURES EXCEEDING $1 MILLION
For mitigation activities with total expected capital expenditures of $1 million or greater, recipients (except for
Tribal governments) must complete and meet the substantive requirements of a Written Justification for the
capital expenditures in their project.
A Written Justification includes:
• Description of emergency relief to be provided and potential impact to be addressed: Recipients must provide
a description of the specific mitigation activities to be provided, and why the emergency relief is needed to
lessen or avert the potential impacts of the natural disaster that is threatened to occur in the future. When
appropriate, recipients may provide quantitative information on the extent and type of assistance needed,
such as the number of individuals or entities that may be affected. Recipients must use the documented
evidence of historical patterns or predictions of natural disasters that would reasonably demonstrate
the likelihood of future occurrence of a natural disaster in their communities, along with considerations
of efficacy, cost, cost effectiveness, and time to delivery, to support their determinations that mitigation
activities would be related and reasonably proportional.
• Explanation of why a capital expenditure is appropriate: Recipients must provide an assessment demonstrating
why a mitigation activity capital expenditure is appropriate to address the specified potential impact
identified. The assessment must include an explanation of why existing equipment and facilities, or policy
changes or additional funding to pertinent programs or services, would be inadequate to addressing the
potential impact of the threat of a natural disaster and why policy changes or additional funding to pertinent
programs or services would be insufficient without the corresponding capital expenditures.
• Comparison of the proposed capital expenditure against alternative capital expenditures: Recipients must
provide an objective comparison of the proposed mitigation capital expenditure against at least two
alternative capital expenditures and demonstrate why their proposed capital expenditure is superior to
alternative capital expenditures that could be made. Specifically, recipients must assess the proposed
capital expenditure against at least two alternative types or sizes of capital expenditures that are potentially
effective and reasonably feasible. Where relevant, recipients must compare the proposal against the
alternative of improving existing capital assets already owned or leasing other capital assets. Recipients
must use quantitative data when available, although they are encouraged to supplement with qualitative
information and narrative description. Recipients that complete analyses with minimal or no quantitative
data must provide an explanation for doing so.
DUPLICATION OF BENEFITS
As a general matter, recipients may not claim use of federal financial assistance to cover a cost that the recipient
is covering with another federal award, by insurance, or from another source, and subrecipients are bound
by the same requirements as recipients. Specific requirements apply when recipients use federal funds to
provide assistance with respect to losses suffered as a result of a major disaster or emergency declared under
the Stafford Act (disaster losses). If a recipient uses SLFRF funds to cover disaster losses, the Stafford Act’s
prohibition on duplication of benefits applies. Recipients may not provide financial assistance to a person,
business concern, or other entity with respect to disaster losses for which the beneficiary will receive financial
assistance under any other program or from insurance or any other source. Recipients may provide assistance
with respect to disaster losses to a person, business concern, or other entity that is or may be entitled to
receive assistance for those losses from another source, if such person, business concern, or other entity has
not received the other benefits by the time of application for SLFRF funds and the person, business concern, or
other entity agrees to repay any duplicative assistance to the SLFRF recipient. Recipients also may use SLFRF
funds to provide assistance for any portion of disaster losses not covered by other benefits. Recipients are
7
advised to review FEMA’s guidance, which describes a “delivery sequence” for assistance for disaster losses.
Recipients must treat SLFRF funds as last in the delivery sequence, unless the recipient, in consultation with the
appropriate FEMA Regional Administrator or state disaster-assistance administrator, determines that another
sequence is appropriate. Recipients also must notify subrecipients and contractors that, when providing
assistance in response to a Stafford Act declaration, they are responsible for ensuring that beneficiaries disclose
any other assistance received for the same disaster losses prior to receiving assistance with SLFRF funds.
LABOR STANDARDS
Treasury encourages recipients to adhere to strong labor standards when undertaking capital expenditures to
provide emergency relief from natural disasters, including project labor agreements and community benefits
agreements that offer wages at or above the prevailing rate and include local hire provisions. Treasury also
encourages recipients to prioritize, in their procurements, employers with high labor standards and to prioritize
employers without recent violations of federal and state labor and employment laws.
