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64986 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
DEPARTMENT OF THE TREASURY I. Introduction comments and made several
clarifications and changes to the
31 CFR Part 35 Overview
provisions of the 2021 interim final rule
Since the first case of coronavirus to provide broader flexibility and greater
RIN 1505–AC81 disease 2019 (COVID–19) was simplicity in the SLFRF program.5 The
discovered in the United States in 2022 final rule provided for the
Coronavirus State and Local Fiscal January 2020, the pandemic has caused following:
Recovery Funds severe, intertwined public health and • Public Health and Negative
economic crises. In March 2021, as Economic Impacts: Recipients may use
AGENCY: Department of the Treasury. these crises continued, the American SLFRF funds for a non-exhaustive list of
Rescue Plan Act of 2021 (ARPA) 1 programs, services, and capital
ACTION: Interim final rule. established the Coronavirus State and expenditures that support an eligible
Local Fiscal Recovery Funds (SLFRF) to COVID–19 public health or economic
SUMMARY: The Secretary of the Treasury provide state, local, and Tribal response. Recipients must serve
is issuing an interim final rule to governments 2 with the resources ‘‘impacted’’ and ‘‘disproportionately
implement the amendments made by needed to respond to the pandemic and impacted’’ classes of beneficiaries:
the Consolidated Appropriations Act, its economic effects and to build a impacted classes experienced the
2023 with respect to the Coronavirus stronger, more equitable economy general, broad-based impacts of the
State Fiscal Recovery Fund and the during the recovery. Upon enactment, pandemic, while disproportionately
Coronavirus Local Fiscal Recovery Fund the ARPA provided that SLFRF funds 3 impacted classes faced more severe
established under the American Rescue may be used: impacts, often due to preexisting
Plan Act. (a) To respond to the public health disparities.
DATES: emergency or its negative economic Public health eligible uses include
impacts, including assistance to COVID–19 mitigation and prevention,
Effective date: The provisions in this households, small businesses, and medical expenses, behavioral
interim final rule are effective nonprofits, or aid to impacted industries healthcare, and preventing and
September 20, 2023. such as tourism, travel, and hospitality; responding to violence. Negative
Comment date: Comments must be (b) To respond to workers performing economic impact eligible uses include
received on or before November 20, essential work during the COVID–19 assistance to households such as job
2023. public health emergency by providing training, rent, mortgage, or utility aid,
premium pay to eligible workers; affordable housing development,
ADDRESSES: Please submit comments (c) For the provision of government childcare; assistance to small businesses
electronically through the Federal services to the extent of the reduction in or nonprofits such as through loans or
eRulemaking Portal: https:// revenue due to the COVID–19 public grants to mitigate financial hardship;
www.regulations.gov. Comments can be health emergency relative to revenues assistance to impacted industries like
mailed to the Office of Recovery collected in the most recent full fiscal travel, tourism, and hospitality that
Programs, Department of the Treasury, year prior to the emergency; and faced substantial pandemic impacts; or
1500 Pennsylvania Avenue NW, (d) To make necessary investments in
assistance to address impacts to the
Washington, DC 20220. Because postal water, sewer, or broadband
public sector, for example by hiring
mail may be subject to processing delay, infrastructure.
The U.S. Department of the Treasury public sector workers to pre-pandemic
it is recommended that comments be
(Treasury) issued an interim final rule levels.
submitted electronically. All comments • Premium Pay: Recipients may
should be captioned with ‘‘Coronavirus implementing the SLFRF program on
May 10, 2021 (the 2021 interim final provide premium pay to a broad set of
State and Local Fiscal Recovery Funds essential workers.
2023 Interim Final Rule Comments.’’ rule).4 Treasury received over 1,500
• Revenue Loss: Recipients may
Please include your name, organization public comments on the 2021 interim
determine revenue loss due to the
affiliation, address, email address and final rule.
COVID–19 public health emergency by
telephone number in your comment. Executive Summary of the 2022 Final claiming the standard allowance of up
Where appropriate, a comment should Rule to $10 million or completing the full
include a short executive summary. In revenue loss calculation. Recipients
general, comments received will be On January 6, 2022, Treasury issued
a final rule which responded to public may use funds under revenue loss for
posted on https://www.regulations.gov government services.
without change, including any business 1 Sec. 9901, Public Law 117–2, 135 Stat. 223. • Water, Sewer, and Broadband
or personal information provided. 2 Throughout this SUPPLEMENTARY INFORMATION, Infrastructure: Recipients may use
Comments received, including Treasury uses ‘‘state, local, and Tribal SLFRF funds for eligible broadband
attachments and other supporting governments’’ or ‘‘recipients’’ to refer generally to infrastructure investments to improve
materials, will be part of the public governments receiving SLFRF funds; this includes
states, territories, Tribal governments, counties, access, affordability, and reliability; and
record and subject to public disclosure. metropolitan cities, and nonentitlement units of for eligible water and sewer
Do not enclose any information in your local government. infrastructure investments, including a
comment or supporting materials that 3 The ARPA added section 602 of the Social
broad range of lead remediation and
you consider confidential or Security Act, which created the State Fiscal
stormwater management projects.
inappropriate for public disclosure. Recovery Fund, and section 603 of the Social
Security Act, which created the Local Fiscal Impact of SLFRF
Recovery Fund (together, SLFRF). Sections 602 and
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FOR FURTHER INFORMATION CONTACT:
603 contain substantially similar eligible uses; the Since the launch of the SLFRF
Jessica Milano, Acting Chief Recovery primary difference between the two sections is that program, Treasury has disbursed
Officer, Office of Recovery Programs, section 602 established a fund for states, territories,
99.99% of SLFRF funds to
Department of the Treasury, (844) 529– and Tribal governments and section 603 established
a fund for metropolitan cities, nonentitlement units approximately 30,000 state, local, and
9527.
of local government, and counties.
SUPPLEMENTARY INFORMATION: 4 See 86 FR 26786 (May 17, 2021). 5 See 87 FR 4338 (Jan. 27, 2022).
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 64987
Tribal governments, and these economic recovery and help the country capped at the greater of $10 million and
recipients have moved swiftly to deploy be better prepared for future crises. 30% of a recipient’s total SLFRF award.
this funding in their communities.
Overview of the Consolidated • Except as otherwise determined by
According to data reported to Treasury Appropriations Act, 2023 the Secretary, the use of SLFRF funds
through March 31, 2023,6 states and the for Surface Transportation and Title I
largest local governments have budgeted On December 29, 2022, the projects is also subject to certain other
nearly 80% of their total available Consolidated Appropriations Act, 2023 laws, including the requirements of
SLFRF funds. Recipients are using (the 2023 CAA) was signed into law by titles 23, 40, and 49 of the U.S. Code,
SLFRF funds across a wide variety of the President,9 amending sections 602 title I of the Housing and Community
eligible uses to meet the unique needs and 603 of the Social Security Act to Development Act of 1974, and the
of their communities.7 Recipients have give state, local, and Tribal governments National Environmental Policy Act of
been using SLFRF funds to shore up more flexibility to use SLFRF funds to 1969.
state and local finances, helping to provide emergency relief from natural • SLFRF funds used for Surface
avoid a repeat of the Great Recession disasters, build critical infrastructure, Transportation and Title I projects must
when state and local government and support community development. supplement, not supplant, other
budgets were a drag on the overall Generally, the 2023 CAA does not Federal, state, territorial, Tribal, and
economy for 14 quarters of the alter the existing eligible use categories local government funds (as applicable)
recovery.8 Recipients reported that they originally provided by the ARPA. All that are otherwise available for these
budgeted nearly $100 billion for over eligible uses described in the 2022 final projects. This provision does not apply
53,000 revenue replacement projects to rule remain available to recipients. The to funds used under the emergency
provide fiscal stability through the 2023 CAA codifies the option for relief from natural disasters eligible use
provision of government services. recipients to use up to $10 million, category.
which Treasury termed the ‘‘standard
Recipients have also budgeted over $12 • Recipients must obligate funds used
allowance,’’ to replace lost revenue and
billion across over 5,800 projects to for Surface Transportation projects and
use that funding to provide government
respond to the public health needs of Title I projects by December 31, 2024
services in lieu of calculating revenue
the COVID–19 pandemic including by (the same obligation deadline that
loss according to the formula set forth
providing testing, vaccinations, staffing, applies to the other eligible uses) and
in the 2022 final rule. Otherwise, the
and outreach to underserved must expend funds by September 30,
2023 CAA provides for new eligible
communities; budgeted $17 billion in 2026. This expenditure deadline is three
uses.
projects to meet housing needs months earlier than the expenditure
The 2023 CAA provides that state, deadline for all other eligible uses.
including through rental assistance,
local, and Tribal governments may use
development and preservation of
SLFRF funds to provide emergency • Treasury may delegate oversight
affordable housing, and permanent and administration of the requirements
relief from natural disasters or the
supportive housing services; budgeted negative economic impacts of natural associated with funds used for Surface
over $11 billion to support workers disasters, including temporary Transportation projects and Title I
through job training for populations emergency housing, food assistance, projects to the appropriate Federal
impacted by the pandemic, to provide financial assistance for lost wages, or agency. This interim final rule discusses
premium pay, and to invest in public other immediate needs. As described how the Department of Transportation
sector capacity building; and budgeted later in this interim final rule, the will oversee funds expended for certain
over $26 billion for water, sewer, and emergency relief from natural disasters Surface Transportation projects.
broadband infrastructure projects. eligible use category is subject to the Sections 602 and 603 of the Social
Overall, the impact of the SLFRF same program administration Security Act specify two restrictions on
program is already proving to be requirements as the four existing uses of funds: for recipients other than
transformative for communities across eligible uses in the SLFRF program, Tribal governments, funds may not be
the country as recipients use SLFRF including the obligation deadline of used for deposits into any pension fund
funds to build a more equitable December 31, 2024, and expenditure and, in the case of states and territories
deadline of December 31, 2026. only, funds may not be used to directly
6 U.S. Department of the Treasury, April 2023
The 2023 CAA also grants the or indirectly offset a reduction in net tax
Quarterly and Annual Reporting Analysis, https:// revenue resulting from a change in law,
home.treasury.gov/system/files/136/April-2023- authority for recipients to use SLFRF
Reporting-Blog-Post.pdf. funds for additional infrastructure regulation, or administrative
7 The figures included in this interim final rule projects, including projects eligible interpretation during the covered
include Project and Expenditure reporting data under certain Department of period. The 2023 CAA did not amend
covering the period ending March 31, 2023 from the
Transportation programs (Surface these restrictions.
all SLFRF recipients. It includes quarterly data
reported by states, territories, and metropolitan Transportation projects) and projects Thus, sections 602(c)(1) and 603(c)(1)
cities and counties with a population over 250,000 eligible under Title I of the Housing and of the Social Security Act, as amended
or an allocation over $10 million, non-entitlement Community Development Act of 1974 by the 2023 CAA, provide that SLFRF
units of local government allocated more than $10 funds may be used:
million, and Tribal governments allocated over $30
(Title I projects). The 2023 CAA also
million from January 1, 2023–March 31, 2023 and provides additional requirements that (a) To respond to the public health
annual data reported by metropolitan cities and apply to SLFRF funds used for Surface emergency or its negative economic
counties with populations less than 250,000 and an Transportation and Title I projects. impacts, including assistance to
allocation less than $10 million, Tribal governments
with an allocation less than $30 million, and non-
These additional requirements provided households, small businesses, and
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entitlement units of local government allocated less for in the 2023 CAA are outlined below: nonprofits, or aid to impacted industries
than $10 million from April 1, 2022 to March 31, • The total amount of SLFRF funds a such as tourism, travel, and hospitality;
2023. recipient may direct toward Surface (b) To respond to workers performing
8 Press Release, U.S. Department of the Treasury,
Transportation and Title I projects is essential work during the COVID–19
Remarks by Secretary of the Treasury Janet L.