8
Surface Transportation and Title I Projects
Recipients may use SLFRF funds for Surface Transportation projects and Title I projects. For projects undertaken
under these eligible use categories, there are several statutory requirements that apply to these eligible use
categories, including:
Limitation on SLFRF Contribution Towards Surface Transportation and Title I Projects: The total amount
of SLFRF funds that a recipient may use for Surface Transportation projects and Title I projects, taken
together, cannot exceed the greater of $10 million and 30% of a recipient’s SLFRF allocation. For example:
Consider a recipient that received $60 million in SLFRF funds. This recipient would have $18 million
available to use for Surface Transportation projects and Title I projects.
This recipient could choose to spend $10 million under the Surface Transportation projects eligible
use category and $8 million in the Title I projects eligible use category, or $3 million for Surface
Transportation projects and $15 million for Title I projects, or some other combination.
This recipient cannot spend more than $18 million in SLFRF funds across the Surface Transportation
projects and Title I projects eligible use categories, taken together.
Restriction on Supplanting of Funds: Recipients using SLFRF funds for Surface Transportation projects
and Title I projects must supplement, and not supplant, other federal, state, territorial, Tribal, and local
government funds (as applicable) otherwise available for such uses. Funds are considered “otherwise
available for such uses”:
For non-federal funds, if they have been obligated for activities or projects that are eligible as part of any
Surface Transportation project or Title I project, or
For federal funds, if a federal agency has committed to a particular project pursuant to an award
agreement or otherwise.
For the Surface Transportation projects and Title I projects eligible use categories, this means that SLFRF
recipients may not:
De-obligate funds that were obligated for specific uses that are eligible Surface Transportation project or Title
I project activities (e.g., cancel, amend, renegotiate, or otherwise revise or abrogate a contract, subaward, or
similar transaction that requires payment) and replace those previously obligated funds with SLFRF funds.
Use SLFRF funds to replace federal or non-federal funds identified in a federal commitment, such as an
award agreement.
The supplement, not supplant restriction does not apply to the other eligible use categories in the SLFRF
program, including the emergency relief from natural disasters eligible use category.
Applicability of Certain Existing Laws: Except as otherwise determined by the Secretary, the use of SLFRF
funds for Surface Transportation and Title I projects is subject to certain other laws, including the requirements
of titles 23, 40, and 49 of the U.S. Code, title I of the Housing and Community Development Act of 1974, and the
National Environmental Policy Act of 1969. The sections that follow discuss how these laws apply.
Obligation and Expenditure Deadline: Recipients using SLFRF funds for Surface Transportation and Title I
projects must obligate funds by December 31, 2024 and expend funds by September 30, 2026.
9
Surface Transportation Projects
Recipients may use SLFRF funds for Surface Transportation projects in the following ways:
1. Supplementing surface transportation projects receiving funding from DOT (Pathway One)
2. Funding surface transportation projects not receiving funding from DOT (Pathway Two)
3. Satisfying non-federal share requirements for certain surface transportation projects or repaying a loan
provided under the TIFIA program (Pathway Three)
In addition to the limitations and requirements described above, the eligible projects and additional
requirements and limitations associated with each pathway are outlined below.
PATHWAY ONE: SURFACE TRANSPORTATION PROJECTS RECEIVING FUNDING FROM DOT
Recipients may use SLFRF funds for Surface Transportation projects that are or will be receiving funding from
DOT prior to the obligation deadline of December 31, 2024. A Surface Transportation project must be subject
to DOT’s oversight during the period that SLFRF funds are used for the project. Recipients must consult with
DOT before using SLFRF funds under Pathway One. Under Pathway One, recipients may:
Expand an existing project that is receiving funding from DOT
Cover unexpected costs of an existing project receiving funding from DOT
Expand the scope of a project, cover additional costs, or in other ways supplement DOT funding for projects
that have not yet, but will receive funding from DOT by the December 31, 2024 obligation deadline
PATHWAY ONE - ELIGIBLE DOT PROGRAMS
Under Pathway One, recipients may use SLFRF funds for projects eligible only under the programs listed
below. Recipients should refer to the relevant program guidance for DOT programs of interest for further
information and detail about the types of projects eligible under those programs.
99 INFRA Grants 99 Rebuilding American Infrastructure with
99 National Highway Performance Program Sustainability and Equity Grant Program
99 Bridge Investment Program 99 Transportation Infrastructure Finance and
99 Surface Transportation Block Grant Program Innovation Act Program
99 Highway Safety Improvement Program 99 Urbanized Formula Grants
99 Congestion Mitigation and Air Quality 99 Fixed Guideway Capital Investment Grant
Improvement Program 99 Formula Grants for Rural Areas
99 Charging and Fueling Infrastructure Discretionary 99 State of Good Repair Grants
Grant Program 99 Grants for Buses and Bus Facilities
99 Territorial and Puerto Rico Highway Program 99 National Culvert Removal, Replacement, and
99 National Highway Freight Program Restoration Grant Program
99 Rural Surface Transportation Grant Program 99 Bridge Replacement, Rehabilitation, Preservation,
99 Carbon Reduction Program Protection, and Construction Program
99 Promoting Resilient Operations for Transformative, 99 Activities to carry out metropolitan
Efficient, and Cost-Saving Transportation Program transportation planning
99 Tribal Transportation Program 99 Projects that further the completion of
99 Federal Lands Transportation Program a designated route of the Appalachian
Development Highway System
99 Federal Lands Access Program
10
PATHWAY ONE – APPLICABLE REQUIREMENTS
Recipients using SLFRF funds for Surface Transportation projects under Pathway One must comply with the
applicable requirements and limitations that apply to the project as administered by DOT, including the
applicable requirements of titles 23, 40, and 49. Recipients are responsible for ensuring all requirements are
met, as would typically be the case for a DOT-funded project in the absence of SLFRF funds.
Recipients using SLFRF funds for Surface Transportation projects under Pathway One are not required to
contribute cost-sharing or matching funds alongside SLFRF funds. However, because SLFRF funds are federal
funds, using SLFRF funds under Pathway One will still impact the cost-share requirements that apply to certain
Surface Transportation projects due to differences in applicable non-federal cost share requirements across DOT
projects and programs. In some cases, DOT programs are capped in the amount of federal funds that may be
used in a project, regardless of whether those funds are provided by DOT or another federal source. This is true,
for example, of the State of Good Repair Grant Formula Program, the Railcar Vehicle Replacement Program, and
Grants for Buses and Bus Facilities Program. Recipients must consult with DOT to determine the applicable non-
federal cost share requirements.
In addition, recipients must also comply with the following requirements:
• Limitation on Operating Expenses: Recipients using SLFRF funds for projects eligible for Urbanized
Formula Grants, Fixed Guideway Capital Investment Grants, Formula Grants for Rural Areas, State of Good
Repair Grants, or Grants for Buses and Bus Facilities may not use SLFRF funds for operating expenses of these
projects. Operating expenses are those costs necessary to operate and manage a public transportation system,
including costs such as driver salaries, the cost of fuel, and the cost of equipment and supplies having a useful
life of less than one year. Operating expenses do not include preventive maintenance activities. The limitation
on operating expenses does not apply to other Surface Transportation projects or to other uses of SLFRF funds,
including under the revenue loss eligible use category.
• State of Good Repair and Performance Targets: States that use SLFRF funds for Surface Transportation
projects under Pathway One for programs eligible under title 23, or that otherwise are subject to the
requirements of title 23, must either demonstrate progress in achieving a state of good repair under 23
U.S.C. 119(e) or support the achievement of one or more performance targets under 23 U.S.C. 150.
Treasury is delegating authority to DOT to oversee and administer compliance with certain requirements
applicable to Surface Transportation projects within Pathway One. Recipients that direct SLFRF funds toward
Surface Transportation projects under Pathway One are required to complete the existing DOT reporting
requirements that already apply to projects funded by DOT and will be required to report certain information to
Treasury. In all instances, recipients must consult with DOT prior to using SLFRF funds under Pathway One.
11
PATHWAY TWO - SURFACE TRANSPORTATION PROJECTS NOT RECEIVING FUNDING FROM DOT
If recipients wish to pursue Surface Transportation projects that are not or will not be funded by DOT, they
may pursue them under Pathway Two. Pathway Two projects will be administered by Treasury. Within this
pathway, Treasury is articulating a streamlined framework for recipients to use up to $10 million in SLFRF
funds per project on Surface Transportation projects that do not include DOT funding but meet certain
parameters. Recipients may begin using SLFRF funds now for projects that meet the parameters of the
streamlined framework, outlined below.