Yellen at National Association of Counties 2023 public health emergency by providing
Legislative Conference (Feb. 14, 2023). 9 Public Law 117–328 (Dec. 29, 2022). premium pay to eligible workers;
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64988 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
(c) For the provision of government restrictions, or other provisions in one released January 6, 2022 and published
services up to an amount equal to the eligible use category do not apply to January 27, 2022. Statements
greater of— other categories. Therefore, recipients referencing ‘‘this interim final rule’’
(i) The amount of the reduction in should first determine which eligible reference this rule, released August 4,
revenue due to the COVID–19 public use category a potential use of funds fits 2023, and published September 20,
health emergency relative to revenue within, then assess whether the 2023.
collected in the most recent full fiscal potential use of funds meets the Uses of Funds Not Specifically
year prior to the emergency; or eligibility standard or criteria for that
(ii) $10,000,000 Identified as Eligible in This Interim
category. Recipients using funds for Final Rule
(d) To make necessary investments in Surface Transportation projects
water, sewer, or broadband receiving funding from the Department Even if a use of funds is not
infrastructure; or of Transportation must consult with the specifically identified as eligible in this
(e) To provide emergency relief from Department of Transportation before interim final rule, recipients may still be
natural disasters or the negative using SLFRF funds for these projects. able to direct SLFRF funds toward that
economic impacts of natural disasters, In the Emergency Relief from Natural purpose as described further below.
including temporary emergency Disasters section of this interim final First, the eligible uses described in
housing, food assistance, financial rule, Treasury identifies a non- the 2022 final rule remain available to
assistance for lost wages, or other exhaustive list of specific uses of funds recipients, and recipients may continue
immediate needs. that are eligible, called ‘‘enumerated to pursue eligible projects under the
Sections 602(c)(4) and 603(c)(5) of the eligible uses,’’ that provide emergency 2022 final rule. For example, under the
Social Security Act, as amended by the relief from the physical or negative revenue loss eligible use category,
Infrastructure Investment and Jobs Act, economic impacts of natural disasters. recipients have broad latitude to use
provide that SLFRF funds may be used The sections discussing Surface funds for government services up to
for an authorized Bureau of Reclamation Transportation projects and Title I their amount of revenue loss due to the
project for purposes of satisfying any pandemic, provided that other
projects specifically describe the eligible
non-Federal matching requirement restrictions on use do not apply. A
projects articulated by the statute.
required for the project.10 potential use of funds that does not fit
The Discussion of Revenue Loss and
Sections 602(c)(5) and 603(c)(6) of the within the other eligible use categories
Program Administration Provisions
Social Security Act, as added by the in this interim final rule or in the 2022
section provides additional information,
2023 CAA, provide that SLFRF funds final rule may be permissible as a
where relevant, to clarify the availability
may be used for Surface Transportation government service. Please reference the
of the standard allowance, discuss
projects and Title I projects, including 2022 final rule for further information.
program requirements applicable to the Second, the eligible use category for
in some cases to satisfy a non-Federal new eligible uses, and describe relevant
share requirement applicable to certain providing emergency relief from natural
distinctions between the requirements disasters provides a non-exhaustive list
projects or to repay a loan provided of the 2022 final rule and this interim
under one of the Surface Transportation of enumerated eligible uses, which
final rule. This section includes: means that the listed eligible uses
programs.
(1) Revenue Loss include some, but not all, of the uses of
Structure of the Supplementary (2) Timeline for Use of SLFRF Funds funds that could be eligible under this
Information (3) Use of Funds for Match or Cost- eligible use category. This interim final
Following this Introduction, this Share Requirements rule outlines a standard for determining
SUPPLEMENTARY INFORMATION is (4) Reporting other eligible forms of emergency relief,
organized into four sections: (1) Eligible (5) Uniform Guidance beyond those specifically enumerated. If
Uses, (2) Discussion of Revenue Loss Next, the Comments and Effective a recipient would like to pursue a use
and Program Administration Provisions, Date section discusses the effective date of funds to provide emergency relief
(3) Comments and Effective Date, and and comment period for this interim that is not specifically enumerated, the
(4) Regulatory Analyses. Recipients final rule. Finally, the Regulatory recipient should use the standards and
seeking information regarding the Analyses section provides Treasury’s associated guidance to assess whether
original four eligible uses in the SLFRF analysis of the impacts of this the use of funds is eligible.
program generally may reference the rulemaking, as required by several laws, Third, as described further below,
2022 final rule and other SLFRF regulations, and Executive Orders. This many of the uses in the Title I projects
program guidance. section discusses the impact of the eligible use category are also eligible in
The Eligible Uses section describes amendments in the 2023 CAA, where the public health and negative economic
the standards for determining eligible relevant. Please reference the 2022 final impacts eligible use category, discussed
uses of funds in each of the eligible use rule for the regulatory analyses of the in the 2022 final rule, where there is no
categories provided in the 2023 CAA: impacts of the 2022 final rule. cap on the amount of SLFRF funds that
(1) Emergency Relief from Natural Throughout this SUPPLEMENTARY may be directed toward an eligible use.
Disasters INFORMATION, statements using the terms Furthermore, the public health and
(2) Surface Transportation Projects and ‘‘should’’ or ‘‘must’’ refer to negative economic impacts eligible use
Title I Projects requirements. Statements using the term category also offers a standard for
a. Surface Transportation Projects ‘‘encourage’’ or ‘‘advise’’ refer to determining if other uses of funds,
b. Title I Projects recommendations, not requirements. beyond those specifically enumerated,
As with the 2022 final rule, each This SUPPLEMENTARY INFORMATION are eligible. Recipients seeking to use
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eligible use category has separate and references three rule-making SLFRF funds for Title I projects may
distinct standards for assessing whether documents. Statements referencing ‘‘the consider the relevant eligible uses and
a use of funds is eligible. Standards, 2021 interim final rule’’ refer to the rule available funding levels to determine
released May 10, 2021, and published which eligible use category best
10 See section 40909 of Public Law 117–58, 135 May 17, 2021. Statements referencing supports their community’s needs. As
Stat. 429, 1126 (Nov. 15, 2021). ‘‘the 2022 final rule’’ refer to the rule noted above, this interim final rule did
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 64989
not alter the public health and negative wildfire seasons in the Western States,14 disrupt regular access to food and water,
economic impacts eligible use category. and increase heavy rainfall events in the causing food insecurity and reliance on
Please see the 2022 final rule for more contiguous 48 states.15 In 2020, 2021, support from disaster relief
information. and 2022, there were an average of 20 organizations.21 Furthermore, the
weather and climate disasters each year damage caused by natural disasters can
Request for Comments that reached or exceeded damages cause short-term earnings losses, as it
Treasury seeks comment on sections valued at $1 billion, compared to an may physically prevent individuals
addressing the new eligible uses, average of 12.8 weather and climate from working, whether due to housing
Emergency Relief from Natural disasters annually from 2010 to 2019.16 displacement, physical barriers in
Disasters, Surface Transportation From 2020 to 2022 alone, these billion- accessing their place of employment or
projects, and Title I projects. To better dollar natural disasters caused 1,460 business, sustained damage to their
facilitate public comment, Treasury has deaths and resulted in damages valued place of employment or business, or
included specific questions in the at $434.6 billion.17 injuries sustained as a result of the
relevant sections of this SUPPLEMENTARY The impacts of natural disasters range natural disaster.22 Natural disasters also
INFORMATION. Treasury encourages state, from loss of life and other consequences can generate a significant volume of
local, and Tribal governments in for health and safety to destruction of debris 23 and damage buildings and
particular to provide feedback and to property and infrastructure and infrastructure that provide critical or
engage with Treasury regarding issues disruption of economic activity. The essential services to the general public,
that may arise regarding the new eligible increasing prevalence of natural such as educational, utility, emergency,
uses. disasters and corresponding increased medical, and other services, creating
costs of responding to and recovering strains on local governments and other
II. Eligible Uses from natural disasters places additional responders.
A. Emergency Relief From Natural burden on state, local, and Tribal While the impacts of a natural
Disasters governments.18 This burden is disaster can be widespread,
experienced throughout communities, communities that are historically
Background including through strains placed on underserved often experience
The 2023 CAA amended sections 602 public infrastructure and on heightened impacts as a result of
and 603 of the Social Security Act to households, ranging from impacts to underlying disparities and ability to
permit recipients to use SLFRF funds to housing, food, water, wages, and other prepare for disasters,24 resiliency of
‘‘provide emergency relief from natural needs. homes to natural disasters,25 risk of food
disasters or the negative economic The U.S. Census Bureau found that insecurity,26 ability to recover
impacts of natural disasters, including approximately 3.3 million people were financially after a natural disaster,27 and
temporary emergency housing, food displaced from their homes by natural ultimately their ability to quickly return
assistance, financial assistance for lost disasters in 2022.19 Even when to social and economic life after a
wages, or other immediate needs.’’ As individuals and families in an impacted natural disaster.28 Tribal governments,
state, local, and Tribal governments area are not displaced after a natural for example, are the first and sometimes
spend billions of dollars a year to disaster, they may face significant costs the only responders to natural disasters
respond to the impacts of natural to repair homes to become livable that impact their communities.29
disasters that are growing in size, scale, again.20 Natural disasters also can Despite this responsibility, Tribal
and frequency, often as a result of emergency management capacity has
climate change,11 this new eligible use %20global%20surface%20temperatures,more been underfunded over the years,
%20powerful%20storms%20to%20develop.
supports recipients in responding to the 14 NOAA NCEI, U.S. Billion-Dollar Weather and
varied and evolving needs of their Climate Disasters (2023), https://www.ncei.