For recipients seeking to use SLFRF funds under Pathway Two for projects outside the parameters of the
streamlined framework, recipients must submit a Notice of Intent to Treasury through the process described
in the next section. Treasury will use the notices of intent, along with comments to the IFR, to design and
implement the framework for approving these projects.
PATHWAY TWO - STREAMLINED FRAMEWORK
In the streamlined framework, recipients may use SLFRF funds for a Surface Transportation project not
receiving funding from DOT to conduct a project that would be eligible under the RAISE grant program
and that meets the criteria discussed below.2 For these projects, recipients are not required to submit an
application to, or receive approval from, Treasury to conduct the project. For a RAISE-eligible project to
qualify for the streamlined framework, it must satisfy the following criteria:
Contributes no more than $10 million SLFRF: The recipient’s contribution of SLFRF funding to the
project under Pathway Two must not exceed $10 million. If a recipient has more than $10 million available
for Surface Transportation and Title I projects, as discussed in the earlier example, then it could choose to
fund multiple $10 million projects under Pathway Two. (It could also choose to fund one $10 million project
under Pathway Two and use remaining funds available under the cap on funds for Title I projects. It could
also choose to spend the remaining funds in another eligible use category where there is no cap on funds.)
Limited to actions that typically do not have a significant environmental impact: The entire project
scope must be limited to the set of actions or activities deemed by DOT as meeting the criteria for
categorical exclusion as listed under 23 C.F.R. 771.116(c)(1)-(22), 771.117(c)(1)-(30), and 771.118(c)(1)-(16).
The recipient also must determine that those actions do not involve unusual circumstances, as described
in 23 CFR 771.116(b), 771.117(b), and 771.118(b).
PATHWAY TWO– APPLICABLE REQUIREMENTS
Generally, the requirements of titles 23, 40, and 49 apply to recipients’ use of SLFRF funds under Pathway
Two (both to projects under the streamlined framework and projects outside the streamlined framework).
Furthermore, restrictions that apply to projects regardless of the source of funds of the project apply as they
would to any other project carried out by a recipient. For all of the applicable requirements under titles 23, 40,
and 49 described below, the associated DOT regulations also apply, unless Treasury states otherwise.
Applicable portions of Titles 23, 40, and 49 generally include:
• Title 23: All parts of title 23
• Title 40: Chapters 141 and 145
• Title 49: Chapters 53, 55, 67, 471, and subtitle V
2 The eligibility of projects under the RAISE grant program is described in the “Notice of Funding Opportunity for the Department of
Transportation’s National Infrastructure Investments (i.e., the Rebuilding American Infrastructure with Sustainability and Equity (RAISE)
Grant Program) under the Infrastructure Investment and Jobs Act (“Bipartisan Infrastructure Law”), Amendment No. 2” (2023 RAISE Grant
NOFO) under “3. Other” in “C. Eligibility Information, available at https://www.transportation.gov/sites/dot.gov/files/2023-02/RAISE%20
2023%20NOFO%20Amendment2.pdf.
12
More specifically, applicable provisions include those relating to the following requirements:
• Underlying project requirements.
For example, if a recipient intends to use SLFRF funds under Pathway Two for an INFRA project that
would be eligible under title 23 (as included by the RAISE program), then in addition to complying
with the requirements established in the RAISE NOFO, the recipient must also comply with the project
eligibility and execution requirements of the INFRA program in 23 U.S.C. 117.
• Design, planning, construction, operation, maintenance, vehicle weight limit, and toll requirements with
respect to particular projects.
• Location requirements for particular projects.
• Project approval requirements.
The approval requirements of titles 23, 40, and 49 of the U.S. Code apply to Pathway Two projects
other than those that qualify for the streamlined framework described above. Treasury has determined
not to require recipients to submit an application to, or receive approval from, Treasury to conduct a
project that would be eligible under the RAISE grant program and meets the criteria of the streamlined
framework of Pathway Two. Depending on the nature of the project, a recipient may still be required to
obtain approval pursuant to a specific requirement under titles 23, 40 or 49 or the regulations adopted
by DOT thereunder.
• Procurement requirements.
Recipients generally must satisfy the Buy America requirements of titles 23, 40, and 49 of the U.S. Code
when funds are used on Surface Transportation projects under Pathway Two. However, recipients are
not required to satisfy with the Buy America requirements in the case of Surface Transportation projects
meeting the criteria for streamlined projects under Pathway Two.
• Wage and labor requirements.
For example, the requirements of 23 U.S.C. 113, applying Davis-Bacon prevailing wage protections for
highway projects, apply.
• Compliance requirements.
Compliance provisions apply to the extent that they require recipients to establish and maintain
measures to oversee the eligible projects that they are undertaking.
• Definitions of terms used in the provisions above.
Recipients should note that the RAISE program includes eligibility for projects with applicable requirements that
are found outside of titles 23, 40, and 49. If a recipient would like to use SLFRF funds for a project eligible under
the RAISE program but governed by laws outside titles 23, 40, and 49, the general principles described above for
titles 23, 40, and 49 will apply, and recipients may ask Treasury for more detail about the specific requirements
that apply to the particular project.
In addition to the applicable requirements of titles 23, 40, and 49 described above, recipients pursuing Surface
Transportation projects under Pathway Two must also comply with the following requirements:
• Limitation on Operating Expenses: Recipients using SLFRF funds for projects eligible for Urbanized
Formula Grants, Fixed Guideway Capital Investment Grants, Formula Grants for Rural Areas, State of Good
Repair Grants, or Grants for Buses and Bus Facilities may not use SLFRF funds for operating expenses of these
projects. Operating expenses are those costs necessary to operate and manage a public transportation system,
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including costs such as driver salaries, the cost of fuel, and the cost of equipment and supplies having a useful
life of less than one year. Operating expenses do not include preventive maintenance activities. The limitation
on operating expenses does not apply to other Surface Transportation projects or to other uses of SLFRF funds,
including under the revenue loss eligible use category.
• State of Good Repair and Performance Targets: States that use SLFRF funds for Surface Transportation
projects under Pathway Two for programs eligible under title 23, or that otherwise are subject to the
requirements of title 23, must either demonstrate progress in achieving a state of good repair under 23
U.S.C. 119(e) or support the achievement of one or more performance targets under 23 U.S.C. 150.
• National Environmental Policy Act (NEPA): Recipients using funds for Surface Transportation projects that
qualify for the streamlined framework under Pathway Two are not required to conduct NEPA environmental
reviews. However, projects supported with SLFRF funds may still be subject to NEPA review and other
environmental statutes if they are also funded by other federal financial assistance programs or have
certain federal licensing or registration requirements. In addition, a project that qualifies for the streamlined
framework may still be subject to limitations or prohibitions as a result of the application of other
environmental statutes. For projects under Pathway Two outside of the streamlined framework, recipients
must submit a notice of intent as outlined above, and the requirements of NEPA and other environmental
laws apply to these Surface Transportation projects
PATHWAY TWO - INAPPLICABLE REQUIREMENTS OF TITLES 23, 40, AND 49
Certain sections of the relevant chapters of titles 23, 40, and 49 of the U.S. Code do not apply to recipients’
use of SLFRF funds for Surface Transportation projects under Pathway Two. The following types of provisions
generally do not apply:
• Grant size requirements
• Allocation requirements that require states to distribute funds received under certain programs to their local
governments or to spend funds received under certain programs for the benefit of particular areas
• Non-federal cost-share requirements
• Reporting requirements that would normally apply when DOT provides funding for a project
• STIP/TIP Requirements
Generally, the STIP and TIP requirements do not apply to SLFRF funds used for Surface Transportation
projects under Pathway Two. However, if a project receiving SLFRF funds under this framework is
regionally significant and requires an action by the FHWA or the FTA, it will still be required to be
included in the STIP or TIP. If a project receiving SLFRF funds under this framework is included in a TIP,
for informational and conformity purposes, it also may be required to be included in the STIP.