21 Centers for Disease Control and Prevention,
communities with SLFRF funds already noaa.gov/access/billions/, DOI: 10.25921/stkw- Natural Disaster and Severe Weather, Food and
7w73. Water Needs: Preparing for a Disaster or Emergency
on hand. 15 In recent years, a larger percentage of (Jan. 29, 2019).
Since 1980, there have been 341 22 Jeffrey A. Groen, et al, Census Bureau, Center
precipitation has come in the form of intense single-
natural disasters in the United States day events. Environmental Protection Agency, for Economic Studies. Storms and Jobs: The Effect
that reached or exceeded damages ‘‘Climate Change Indicators: Heavy Precipitation,’’ of Hurricanes on Individuals’ Employment and
Figure 1: Extreme One-Day Precipitation Events in Earnings over the Long Term, https://
valued at $1 billion, causing 15,821 www2.census.gov/ces/wp/2015/CES-WP-15-21.pdf.
the Contiguous 48 states, 1910–2020 (Aug. 1, 2022).
deaths and resulting in nearly $2.5 https://www.epa.gov/climate-indicators/climate- 23 Linda Luther, Congressional Research Service,
trillion in damages.12 In recent years, change-indicators-heavy-precipitation. R44941, Disaster Debris Management:
costly U.S. natural disasters have 16 NOAA NCEI, U.S. Billion-Dollar Weather and Requirements, Challenges, and Federal Agency
become even more frequent, in part due Climate Disasters (2023), https:// Roles (2017).
24 Federal Emergency Management Agency
to the impacts of climate change, which www.ncei.noaa.gov/access/billions/, DOI: 10.25921/
stkw-7w73. (FEMA), 2022–2026 FEMA Strategic Plan (2023).
are known to create more frequent and 17 See id. 25 Substance Abuse and Mental Health Services
intense droughts and storms,13 lengthen 18 See id. Administration, Disaster Technical Assistance
19 U.S. Census Bureau. Household Pulse Survey: Center Supplemental Research Bulleting, Greater
11 Billion-dollar disaster events account for the
Displaced in Last Year by Natural Disaster (2023). Impacts: How Disasters Affect People of Low
majority (>80%) of the damage from all recorded https://www.census.gov/data-tools/demo/hhp/#/ Socioeconomic Status (2017).
26 Kevin M. Fitzpatrick, et al., Food Insecurity in
U.S. weather and climate events per NCEI and ?measures=DISPLACED.
Munich Re. NOAA National Centers for 20 Harvard University’s Joint Center for Housing the Post-Hurricane Harvey Setting: Risks and
Environmental Information (NCEI), U.S. Billion- Studies estimates that disaster-related home repairs Resources in the Midst of Uncertainty, 17(22), Int.
Dollar Weather and Climate Disasters (2023), and improvements cost $300 million in annual J. Environ. Res.Public Health 8424, (2020).
https://www.ncei.noaa.gov/access/billions/, DOI: 27 Caroline Ratcliffe, et al., Urban Institute, Insult
lotter on DSK11XQN23PROD with RULES2
spending for every $10 billion in disaster losses
10.25921/stkw-7w73. incurred in the three years prior. Kermit. Baker & to Injury Natural Disasters and Residents’ Financial
12 See id.
Alexander Hermann, Joint Center for Housing Health 7 (2019).
13 U.S. Department of the Interior, US Geological 28 FEMA, 2022–2026 FEMA Strategic Plan (2023).
Studies of Harvard University. Rebuilding from
Survey, Climate FAQ: How can climate change 2017’s Natural Disasters: When, For What, and How 29 National Congress of American Indians, Indian
affect natural disasters? (2023), https:// Much?, https://www.jchs.harvard.edu/blog/ Country FY 2022 Budget Request (2023), 47–54.
www.usgs.gov/faqs/how-can-climate-change-affect- rebuilding-from-2017s-natural-disasters-when-for- https://www.ncai.org/resources/ncai-publications/
natural-disasters#:∼:text=With%20increasing what-and-how-much. NCAI_IndianCountry_FY2022_BudgetRequest.pdf.
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64990 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
limiting Tribal governments’ access to physical and economic impacts of Emergency relief must be related and
disaster resources before, during, or natural disasters in their communities. reasonably proportional to the physical
after the disaster strikes.30 Treasury encourages recipients to or negative economic impacts of a
This interim final rule provides consider how the provision of natural disaster that has occurred or is
significant flexibility for recipients to emergency relief can support expected to occur imminently, or to the
use SLFRF funds to provide emergency communities that have been historically potential physical or negative economic
relief from the widespread physical and underserved and are more at risk of the impacts of a natural disaster that is
negative economic impacts of natural impacts of natural disasters. threatened to occur in the future.
disasters. Recognizing that communities Emergency relief that bears no relation
that have been historically underserved 2. Identifying Natural Disasters or is grossly disproportionate to the type
often experience deeper impacts of This interim final rule explains that or extent of the impacts of the natural
natural disasters due in part to for the purposes of the SLFRF program, disaster would not be an eligible use.
differences that exist prior to the a natural disaster is defined as a In the case of a response to a natural
occurrence of a natural disaster, hurricane, tornado, storm, flood, high disaster that has occurred or is expected
Treasury encourages recipients to water, wind-driven water, tidal wave, to occur imminently, communities,
consider how the emergency relief they tsunami, earthquake, volcanic eruption, individuals, or areas that did not or are
provide supports all communities in landslide, mudslide, snowstorm, not expected to experience the natural
resuming their lives after a natural drought, or fire, in each case attributable disaster or its negative economic
disaster and building resiliency to to natural causes, that causes or may impacts would not be eligible to receive
future natural disasters. cause substantial damage, injury, or emergency relief in response to the
In the section that follows, this imminent threat to civilian property or natural disaster. In evaluating whether a
interim final rule discusses how persons. A natural disaster may also use is reasonably proportional,
recipients may use SLFRF funds to include another type of natural recipients should consider relevant
provide emergency relief from the catastrophe, attributable to natural factors about the natural disaster’s
physical or negative economic impacts causes, that causes, or may cause actual or imminent physical or negative
of natural disasters, including the substantial damage, injury, or imminent economic impacts and the emergency
standards for identifying a natural threat to civilian property or persons. relief to be provided, including the
disaster and responsive emergency This definition provides recipients the availability of other assistance such as
relief. flexibility to determine an event to be a insurance or other Federal assistance.
natural disaster even if it is not of a type For more information, recipients should
1. Standards for Providing Emergency reference the section titled Duplication
Relief From Natural Disasters specifically listed in the definition. This
definition is based on the definition of of Benefits below. Recipients should
This section of the interim final rule natural disaster under the Robert T. also consider the efficacy, cost, cost
discusses the standards for providing Stafford Disaster Relief and Emergency effectiveness, and time to delivery of the
emergency relief from the physical or Assistance Act (42 U.S.C. 5121 et seq.) response.
negative economic impacts of natural (the Stafford Act), which provides the When providing emergency relief
disasters. Generally, a recipient should statutory authority for most Federal from a natural disaster that is threatened
undertake the following two-step to occur in the future, mitigation
disaster response activities, including as
process: activities to address the potential
they pertain to Federal Emergency
1. Identify a natural disaster that has physical or economic impacts of the
Management Agency (FEMA) assistance
occurred or is expected to occur natural disaster in a community where
and programs.31 The Stafford Act
imminently, or a natural disaster that is the natural disaster is unlikely to occur
provides the framework for an orderly
threatened to occur in the future. would not be considered a related and
means of assistance by the Federal
2. Identify emergency relief that reasonably proportional response
government to state, local, and Tribal
responds to the physical or negative because there would not be an
governments in carrying out their
economic impacts, or potential physical established need to provide emergency
responsibilities to alleviate the suffering
or negative economic impacts, of the relief from that natural disaster, for
and damage that result from such example.
identified natural disaster. The
disasters.32 Available emergency relief based on
emergency relief must be related and
reasonably proportional to the impact 3. Identifying Emergency Relief the immediacy of the natural disaster.
identified. This section discusses how recipients
This interim final rule implements the This interim final rule defines may distinguish between a natural
framework described above by defining emergency relief as assistance that is disaster that has already occurred or is
natural disaster, defining emergency needed to save lives and to protect expected to occur imminently, and the
relief, and providing a non-exhaustive property and public health and safety, threat of a future occurrence of a natural
list of examples of emergency relief that or to lessen or avert the threat of disaster. As discussed, recipients may
may be provided. In addition to this catastrophe. This definition of provide emergency relief from natural
non-exhaustive list, recipients may use emergency relief is based on the Stafford disasters in the form of assistance that
the two-step framework above to Act’s definition of ‘‘emergency.’’ 33 is needed to save lives and to protect
identify and provide additional types of property and public health and safety or
31 See 42 U.S.C. 5195a(a)(2).
emergency relief in response to the 32 FEMA, Stafford Act, as Amended, P–592 vol.
to lessen or avert the threat of
physical or negative economic impacts, 1 (2021).
catastrophe.
or the potential for such impacts, of an To provide emergency relief before,
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33 See 42 U.S.C. 5122(1) (‘‘’Emergency’ means any
identified natural disaster. occasion or instance for which, in the during, or after a natural disaster that
The eligible uses set forth in this determination of the President, Federal assistance is has already occurred or is expected to
interim final rule provide flexibility to needed to supplement State and local efforts and occur imminently, the recipient should
capabilities to save lives and to protect property
recipients to respond to the widespread and public health and safety, or to lessen or avert
first identify how the disaster meets the
the threat of a catastrophe in any part of the United definition of natural disaster as
30 See Id. States.’’) described above. The natural disaster
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 64991
that has occurred or is imminent must the threat of a natural disaster that it is requirements of these FEMA-
be, or have been, the subject of an addressing. For example, a recipient administered programs. Furthermore,
emergency declaration or designation could utilize FEMA’s National Risk recipients are not required to receive
applicable to the recipient’s geography Index 34 to represent the community’s pre-approval from FEMA or Treasury to
and jurisdiction in the form of (1) an relative risk for hurricanes to establish use SLFRF funds for these eligible uses.
emergency declaration pursuant to the the likelihood of a future hurricane, or Duplication of Benefits. As a general
Stafford Act; (2) an emergency a Tribal government could cite matter, recipients may not claim use of
declaration by the Governor of a state Indigenous Traditional Ecological Federal financial assistance to cover a
pursuant to state law; or (3) an Knowledge to determine future risks.35 cost that the recipient is covering with
emergency declaration made by a Tribal another Federal award, by insurance, or
4. Eligible Types of Emergency Relief
government. If one of the declarations from another source,36 and
listed in (1)–(3) is not available, Sections 602 and 603 of the Social
Security Act, as amended by the 2023 subrecipients are bound by the same
recipients may satisfy this requirement requirements as recipients.37 Specific
through the designation of an event as CAA, provide a non-exhaustive list of
four types of emergency relief from requirements apply when recipients use
a natural disaster by the chief executive Federal funds to provide assistance with
(or equivalent) of the recipient natural disasters or their negative
economic impacts that may be provided respect to losses suffered as a result of
government, provided that the chief
using SLFRF funds: temporary a major disaster or emergency declared
executive documents that the event
emergency housing, food assistance, under the Stafford Act (disaster losses).
meets the definition of natural disaster
financial assistance from lost wages, and Under the emergency relief from natural
provided above. Recipients should
other immediate needs. This interim disasters eligible use category, certain
maintain documentation consistent with
final rule discusses and expands on this duplication of benefits requirements
the terms and conditions of the award
list, to enable recipients both to under the Stafford Act, in addition to all
agreement. Note that if the governor of
complement existing disaster relief relevant Uniform Guidance cost
a state declares an emergency for the
funding and to address gaps in principles requirements, would apply to
entire state, the local governments
assistance. recipients using funds for events that
within that state are not also required to
declare an emergency in order to use To facilitate implementation, this both a) satisfy this interim final rule’s
SLFRF funds to provide emergency interim final rule identifies a non- definition of natural disaster and b)
relief. A recipient government does not exhaustive list of eligible emergency form the basis for a Stafford Act
need to submit to Treasury for approval relief, which means that the listed declaration of an emergency or major
of the designation of a natural disaster; eligible uses include some, but not all, disaster. Accordingly, if a recipient uses
Treasury will defer to the reasonable of the uses of funds that could be SLFRF funds to cover disaster losses
determination of the recipient’s chief eligible. This non-exhaustive list of under the emergency relief from natural
executive (or equivalent) in making eligible emergency relief does not disasters eligible use category, it must
such a designation. For information distinguish between emergency relief abide by the Stafford Act’s prohibition
about duplication of benefits from the physical impacts of natural on duplication of benefits: Recipients
requirements when responding to disasters and emergency relief from the may not provide financial assistance to
natural disasters with Stafford Act negative economic impacts of natural a person, business concern, or other
declarations, please reference the disasters. However, the list does entity with respect to disaster losses for
section titled Duplication of Benefits distinguish between emergency relief which such beneficiary will receive
below. provided from a declared or designated financial assistance under any other
As discussed above, Treasury’s natural disaster that has occurred or is program or from insurance or any other
definition of emergency relief includes expected to occur imminently, and source.38 A recipient may provide
assistance to lessen or avert the threat of emergency relief provided from the assistance with respect to disaster losses
a future natural disaster, based on the threat of a future natural disaster. To to a person, business concern, or other
Stafford Act definition of ‘‘emergency,’’ assess whether additional types of entity that is or may be entitled to
which enables recipients to provide emergency relief would be eligible receive assistance for those losses from
mitigation activities. By providing under this category beyond the non- another source, if such person, business
mitigation activities that would reduce exhaustive list provided below, concern, or other entity has not received
the threat of a future natural disaster’s recipients should first identify a natural the other benefits by the time of
potential impacts, the recipient will disaster and then identify emergency application for SLFRF funds and the
have reduced the severity of threats to relief that responds to the natural person, business concern, or other entity
life, risks of loss of economic activity, disaster’s physical or negative economic agrees to repay any duplicative
and costs to private and public entities impacts according to the standards
to respond and recover, because less discussed in the prior section. 36 See, e.g., 2 CFR 200.1 Definitions (defining
damage will be incurred. Treasury has included references to ‘‘improper payment’’ to include ‘‘duplicate
To provide emergency relief in the programs currently administered by payments’’); 2 CFR 200.403 Factors affecting
FEMA in the discussion of the eligible allowability of costs (providing that ‘‘in order to be
form of mitigation activities, to lessen or allowable under Federal awards’’ costs must ‘‘[b]e
avert the threat of a future natural uses below. These references do not necessary and reasonable for the performance of the
disaster, a recipient should document impose any of the associated Federal award and be allocable thereto under these
evidence of historical patterns or principles’’ and ‘‘[n]ot be included as a cost . . . of
34 See FEMA’s National Risk Index available at any other federally-financed program in either the
predictions of natural disasters (as current or a prior period’’).
https://hazards.fema.gov/nri/hurricane.
defined above) that would reasonably 37 2 CFR 200.101(b)(2) (‘‘The terms and
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35 Memorandum from the White House Office of
demonstrate the likelihood of the future Science and Technology Policy & the White House conditions of Federal awards (including this part [2
occurrence of a natural disaster in its Council on Environmental Quality on Indigenous CFR part 200, the Uniform Guidance]) flow down
community. A recipient should use this Traditional Ecological Knowledge and Federal to subawards to subrecipients unless a particular
Decision Making (Nov. 15, 2021). For example, a section of this part or the terms and conditions of
evidence to support its determination Tribe may be able to rely on Indigenous Traditional the Federal award specifically indicate
that mitigation activities would be Ecological Knowledge in considering the threat of otherwise.’’).
related and reasonably proportional to wildfires on Tribal lands. 38 See 5 U.S.C. 5155(a).
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64992 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
assistance to the SLFRF recipient.39 beneficiaries disclose any other flexibility to determine the length of
Recipients may also use SLFRF funds to assistance received for the same disaster time to provide temporary emergency
provide assistance for any portion of losses prior to receiving assistance with housing based on the impact of the
disaster losses not covered by other SLFRF funds. Treasury further intends natural disaster and the housing
benefits.40 to make the reported information conditions in their jurisdiction.
To ensure compliance with the available to FEMA, the relevant FEMA Food assistance. Recipients may
Stafford Act’s prohibition on Regional Administrator, and other provide emergency relief from the
duplication of benefits, SLFRF agencies providing assistance with physical or negative economic impacts
recipients are advised to review FEMA’s respect to disaster losses, as appropriate. of a natural disaster in the form of food
guidance codified at 44 CFR 206.191. Non-Federal Matching Requirements. assistance. As is the case across the
FEMA’s guidance sets forth a The emergency relief enumerated SLFRF program, recipients may
‘‘delivery sequence’’ for assistance with eligible uses do not add any new administer programs through a range of
disaster losses, providing that sources of authority for recipients to use SLFRF other entities, including nonprofit and
assistance later in the sequence are funds to satisfy non-Federal matching for-profit entities, to carry out eligible
considered ‘‘duplicative’’ if paid despite requirements of other Federal programs. uses on behalf of the recipient
the availability of other sources of Instead, as described in the 2022 final government, including to provide
assistance earlier in the sequence.41 rule, recipients may use SLFRF funds emergency relief in the form of food
That is, if two sources provide under the revenue loss eligible use assistance.
assistance for the same disaster losses, category to satisfy non-Federal matching Financial assistance for lost wages.
the assistance provided later in the requirements. The newly eligible Recipients may provide emergency
delivery sequence is considered Surface Transportation projects and relief from the physical or negative
duplicative and must not be paid or if Title I projects, discussed later in this economic impacts of a natural disaster
paid must be repaid when the interim final rule, also provide in the form of financial assistance for
duplication of benefits occurs. While recipients the ability to use funds to lost wages. As with all forms of
not listed in section 206.191’s delivery satisfy non-Federal cost share emergency relief under this eligible use
sequence, recipients should treat SLFRF requirements in certain instances. category, financial assistance for lost
funds as last in the delivery sequence, Recipients seeking to use SLFRF funds wages must be related and reasonably
unless the recipient, in consultation for non-Federal matching requirements proportional to the impact identified. In
with the appropriate FEMA Regional should reference the section titled Use making this determination, recipients
Administrator or state disaster- of Funds for Match or Cost-Share should consider all sources of available
assistance administrator, determines Requirements in this interim final rule relief and other resources available to
that another sequence is appropriate.42 and the 2022 final rule for additional the potential beneficiaries of financial
For example, assistance with disaster information. assistance.