PATHWAY TWO – PROJECTS OUTSIDE OF THE STREAMLINED APPROACH – NOTICE OF INTENT
Recipients interested in financing Surface Transportation projects outside of the parameters of the streamlined
approach in Pathway Two must submit a notice of intent to Treasury. The notice of intent must be submitted to
NOI-SLFRF@Treasury.gov and is due 30 calendar days after the end of the IFR comment period. For an example
of what an ideal notice of intent would include, please see the IFR section titled “Pathway Two: Notice of Intent
for Projects Outside Streamlined Framework.”
Treasury will evaluate the projects included in these notices of intent, along with comments to this IFR, to
design and implement the framework for approving these types of projects.
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PATHWAY THREE: USING SLFRF TO SATISFY NON-FEDERAL SHARE REQUIREMENTS FOR CERTAIN
SURFACE TRANSPORTATION PROJECTS
Under Pathway Three, recipients may use SLFRF funding to repay a TIFIA loan or to satisfy non-federal share
requirements for projects eligible under the following programs:
99 INFRA Grants 99 Mega Grants
99 Fixed Guideway Capital Investment Grants 99 Projects eligible for credit assistance under the
TIFIA program
If a recipient uses SLFRF funds to satisfy the non-federal share requirements for projects eligible under the
programs noted above, DOT will not treat the SLFRF funds as federal funds for this limited purpose and will
credit SLFRF toward applicable cost-share or non-federal match requirements accordingly.
Recipients using SLFRF funds to satisfy non-federal cost share requirements under Pathway Three must consult
with DOT to understand the applicable non-federal cost share requirements and how SLFRF funds may be used
for these purposes. As with any use of funds to meet non-federal cost share requirements, the requirements
associated with the project, as administered by DOT, continue to apply unless otherwise provided by DOT.
Recipients are required to comply with the existing DOT reporting requirements associated with the project for
which they are using SLFRF funds for non-federal share requirements. Recipients will also be required to report
certain information to Treasury.
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Title I projects
Recipients may use SLFRF funds for Title I projects, which are the activities eligible under the CDBG and ICDBG
programs, subject to certain requirements and limitations.
ELIGIBLE ACTIVITIES
Below is an illustrative list of eligible Title I projects:
99 Acquisition of certain real property for a public 99 Rehabilitation and reconstruction of housing,
purpose, subject to certain limitations conversion of structures to housing, or
99 Disposition of certain property, subject to certain construction of certain housing
limitations and rules 99 Homeownership assistance
99 Acquisition, construction, reconstruction, 99 Technical assistance to entities to increase
rehabilitation, or installation of public facilities capacity to carry out CDBG-eligible projects
and improvements, clearance and remediation 99 Assistance to certain institutions of higher
activities education to carry out eligible activities
99 Public services, subject to the limitation 99 Administration activities including general
discussed below management, oversight, and coordination
99 Interim assistance where immediate action costs, fair housing activities, indirect costs, and
is required for certain activities such as street submission of applications for federal programs
repair, and costs to complete an urban renewal 99 Planning activities including the development
project under Title I of plans and studies, policy planning, and
99 Relocation payments for relocated families, management and capacity building activities;
businesses, nonprofit organizations, and farm and
operations, under certain conditions 99 Satisfying the non-federal share requirements of
99 Payments to housing owners for loss of certain a federal financial assistance program in support
rental income of activities that would be eligible under the
99 Certain housing services CDBG and ICDBG programs3
99 Acquisition, construction, reconstruction,
rehabilitation, or installation of privately owned
utilities
3 Recipients using SLFRF funds to satisfy non-federal match or cost-share requirements under the Title I eligible use category must analyze
the projects and activities for which they intend to use SLFRF funds to meet non-federal share requirements to confirm that the project or
activity is an eligible activity under section 105 of the Housing and Community Development Act and would comply with HUD’s statutory,
regulatory, and other requirements apply to CDBG and ICDBG activities.