losses would generally be duplicative of Generally, Federal financial assistance
a. Declared or Designated Natural programs directed toward individuals
insurance covering those same losses Disasters
because insurance comes first in the are designed to target individuals with
delivery sequence. In that case, SLFRF Below, Treasury is providing a non- a specific set of circumstances or to
funds should not be used to cover any exhaustive list of eligible uses that provide those who earn up to a specific
portion of the disaster losses for which recipients may provide as emergency income threshold with a specified
insurance benefits are received. The relief from the physical or negative amount of assistance. For example, the
recipient is responsible for preventing economic impacts of a natural disaster Coronavirus Aid, Relief, and Economic
and rectifying duplication of benefits that has a declaration or designation, as Security Act (CARES Act), Public Law
with respect to disaster losses and described above. 116–136, 134 Stat. 281 (March 27, 2020)
should coordinate with the relevant Temporary emergency housing. provided an eligible individual a
FEMA Regional Administrator and state Recipients may provide emergency refundable tax credit of up to $1,200
disaster assistance administrator, or relief from the physical or negative ($2,400 for eligible individuals filing a
other relevant agencies providing economic impacts of a natural disaster joint tax return), plus $500 per
disaster assistance, as described in in the form of temporary emergency qualifying child of the eligible
FEMA’s guidance. housing to individuals and households individual. The credit was reduced for
To facilitate compliance with the including by providing funds for taxpayers with adjusted gross income
Stafford Act’s prohibition on temporary housing for households who that exceeded a threshold. The
duplication of benefits, Treasury are unable to live in their home threshold was $150,000 in the case of a
intends to require recipients to report following a natural disaster. Examples joint return, $112,500 in the case of a
their use of SLFRF funds to provide of temporary emergency housing could head of household, and $75,000
assistance with respect to disaster include rental assistance or otherwise. An advance refund of this
losses. Recipients are further required to reimbursement for hotel costs; credit, referred to by the IRS as an
notify subrecipients and contractors providing a temporary housing unit Economic Impact Payment, was made
that, when providing assistance in when individuals are facing challenges during 2020.43
response to a Stafford Act Declaration, finding permanent housing due to Recipients may provide financial
they are responsible for ensuring that shortages caused by a natural disaster; assistance for lost wages by providing
establishing other temporary emergency supplemental benefits to individuals
39 See 5 U.S.C. 5155(b)(1). housing, including congregate and non- who are participating in state
40 See 5 U.S.C. 5155(b)(3). congregate shelter (i.e., sheltering unemployment insurance programs or
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41 44 CFR 206.191(d). individuals in motels, hotels, dorms,
42 As provided in FEMA’s guidance, ‘‘If following etc.) before, during, or after a natural 43 For more information on Treasury’s Economic
the delivery sequence concept would adversely disaster; or providing shelter following Impact Payments provided in response to the
affect the timely receipt of essential assistance by COVID–19 public health emergency, see https://
a disaster victim, an agency may offer assistance
an evacuation due to a natural disaster. home.treasury.gov/policy-issues/coronavirus/
which is the primary responsibility of another Given the varying potential impacts of assistance-for-american-families-and-workers/
agency.’’ 44 CFR 206.191(d)(4). a natural disaster, recipients have economic-impact-payments.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 64993
the Department of Labor’s Disaster purpose. Category B of FEMA’s Public program.47 As noted above, recipients
Unemployment Assistance (DUA) Assistance program includes assistance are not required to receive pre-approval
program at the time the natural disaster like emergency access, medical care and from FEMA or Treasury to use SLFRF
occurred or following the natural transport, emergency operations center funds for these eligible uses. Recipients
disaster. Supplemental benefits can be related costs and other activities are also not required to comply with the
provided to any person who is impacted traditionally undertaken as part of requirements associated with FEMA’s
by the natural disaster and receiving emergency response. In considering Public Assistance program.
state unemployment insurance program what ‘‘other activities’’ are eligible Public Infrastructure Repair.
benefits or DUA program benefits. under this category, recipients are Recipients may use SLFRF funds to
The amount of financial assistance for encouraged to refer to Chapter 7 Section
lost wages paid as a supplemental restore public infrastructure damaged by
II of FEMA’s Public Assistance Program a natural disaster, including roads,
benefit to participants in the programs and Policy Guide, which discusses
discussed above must not exceed $400 bridges, and utilities. Recipients may
Category B Emergency Protection restore public infrastructure to its pre-
a week for the duration of the need for Measures.46 For Category B Emergency
emergency relief. This limit was disaster size, capacity, and function in
Protection Measures that are only accordance with applicable laws, codes,
determined to be reasonably eligible under FEMA’s Public
proportional through the review of other and standards. As part of restoring
Assistance program as direct Federal
assistance for lost wages, such as the public infrastructure damaged by a
assistance, recipients may use SLFRF
FEMA COVID–19 Assistance Program natural disaster, recipients also may
funds to provide these services directly,
for Lost Wages,44 which offered undertake activities that make this
such as emergency communications or
participants the option to provide restored infrastructure more resilient to
public transportation.
claimants a lost wages supplement of up future natural disasters, helping to
Other examples of emergency mitigate the impacts of future natural
to $400, providing additional financial protective measures include:
assistance for individuals who were disasters. For more information on how
transporting and pre-positioning to incorporate mitigation activities into
participants in other Federal financial equipment and resources; flood fighting;
assistance programs during the height of a public infrastructure project, please
firefighting; purchasing and distributing see the section titled Threat of Future
the COVID–19 emergency. To provide supplies and commodities; provision of
other types of direct financial assistance Natural Disaster: Mitigation Activities
medical care and transport; evacuation below.
to individuals impacted by natural and sheltering; provision of childcare;
disasters, please refer to the section demolition of structures; search and Increased operational and payroll
titled Cash Assistance below. rescue to locate survivors, household costs. When providing emergency relief
Other immediate needs. As discussed from the physical or negative economic
pets, and service animals requiring
above, natural disasters cause varied impacts of natural disasters, recipients
assistance; use or lease of temporary
damage to persons, property, and may need to increase government
generators for facilities that provide
infrastructure. Recipients may provide services due to suddenly lacking or
essential community services;
emergency relief from the physical or limited resources or may need to
dissemination of information to the
negative economic impacts of natural leverage existing government services or
disasters for other immediate needs not public to provide warnings and
guidance about health and safety government facilities to be responsive as
discussed above. Below, this interim quickly and effectively as possible.
final rule discusses examples of eligible hazards; searching to locate and recover
human remains; storage and interment Recipients may use SLFRF funds for
uses available to state, local, and Tribal increased operating costs, including
governments using SLFRF funds to of unidentified human remains; mass
mortuary services; construction of payroll costs and costs for government
address other immediate needs. facilities and government services used
Emergency Protective Measures. emergency berms or temporary levees to
provide protection from floodwaters or before, during, or after a natural
Recipients may use SLFRF funds to disaster. This may include social
provide emergency protective measures, landslides; emergency repairs necessary
to prevent further damage, such as services that are directly responsive to
such as those described in Category B of an impact from the disaster,
FEMA’s Public Assistance program to covering a damaged roof to prevent
infiltration of rainwater; buttressing, representing an increased cost of
respond before, during, or after a natural
shoring, or bracing facilities to stabilize providing those services due to the
disaster.45 By referencing Category B
them or prevent collapse; emergency disaster.
eligible uses as an illustrative list of the
types of emergency protective measure slope stabilization; mold remediation; Cash Assistance. Recipients may use
recipients may pursue with SLFRF extracting water and clearing mud, silt, SLFRF funds to provide cash assistance
funds, Treasury is seeking to simplify or other accumulated debris from for uninsured or underinsured expenses
the administrability of this eligible use eligible facilities; taking actions to save caused by the disaster such as repair or
through a framework that may already the lives of animals; and snow removal. replacement of personal property and
be familiar to recipients. As noted Debris Removal. Recipients may use vehicles, or funds for moving and
above, recipients are not required to SLFRF funds for debris removal storage, medical, dental, childcare,
comply with the requirements activities. Generally, this includes the funeral expenses, behavioral health
associated with FEMA’s Public clearance, removal, and disposal of services, and other miscellaneous items.
Assistance program and are not required vegetative debris (including tree limbs, The eligible uses are generally modeled
to receive pre-approval from FEMA or branches, stumps, or trees), construction on FEMA’s Individuals and Households
Treasury to use SLFRF funds for this and demolition debris, sand, mud, silt, program, which provides money and
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gravel, rocks, boulders, white goods, services to individuals who have
44 Memorandum from President Trump on and vehicle and vessel wreckage. These experienced a disaster whose property
Authorizing the Other Needs Assistance Program eligible uses are described further in has been damaged or destroyed and
for Major Disaster Declarations Related to
Coronavirus Disease 2019 (Aug. 8, 2020).
Category A of FEMA’s Public Assistance whose losses are not covered by
45 FEMA, FP 104–009–02, Public Assistance
Program and Policy Guide Version 4 (2020). 46 See id. 47 See id.
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64994 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
insurance.48 Consistent with the repairs, recipients may undertake a wildfire, the roof can be strengthened
provision of emergency relief discussed activities that make restored homes or fireproofed to make it more resilient
throughout this section, recipients are more resilient to future natural to future wildfires as well. Similarly,
not required to comply with the disasters, helping to mitigate the recipients repairing roads damaged by
requirements associated with FEMA’s impacts of future natural disasters. For flooding can incorporate drainage or
Individuals and Households program to more information on how to incorporate pervious pavement that would result in
use SLFRF funds for these eligible uses. mitigation activities into home repair a reduced or eliminated impact of
Furthermore, recipients are not required projects, please see the section titled flooding in the future, thereby
to receive pre-approval from FEMA or Threat of Future Natural Disaster: decreasing future costs of repair and
Treasury to use SLFRF funds for these Mitigation Activities below. This impact to the community. As discussed
eligible uses. eligible use is generally modeled off of above, when identifying the threat of a
Recognizing that low-income FEMA’s Individuals and Households natural disaster, a recipient must have
households often experience deeper program, which provides money and documented evidence that historical
challenges recovering financially from a services to individuals who have patterns or predictions that reasonably
natural disaster,49 recipients may also experienced a disaster whose property demonstrate the likelihood of future
design cash assistance programs that has been damaged or destroyed and occurrence of a natural disaster in the
serve low-income households that have whose losses are not covered by community.
been impacted by a natural disaster. insurance.50 Uses of funds that are Mitigation Activities with Capital
Consistent with Treasury’s definition of eligible under FEMA’s Individuals and Expenditures Exceeding $1 Million. In
low-income household in the public Households program are eligible under the case of mitigation activities with
health and negative economic impacts the SLFRF, but recipients are not total expected capital expenditures of $1
eligible use category in the 2022 final required to comply with the million or greater, recipients other than
rule, for this purpose a low-income requirements associated with FEMA’s Tribal governments must complete and
household is one with (i) income at or Individuals and Households program meet the substantive requirements of a
below 185 percent of the Federal and are not required to receive pre- Written Justification for the capital
Poverty Guidelines for the size of its approval from FEMA or Treasury to use expenditures in their project. Recipients
household based on the most recently SLFRF funds for these eligible uses. will submit this Written Justification to
published poverty guidelines by the Treasury as part of the Project &
Department of Health and Human b. Threat of Future Natural Disaster: Expenditure report. Treasury will
Services or (ii) income at or below 40 Mitigation Activities amend the Compliance and Reporting
percent of area median income for its In addition to the emergency relief Guidance to describe how recipients
county and size of household based on described above, recipients also may will submit this information.
the most recently published data by the provide emergency relief to lessen or As discussed in Timeline for Use of
Department of Housing and Urban avert the threat of a natural disaster and SLFRF Funds section, SLFRF funds for
Development. Treasury will presume its potential physical or negative this eligible use must be obligated by
that cash assistance provided to low- economic impacts through mitigation December 31, 2024, and expended by
income households impacted by a activities. Some examples of eligible December 31, 2026. Capital
natural disaster is related and mitigation activities include the eligible expenditures may involve long lead-
reasonably proportional emergency project types described in FEMA’s times, and the Written Justification may
relief to address the negative economic Hazard Mitigation Assistance Guidance, support recipients in analyzing
impacts of natural disasters. such as structure elevation, mitigation proposed capital expenditures to
In designing a cash assistance reconstruction, dry flood proofing, confirm that they conform to the
program targeted to low-income structural retrofitting, non-structure obligation and expenditure timing
households impacted by a natural retrofitting, wind retrofit, and requirements. Further, such large
disaster, recipients are not required to infrastructure retrofit.51 Recipients are projects may be less likely to be
apply a specific dollar threshold for not required to receive pre-approval reasonably proportional to the potential
permissible payments and instead, from FEMA or Treasury to use SLFRF impacts identified. Treasury is adopting
recipients have flexibility in funds for these eligible uses. Recipients the Written Justification requirement in
determining the appropriate level of are also not required to comply with the recognition of this and the need for
cash assistance. This approach enables consistent documentation and reporting
other requirements associated with
recipients to respond to the to support monitoring and compliance
FEMA’s Hazard Mitigation Assistance
particularized natural disaster impacts with the ARPA and this interim final
programs.
for their low-income community Mitigation activities may be stand- rule. For projects with capital
members. alone projects that reduce or eliminate expenditures that only repair or restore
Home Repairs for Uninhabitable infrastructure to pre-disaster conditions
the potential impacts of the threat of a
Primary Residences. Recipients may use and do not include mitigation activities,
natural disaster or may be incorporated
SLFRF funds to rebuild homes or recipients are not required to complete
into repair or reconstruction projects
provide home repairs not covered by a Written Justification.
that address the impacts of a natural
insurance to make residences that meet As noted above, Tribal governments
disaster. For example, if a recipient is are not required to complete the Written
the criteria below habitable again. The
residence must be a primary residence repairing the roof of a home damaged by Justification for mitigation activities
and be uninhabitable as a result of a 50 FEMA, A Guide to the Disaster Declaration
with total capital expenditures of $1
natural disaster. As part of making home Process and Federal Disaster Assistance, https:// million or greater. Tribal governments
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www.fema.gov/pdf/rrr/dec_proc.pdf. generally have limited administrative
48 FEMA, A guide to the Disaster Declaration 51 FEMA, Hazard Mitigation Assistance Guide capacity due to their small size and
process and Federal Disaster Assistance, https:// Hazard Mitigation Grant Program, Pre-Disaster corresponding limited ability to
www.fema.gov/pdf/rrr/dec_proc.pdf. Mitigation Program, and Flood Mitigation
49 Caroline Ratcliffe et al., Urban Institute, Insult Assistance Program (2015), https://www.fema.gov/
supplement staffing for short-term
to Injury Natural Disasters and Residents’ Financial sites/default/files/2020-07/fy15_HMA_ programs. In addition, Tribal
Health 7 (2019). Guidance.pdf. governments are already subject to
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 64995
unique considerations that require description of the specific mitigation improving existing capital assets already
additional administrative processes and activities that provide emergency relief owned or leasing other capital assets.
administrative burden for Tribal and explain why emergency relief is Recipients should use quantitative data
government decision making, including needed to lessen or avert the potential when available, although they are
capital expenditures. Tribal impacts of the natural disaster that is encouraged to supplement with
governments generally are subject to a threatened to occur in the future. When qualitative information and narrative
jurisdictionally complex set of rules and appropriate, recipients may provide description. Recipients that complete
regulations in the case of improvements quantitative information on the extent analyses with minimal or no
to land for which the title is held in and type of assistance needed to provide quantitative data should provide an
trust by the United States for a Tribe emergency relief, such as the number of explanation for doing so.
(Tribal Trust Lands). This includes the individuals or entities that may be In determining whether their
requirement in certain circumstances to affected. As discussed above, when proposed mitigation activity capital
seek the input or approval of one or recipients identify a natural disaster that expenditure is superior to alternative
more Federal agencies such as the is threatened to occur in the future, capital expenditures, recipients should
Department of the Interior, which holds recipients must document evidence of consider the following factors against
fee title of Tribal Trust Lands. historical patterns or predictions of each selected alternative.
As a result of their limited natural disasters that would reasonably a. A comparison of the effectiveness
administrative capacity and the unique demonstrate the likelihood of future of the capital expenditures in
and complex rules and regulations occurrence of a natural disaster in their addressing the need for mitigation
applicable to Tribal governments communities. In the Written identified. Recipients should generally
operating on Tribal Trust Lands, Tribal Justification, recipients should use this consider the effectiveness of the
governments would experience evidence, along with considerations of mitigation capital expenditures in
significant and redundant efficacy, cost, cost effectiveness, and addressing the potential impacts of the
administrative burden by also being time to delivery, to support their threatened natural disasters over the
required to complete a Written determinations that mitigation activities useful life of the capital asset and may
Justification for applicable capital would be related and reasonably consider metrics such as the number of
expenditures. While Tribal governments proportional. individuals or entities served, when
are not required to complete the Written 2. Explanation of why a mitigation such individuals or entities are
Justification, associated substantive capital expenditure is appropriate: estimated to be served, the relative time
requirements continue to apply, Recipients should provide an horizons of the project, and
including the requirement that a capital assessment demonstrating why a consideration of any uncertainties or
expenditure must be related and mitigation activity capital expenditure risks involved with the capital
reasonably proportional to the extent is appropriate to address the specified expenditure.
and type of the threat or impact being potential impact identified. This should b. A comparison of the expected total
addressed. Note that, as a general include an explanation of why existing cost of the capital expenditures.
matter, Treasury may also request capital equipment, property, or facilities Recipients should consider the expected
further information on SLFRF would be inadequate to addressing the total cost of the mitigation capital
expenditures and projects, including potential impact of the threat of a expenditure required to construct,
capital expenditures, as part of the natural disaster and why policy changes purchase, install, or improve the capital
regular SLFRF reporting and or additional funding to pertinent assets intended to address the need for
compliance process, including to assess programs or services would be emergency relief from the threat of the
their eligibility under this interim final insufficient without the corresponding natural disaster identified. Recipients
rule. capital expenditures. Recipients are not should include pre-development costs
Written Justification Requirements for required to demonstrate that the in their calculation and may choose to
Mitigation Capital Expenditures. For potential impacts would be irremediable include information on ongoing
non-Tribal government recipients but for the additional capital operational costs, although this
pursuing mitigation activities where a expenditure; rather, they may show that information is not required. Recipients
Written Justification is required, the other interventions would be inefficient, should balance the effectiveness and
Written Justification must (1) describe costly, or otherwise not reasonably costs of the proposed capital
the emergency relief provided by the designed to remedy the need for expenditure against alternatives and
mitigation activity; (2) explain why a emergency relief without additional demonstrate that their proposed capital
capital expenditure is appropriate to capital expenditure. expenditure is superior. Further,
address the need for emergency relief; 3. Comparison of the proposed capital recipients should choose the most cost-
and (3) compare the proposed expenditure against alternative capital effective option unless it substantively
mitigation activity capital expenditure expenditures: Recipients should provide reduces the effectiveness of the capital
against alternative capital expenditures an objective comparison of the proposed investment in addressing the need for
that could be made. The information mitigation capital expenditure against at emergency relief from the threat of the
required by the Written Justification least two alternative capital natural disaster identified.
reflects the framework applicable to all expenditures and demonstrate why their Because, in all cases, uses of SLFRF
uses under the emergency relief from proposed capital expenditure is superior funds to provide emergency relief from
natural disasters eligible use category, to alternative capital expenditures that natural disasters must be related and
providing justification for the could be made. Specifically, recipients reasonably proportional to actual or
relatedness and reasonable should assess the proposed capital potential physical or negative economic
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proportionality of the capital expenditure against at least two impacts of a natural disaster, some
expenditure in response to the potential alternative types or sizes of capital capital expenditures may not be eligible.
impact identified. expenditures that are potentially In selecting the $1 million threshold,
1. Description of emergency relief to effective and reasonably feasible. Where Treasury recognized that mitigation
be provided and potential impact to be relevant, recipients should compare the activity capital expenditures vary
addressed: Recipients should provide a proposal against the alternative of widely in size and therefore would
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64996 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
benefit from tiered treatment to subcontractors) without recent the Department of Labor, or other
implement eligibility standards while violations of Federal and state labor and Federal emergency assistance programs
minimizing administrative burden. The employment laws. is provided to assist recipients in
$1 million threshold for whether a Treasury believes that such practices understanding the types of emergency
recipient needs to complete a Written will promote effective and efficient relief projects eligible to be funded with
Justification will allow recipients a delivery of high-quality projects and SLFRF funds, recipients do not need to
simplified pathway to complete smaller support the economic recovery through apply for funding from the applicable
projects. strong employment opportunities for state programs or through any Federal
Expenditures from closely related workers. Such practices will reduce programs. Similarly, this interim final
activities directed toward a common likelihood of potential project rule generally does not incorporate
purpose are considered part of the scope challenges like work stoppages or safety program requirements or guidance that
of one project. These expenditures can accidents, while ensuring a reliable attach to other Federal emergency
include capital expenditures, as well as supply of skilled labor and minimizing programs. However, as noted above,
expenditures on related programs, disruptions, such as those associated recipients should be aware of other
services, or other interventions. A with labor disputes or workplace Federal or state laws or regulations that
project includes expenditures that are injuries. That will, in turn, promote on- may apply to projects, independent of
interdependent (e.g., acquisition of land, time and on-budget delivery. SLFRF funding conditions, that may
construction of the facility on the land, Furthermore, among other require approval from another Federal
and purchase of equipment), or are of requirements contained in 2 CFR part or state agency.
the same or similar type and would be 200, Appendix II, all contracts made by Question 1: Are there other types of
utilized for a common purpose (e.g., a recipient or subrecipient in excess of services or costs that Treasury should
acquisition of barricades that would be $100,000 with respect to projects that consider as enumerated eligible uses to
used to provide emergency relief from involve employment of mechanics or provide emergency relief from the
natural disasters). Recipients must not laborers must include a provision for physical or negative economic impacts
segment a larger project into smaller compliance with certain provisions of of natural disasters? Describe how these
projects in order to evade review. A the Contract Work Hours and Safety provide emergency relief from natural
recipient undertaking a set of identical Standards Act, 40 U.S.C. 3702 and 3704, disasters.
or similar projects may complete one as supplemented by Department of Question 2: What, if any, additional
Written Justification comprehensively Labor regulations (29 CFR part 5). criteria should Treasury consider to
addressing the entire set of projects. Treasury will continue to seek ensure that emergency relief responds to
Treasury employs a risk-based information from recipients on their the physical or negative economic
approach to overall program workforce plans and public impacts of natural disasters?
management and monitoring, which infrastructure and mitigation activities Question 3: What additional clarity or
may result in heightened scrutiny on undertaken with SLFRF funds. guidance would benefit recipients in
larger projects. Accordingly, recipients identifying eligible mitigation activities?