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INELIGIBLE ACTIVITIES UNDER TITLE I
Specific activities are generally not eligible projects under CDBG or ICDBG and accordingly, are not available
as eligible projects under the Title I eligible use category. While the following projects are not eligible uses of
SLFRF funds as a Title I project, they still may be eligible uses of SLFRF funds under other SLFRF eligible use
categories. Non-Tribal government recipients should reference HUD’s regulations at 24 CFR 570.207 and the
“Activities Specified as Ineligible” section of HUD’s Guide to National Objectives and Eligible Activities for CDBG
Entitlement Communities for more information. Tribal governments should reference HUD’s regulations at 24
CFR 1003.207. The activities that are generally ineligible under CDBG and ICDBG are the following:
Buildings or portions thereof, used for the Purchase of equipment
general conduct of government Operating and maintenance expenses
General government expenses New housing construction
Political activities Income payments
TITLE I PROJECTS PROGRAM REQUIREMENTS
Recipients using SLFRF funds for Title I projects generally must comply with Title I requirements and the
associated regulations. For example, project-level approval and certification requirements generally must be
satisfied prior to recipients obligating and expending funds on Title I projects, which in the CDBG program, exist
for projects subject to certain environmental reviews. On the other hand, recipients are not required to provide
the Title I certification requirements that apply at the consolidated and annual planning level. In addition,
recipients must comply with NEPA requirements, as implemented by Title I and the associated HUD regulations,
and as adapted to the SLFRF program by Treasury.
Eligible activities must also satisfy other program requirements such as adherence to the Primary Objective and
CDBG National Objectives, as described below, to be eligible under this eligible use category. Recipients should
refer to and must comply with the following HUD regulations when determining eligible projects under this
eligible use category: 24 C.F.R. 570.201 - 570.209 with respect to non-Tribal governments and 24 C.F.R. 1003.201
– 1003.209 with respect to Tribal governments. Recipients may refer to additional HUD guidance for information
about the full list of projects eligible under CDBG, including guidance about complying with the National
Objectives and other program requirements.
Where applicable, program requirements of the CDBG Entitlement Grants program will apply to non-Tribal
government SLFRF recipients, and program requirements of the ICDBG Single Purpose Grants will apply to Tribal
Government SLFRF recipients.
Project-level Approval and Certification Requirements
As noted above, when using SLFRF funds for Title I projects, recipients must satisfy project-level approval and
certification requirements related to NEPA environmental review requirements.
Recipients are not required to submit certifications or obtain Treasury approval for Title I projects that satisfy
either of the criteria below. Additionally, they may begin using SLFRF funds for the project right away:
99 Exempt Activities: as 99 Categorically Excluded Activities Not Subject to 24 CFR
contemplated by 24 FR 58.34(a). 58.5: as contemplated by 24 CFR 58.35(b), provided that the
circumstances described in 24 CFR 58.35(c) are not present.
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For exempt projects, recipients must document in writing that the project meets the conditions of a specified
exemption. For categorically excluded projects, recipients are required to maintain an Environmental Review
Record, which is a well-organized written record of the process and determinations made with respect to the
categorical exclusion. Treasury will provide additional information on the Environmental Review Record and
certification requirements following issuance of the IFR.
For recipients using SLFRF funds for Title I projects that do not meet the criteria above, recipients must comply
with the environmental review requirements set forth in the HUD statute and regulations, submit a certification
to Treasury, and receive approval.
Other Program Requirements
When using SLFRF funds for Title I projects, recipients must comply with the following requirements that apply
to the total amount of SLFRF used towards Title I projects, including:
For all SLFRF recipients: For non-Tribal SLFRF recipients only:
99 The Primary Objective: SLFRF recipients must 99 CDBG National Objectives: Any project
direct at least 70% of SLFRF funds used for Title I undertaken by a non-Tribal SLFRF recipient must
projects to projects that principally benefit low- satisfy at least one CDBG National Objective.
and moderate-income persons. 99 Labor Standards Requirements: Prevailing
99 Public Services Cap: Not more than 15% of wage rate requirements in accordance with
SLFRF funds used for Title I projects may be spent the Davis-Bacon Act and other labor standards
under the “public services” category of eligible applied by HUD to construction work under Title
activities. I apply.5
99 Planning and Administrative Costs Cap:
Not more than 20% of SLFRF funds used for
Title I projects may be spent on planning and
administrative costs.
99 BEAD Program Requirements: Requirements of
the Broadband Equity, Access, and Deployment
(BEAD) program apply as outlined in section 60102
of the Infrastructure Investment and Jobs Act.4
SLFRF recipients that are also CDBG grantees (but not ICDBG grantees) should note that HUD program
requirements related to timely expenditures of CDBG funds continue to apply to their CDBG funds. Treasury
encourages SLFRF recipients that are also CDBG grantees to continue to spend their CDBG funds in compliance
with such requirements.
Treasury is not delegating authority to HUD to oversee or administer Title I projects. Accordingly, recipients will
report projects only to Treasury.
4 For more guidance, see Section 1.2 of NTIA’s BEAD Program “Letter of Intent and Initial Planning Funding Grant Application Guidance,”
available at https://broadbandusa.ntia.doc.gov/sites/default/files/2022-05/BEAD%20Planning%20Application%20Guidance.pdf.
5 Non-Tribal government recipients must comply with these requirements in accordance with HUD regulations for Title I labor standards
requirements at 24 CFR 570.603 and may reference Chapter 16.1.1 of HUD's “Basically CDBG for Entitlements” Guide, HUD’s “Davis-Bacon
and Labor Standards: Agency/Contractor Guide,” and HUD’s “Davis-Bacon and Labor Standards: Contractor Guide Addendum.” Such
requirements do not apply to Tribal government recipients of SLFRF.
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Finally, many of the uses in the Title I projects eligible use category are also eligible in the public health and
negative economic impacts eligible use category where there is no cap on the amount of SLFRF funds that may
be directed toward an eligible use. Recipients seeking to use SLFRF funds for Title I projects may consider the
relevant eligible uses and available funding levels to determine which eligible use category best supports their
community’s needs. As noted above, this IFR did not alter the public health and negative economic impact
eligible use category. Please see the 2022 final rule for more information.
Program Administration
Generally, recipients using SLFRF funds for the new eligible uses added by the 2023 CAA must comply with the
general rules and restrictions that apply to the SLFRF program. For example, the restrictions on use set forth in
the final rule generally apply to the new eligible uses described in the IFR.
The IFR describes program administration requirements, including timeline for use of funds, use of funds to
meet non-federal match or cost-share requirements, and reporting on use of funds.
TIMELINE FOR USE OF FUNDS
The IFR was submitted for publication in August 2023 and will become effective when published. Recipients
may use SLFRF funds for these new eligible uses for costs incurred beginning December 29, 2022. Consistent
with the existing eligible uses discussed in the 2022 final rule, recipients must obligate SLFRF funds for these
new eligible uses by December 31, 2024. Recipients must expend SLFRF funds obligated to provide emergency
relief from natural disasters by December 31, 2026. Recipients must expend SLFRF funds obligated for Surface
Transportation projects and Title I projects by September 30, 2026.
NON-FEDERAL MATCH OR COST-SHARE REQUIREMENTS
Under the Surface Transportation projects eligible use category, recipients may use SLFRF funds to satisfy non-
federal cost share requirements for certain programs under Pathway Three. Under the Title I projects eligible
use category, recipients may use SLFRF funds to satisfy the non-federal share requirements of a federal financial
assistance program in support of activities that would be eligible under the CDBG and ICDBG programs.
The 2023 CAA did not alter the existing eligible uses of SLFRF funds. Recipients may still use SLFRF funds
in accordance with the 2022 final rule. As described in the 2022 final rule, SLFRF funds available under the
“revenue loss” eligible use category generally still may be used to meet the non-federal cost-share or matching
requirements of other federal programs. However, note that SLFRF funds under the revenue loss eligible
use category may not be used as the nonfederal share for purposes of a state’s Medicaid and CHIP programs
because the Office of Management and Budget has approved a waiver as requested by the Centers for Medicare
& Medicaid Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations. SLFRF funds
beyond those available under the revenue loss eligible use category may not be used to meet the non-federal
match or cost-share requirements of other federal programs, other than as specifically provided for by statute.
REPORTING, COMPLIANCE & RECOUPMENT
Recipients are required to comply with Treasury’s Compliance and Reporting Guidance, which includes
submitting mandatory periodic reports to Treasury. Recipients must maintain records supporting their
determination that projects meet relevant requirements, and recipients should be prepared to attest to having
completed these determinations as part of their ongoing reporting to Treasury. Treasury will update the
Compliance and Reporting Guidance with additional information regarding the IFR.
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