5. Administration
pursuing projects with larger mitigation
As discussed above, generally, the B. Using Funds for Surface
capital expenditures should complete
emergency relief from natural disasters Transportation and Title I Projects
more detailed analyses for their Written
Justification, commensurate with the eligible use category is subject to the To support SLFRF recipients in
scale of the project. same program administration meeting the infrastructure needs of their
Strong Labor Standards in requirements as the existing eligible communities, the 2023 CAA also
Construction. As discussed in the 2022 uses in the SLFRF program, as provided the authority for recipients to
final rule, Treasury continues to discussed in the 2022 final rule, use SLFRF funds for certain
encourage recipients to carry out public including the obligation deadline of infrastructure projects, including
infrastructure and mitigation activities December 31, 2024 and expenditure projects eligible under certain programs
in ways that produce high-quality work, deadline of December 31, 2026. As administered by the Department of
avert disruptive and costly delays, and discussed in this interim final rule, Transportation (Surface Transportation
promote efficiency. Treasury encourages recipients may use SLFRF funds under projects) and projects eligible under
recipients to use strong labor standards, this eligible use category for costs Title I of the Housing and Community
including project labor agreements and incurred beginning December 29, 2022, Development Act of 1974 (Title I
community benefits agreements that regardless of the date of the declared projects).52 The 2023 CAA imposes
offer wages at or above the prevailing disaster. As with all other eligible uses requirements on SLFRF funds used for
rate and include local hire provisions. in the SLFRF program, the general Surface Transportation projects and
Treasury also recommends that restrictions on use outlined in the 2022 Title I projects beyond those
recipients prioritize in their final rule apply to funds expended requirements that apply to all other
procurement decisions employers that under the emergency relief from natural SLFRF eligible use categories. In the
can demonstrate that their workforce disasters eligible use category. sections separately discussing Surface
meets high safety and training standards Additionally, recipients may reference Transportation projects and Title I
(e.g., professional certification, the section titled Distinguishing projects below, this interim final rule
licensure, and/or robust in-house Subrecipients versus Beneficiaries of the summarizes the types of eligible projects
training), that hire local workers and/or 2022 final rule for clarification of the within each category, provides
workers from historically underserved distinction between subrecipients and references to relevant guidance for the
communities, and that directly employ beneficiaries. projects, and discusses how the
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their workforce or have policies and Recipients are not required to obtain requirements imposed by the 2023 CAA
practices in place to ensure contractors project pre-approval from Treasury or apply to each category.
and subcontractors meet high labor any other Federal agency when using The 2023 CAA provides that the total
standards. Treasury further encourages SLFRF funds for natural disaster amount of SLFRF funds that a recipient
recipients to prioritize employers projects unless otherwise required by
(including contractors and Federal law. While reference to FEMA, 52 See 42 U.S.C. 802(c)(5) and 803(c)(6).
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may use for Surface Transportation the Federal agency to whom authority determined not to require recipients to
projects and Title I projects together has been delegated by the Secretary obtain the approval of the Secretary
shall not exceed the greater of $10 prior to obligating and expending funds prior to obligating and expending funds
million and 30% of a recipient’s SLFRF on Surface Transportation projects. Title on Surface Transportation projects that
allocation. This limitation does not I of the HCDA provides for project-level present less risk, as described under the
apply to SLFRF funds used for the other approval only in the case of project streamlined framework of Pathway Two
eligible uses in the SLFRF program, environmental review. The application in the section that follows. Treasury
including funds used for the provision of this requirement to the SLFRF expects far fewer recipients to seek to
of government services under the program means that recipients must use SLFRF funds for higher-risk projects
revenue loss eligible use category. comply with the environmental review involving greater complexity. By not
This limitation applies to the total requirements set forth in the HUD applying the approval requirements to
amount of SLFRF funds that a recipient statute and regulations, submit a the more numerous but less risky types
may use for Surface Transportation certification to Treasury, and receive of projects, Treasury will avoid the
projects and Title I projects taken approval prior to obligating and likelihood that most recipients would
together. For example, an SLFRF expending funds on Title I projects, as effectively be unable to engage in any
recipient with an allocation of $20 discussed below. Surface Transportation projects other
million would have $10 million (as $10 The provisions of the 2023 CAA than those qualifying for Pathway One.
million is greater than 30% of the reflect an intent that the usual The approval requirements will apply
recipient’s allocation—$6 million) to requirements that apply to Surface to Surface Transportation projects that
direct to Surface Transportation projects Transportation projects funded by DOT do not meet the streamlined framework
and Title I projects. This recipient could should generally also apply to such criteria, and as discussed further below,
direct, for example, $5 million toward projects as funded by Treasury under Treasury will design a process, based in
Surface Transportation projects and $5 the SLFRF program but also a part on the comments to this interim
million toward Title I projects, or $3 recognition that the DOT regulatory final rule, for recipients seeking to fund
million toward Surface Transportation requirements would need to be these larger, more complex projects.
projects and $7 million toward Title I harmonized with the particular Similarly, as discussed further below,
projects. This same recipient may structure of the SLFRF program. project-level certification requirements
choose to spend additional funding over Treasury interprets the ‘‘except as related to environmental review
and above this $10 million on projects otherwise determined’’ clause contemplated by title I of the HCDA will
that might otherwise be eligible as referenced above to permit Treasury to apply to the use of SLFRF funds for the
Surface Transportation or Title I determine not to apply certain Title I projects eligible use category.
projects under a different eligible use requirements of the cross-referenced Treasury provides more information
category, such as the revenue loss statutes when such requirements would regarding approval and certification
eligible use category, under which conflict with the existing SLFRF requirements applicable to Surface
recipients may use SLFRF funds for the framework or otherwise would be likely Transportation projects and Title I
provision of government services. to preclude recipients from exercising projects, respectively, in the sections
The 2023 CAA provides that, except the additional authorities provided by titled Pathway Two: Surface
as otherwise determined by the the 2023 CAA. Transportation Projects Not Receiving
Secretary or the head of a Federal As a general matter, DOT must Funding from DOT and Applicable
agency to whom oversight and approve recipients’ use of funds for Requirements for Title I Projects below.
administration of the requirements have projects funded by DOT. However, Recipients using funds for Surface
been delegated, the requirements of under the existing SLFRF framework, Transportation projects that are subject
other laws, including titles 23, 40, and Treasury provided funds to recipients to approval requirements must satisfy
49 of the U.S. Code, title I of the either in full or in two tranches rather NEPA environmental review
Housing and Community Development than disbursing funds to recipients after requirements. Recipients using funds for
Act of 1974 (HCDA), and the National approving the use of funds for particular Surface Transportation projects that are
Environmental Policy Act of 1969 projects, and recipients must obligate not subject to approval requirements
(NEPA), apply to recipients’ use of and expend such funds by set deadlines. (pursuant to the streamlined approach
SLFRF funds for Surface Transportation If the SLFRF program did not have described under Pathway Two in the
projects and Title I projects. These obligation and expenditure deadlines, section that follows) are not required to
requirements include the project recipients might have time to go through conduct NEPA environmental reviews.
approval and certification requirements a process of receiving Treasury approval Recipients using funds for Title I
of titles 23, 40, and 49 of the U.S. Code under Pathway Two prior to using the projects must satisfy NEPA
and title I of the HCDA and the funds that they had already received on environmental review requirements
regulations adopted thereunder.53 The Surface Transportation projects. But it is based on the procedures set forth in title
application of the Surface possible that recipients will seek to use I of the HCDA, the associated
Transportation project approval funds under Pathway Two for hundreds regulations, and as implemented by
requirements to the SLFRF program of Surface Transportation projects in Treasury. For more information about
means that recipients must obtain the total, and application of the statutory how the requirements of NEPA apply to
approval of the Secretary or the head of and regulatory approval requirements to Surface Transportation projects and
such a large volume of projects likely Title I projects, respectively, refer to the
53 The application of these approval and
would preclude recipients from carrying sections titled Pathway Two: Applicable
certification requirements to SLFRF for these out such projects while meeting the Requirements and Applicable
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projects is indicated by the statute’s specific
reference to NEPA. NEPA only applies to federal statutory deadlines for obligation and Requirements for Title I Projects below.
actions such as a federal agency approval. Without expenditure of funds. To ensure that As discussed in Treasury’s guidance to
application of the approval requirements of the recipients are able to exercise the date, NEPA does not apply to the other
cross-referenced statutes, there would be no
generally applicable federal action associated with
additional authorities provided by the eligible uses in the SLFRF program as
the use of SLFRF funds for Surface Transportation 2023 CAA prior to the December 31, described in the 2022 final rule, though
projects and Title I projects. 2024 obligation deadline, Treasury has recipients that blend SLFRF funds with
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64998 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
other Federal funds may be subject to The 2023 CAA provides that Treasury 5309, 5311, 5337, 5339, and 6703 of title
additional requirements associated with may delegate to the appropriate Federal 49 of the U.S. Code; or a project eligible
the other Federal funds.54 agency oversight and administration of under the bridge replacement,
As is the case with all projects using the requirements associated with the rehabilitation, preservation, protection,
SLFRF funds, projects must comply use of funds for Surface Transportation and construction program under
with applicable Federal statutes, projects and Title I projects. As paragraph (1) under the heading
regulations, and executive orders, discussed below, Treasury is delegating ‘‘HIGHWAY INFRASTRUCTURE
including environmental laws and oversight and administration of Surface PROGRAM’’ under the heading
Federal civil rights and Transportation projects under Pathway ‘‘FEDERAL HIGHWAY
nondiscrimination requirements,55 One (described below) to the ADMINISTRATION’’ under the heading
which include prohibitions on Department of Transportation (DOT). ‘‘DEPARTMENT OF
discrimination on the basis of race, Recipients that direct SLFRF funds TRANSPORTATION’’ under title VIII of
color, national origin, sex (including toward Surface Transportation projects division J of the Infrastructure
sexual orientation and gender identity), under Pathway One will be required to Investment and Jobs Act.
religion, disability, age, or familial complete the existing DOT reporting The statute also provides that, to the
status (having children under the age of requirements that already apply to extent consistent with guidance or rules
18).56 State, Tribal, and local projects funded by DOT and to report issued by the Secretary or the head of
procurement, contracting, and conflicts- certain information to Treasury. See the a Federal agency to which the Secretary
of-interest laws and regulations, sections titled Pathway One: Delegation has delegated authority, recipients may
including, for example, required of Authority and Discussion of Revenue use SLFRF funds to satisfy a non-
procurement processes for contractor Loss and Program Administration Federal share requirement applicable to
selection or competitive price setting, Provisions for further information. a project eligible under section 117 of
also may apply to recipients’ use of Below, this interim final rule title 23, sections 5309 or 6701 of title 49,
SLFRF funds. discusses how recipients may use or a project eligible for credit assistance
The 2023 CAA provides that SLFRF SLFRF funds for Surface Transportation under the TIFIA program under chapter
funds used for Surface Transportation projects and Title I projects, 6 of title 23. Additionally, in the case of
projects and Title I projects must respectively. a project eligible for credit assistance
supplement, not supplant other Federal, under the TIFIA program, recipients
state, territorial, Tribal, and local 1. Surface Transportation Projects may use SLFRF funds to repay a loan
government funds (as applicable) that Background provided under such program.
are otherwise available for these The 2023 CAA provides that the
projects. This interim final rule As added by the 2023 CAA, sections requirements of the relevant titles of the
discusses below how the supplement, 602(c)(5) and 603(c)(6) of the Social U.S. Code and the National
not supplant provision applies to uses Security Act provide that state, local, Environmental Policy Act of 1969 apply
of funds for Surface Transportation and Tribal governments may use SLFRF to the use of the SLFRF for Surface
projects and Title I projects. The non- funds, subject to limitations, for surface Transportation projects, except as
supplant requirement does not apply to transportation infrastructure projects otherwise determined by the Secretary
the other SLFRF eligible use categories, (Surface Transportation projects) or the head of a Federal agency to whom
including the emergency relief from eligible under certain programs oversight and administration of the
natural disasters eligible use category. administered by DOT. As described requirements have been delegated.
The 2023 CAA provides that funds above, recipients may only use the Additionally, SLFRF funds may only be
used for Surface Transportation projects greater of 30% of their SLFRF award used to supplement, and not supplant,
and Title I projects must be obligated by and $10 million, not to exceed a other Federal, state, territorial, Tribal,
December 31, 2024 and expended by recipient’s allocation, for all Surface and local government funds (as
September 30, 2026. The expenditure Transportation projects (described in applicable) that are otherwise available
deadline for these eligible uses provided this section) and Title I projects for the eligible project.
by the 2023 CAA is earlier than the (described in the section that follows)
December 31, 2026 expenditure taken together. Overview
deadline associated with the other Under the Surface Transportation There are different ways in which
eligible uses in the program, including projects eligible use category, SLFRF recipients may use SLFRF funds for
emergency relief from natural disasters. funds may be used for a project eligible Surface Transportation projects under
under any of sections 117, 119, 124, the new authority provided by the 2023
54 For additional information about blending and 133, 148, 149, 151(f), 165, 167, 173, 175, CAA. In this interim final rule, Treasury
braiding SLFRF funds with other funding sources, 176, 202, 203, and 204 of title 23 of the has organized discussion of the Surface
refer to SLFRF Final Rule FAQ 4.8, available at
https://home.treasury.gov/system/files/136/SLFRF-
U.S. Code; an activity to carry out Transportation projects eligible use
Final-Rule-FAQ.pdf. section 134 of title 23 of the U.S. Code; category in terms of three ‘‘pathways.’’
55 Applicable federal civil rights and non- a project eligible under the Rebuilding First, recipients may use SLFRF funds
discrimination laws include Title VI of the Civil American Infrastructure with (i) in the case of existing eligible
Rights Act of 1964, 42 U.S.C. 2000d; Title VIII of
the Civil Rights Act of 1968 (the Fair Housing Act),
Sustainability and Equity (RAISE) grant projects that receive funding from DOT,
as amended by the Fair Housing Amendments Act program; a project eligible for credit to expand the project or to cover
of 1988, 42 U.S.C. 3602, et seq; Section 504 of the assistance under the Transportation additional unexpected costs associated
Rehabilitation Act of 1973, 29 U.S.C. 794; Title IX Infrastructure Finance and Innovation with the project and (ii) in the case of
of the Education Amendments Act of 1972, 20
Act (TIFIA) program under chapter 6 of eligible projects that have not yet
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U.S.C. 1681; and the Age Discrimination Act of
1975, 42 U.S.C. 6101 et. seq. title 23 of the U.S. Code; a project that received but will receive funding from
56 As described in SLFRF Final Rule FAQ 12.1, furthers the completion of a designated DOT prior to December 31, 2024, the
award terms and conditions for Treasury’s route of the Appalachian Development obligation deadline for the SLFRF
pandemic recovery programs, including SLFRF, do
not impose antidiscrimination requirements on
Highway System under section 14501 of program, to contribute SLFRF funds to
Tribal governments beyond what would otherwise title 40 of the U.S. Code; a project expand the scope of the project, to cover
apply under Federal law. eligible under any of sections 5307, additional unexpected costs, or in other
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 64999
ways that supplement DOT funding, as any additional requirements associated transaction that requires payment) and
described in the section titled with such projects. replace those previously obligated funds
Prohibition on Supplanting Other Third, recipients may use SLFRF with SLFRF funds under this eligible
Funds. In each case, the Surface funds to repay a TIFIA loan or to satisfy use category.
Transportation project must be subject a non-Federal share requirement for The restriction in prong (ii) on
to DOT’s oversight during the period projects under four Surface replacing funds that a Federal agency
that SLFRF funds are used for the Transportation programs: INFRA Grants, has committed to a particular project
project. Recipients pursuing Surface Fixed Guideway Capital Investment pursuant to an award agreement or
Transportation projects that are Grants, Mega Grants, and projects otherwise applies to all funding sources
receiving or will receive funding from eligible for credit assistance under the covered by the commitment. For
DOT should be prepared to work with TIFIA program. Recipients should example, for DOT-funded projects
DOT to determine whether the use of consult with DOT before pursuing subject to a grant agreement, the
SLFRF funds for a particular project projects under this third pathway. restriction extends to DOT funds, other
meets the relevant requirements. In Throughout this interim final rule, Federal funds, and any other funds
addition, the project must meet the Treasury refers to this eligible use as identified by the recipient for the
requirements and restrictions that apply ‘‘Pathway Three.’’ For more purpose of satisfying cost-share
to Surface Transportation projects information, refer to the section titled requirements of the project.
funded through the SLFRF program Pathway Three: Non-Federal Share Thus, a recipient may not de-obligate
described further below. Furthermore, Requirements for Certain Surface funds and replace those previously
in the case of projects funded under Transportation Requirements. obligated funds with SLFRF funds
certain DOT programs like INFRA and In the following sections, this interim under this eligible use category. Nor
RAISE, the addition of Federal funds— final rule discusses the specific types of may a recipient use SLFRF to replace
including SLFRF funds—to an existing Surface Transportation projects that are Federal or non-Federal funds identified
project is subject to approval from DOT. eligible uses of SLFRF funds and the in a Federal commitment, such as an
Throughout this interim final rule, applicable requirements and limitations. award agreement. However, a recipient
Treasury refers to this eligible use as may use SLFRF funds under this
‘‘Pathway One.’’ Prohibition on Supplanting Other Funds eligible use category:
Second, this interim final rule lays For all three pathways for Surface (1) to provide additional funding to a
out a pathway for all SLFRF recipients, Transportation projects, recipients must project without reducing the amount of
including those that may not typically comply with the requirement provided other funds obligated to such project,
or currently be a direct recipient of DOT in the 2023 CAA that funds used for thereby funding additional activities or
funding, to use SLFRF funds to finance Surface Transportation projects shall expanding the scope of projects; or
Surface Transportation projects that will (2) to undertake a project for which
‘‘supplement, and not supplant, other
be overseen and administered by funds have not been previously
Federal, State, territorial, Tribal, and
Treasury. Within this pathway, Treasury obligated or identified in a Federal
local government funds (as applicable)
is articulating a streamlined framework commitment, such as an award
otherwise available for such uses.’’ The
for recipients to use up to $10 million agreement.
phrase ‘‘other . . . funds available for For example, consider a municipal
in SLFRF funds per project on Surface such uses’’ refers to (i) in the case of
Transportation projects that do not road project. The recipient has not yet
non-Federal funds, non-SLFRF funds entered into an award agreement with
include DOT funding but meet certain that have been obligated for specific
parameters. Though these projects do DOT but is expecting that Federal funds
uses that are eligible under the Surface from DOT will make up a certain
not include DOT funding, recipients Transportation projects eligible use
may choose to blend SLFRF funds with amount of the project funds and is
category or (ii) in the case of Federal planning on using local funds to satisfy
other sources of funds to carry out the funds, funds that a Federal agency has
projects. Recipients using SLFRF funds cost-share requirements. Because the
committed to a particular project recipient has not yet entered into an
for these projects are not required to pursuant to an award agreement or
consult with DOT and instead these award agreement with DOT, even if the
otherwise, including funds identified in project is included in the transportation
projects will be administered and an awarded DOT grant agreement for
overseen by Treasury. Throughout this improvement program (TIP) or a
use on Surface Transportation projects. statewide transportation improvement
interim final rule, Treasury refers to this
Under prong (i), for the purpose of program (STIP), the recipient may
eligible use as ‘‘Pathway Two.’’ For
identifying non-Federal funds that have choose to alter the funding mixture to
additional information, refer to the
been obligated for specific uses, the include SLFRF funding, after consulting
section titled Pathway Two: Surface
definition of ‘‘obligation’’ used in the with DOT. However, if in that same
Transportation Projects not Receiving
2022 final rule applies, which is ‘‘an scenario, the recipient had entered into
Funding from DOT.
Recipients interested in financing order placed for property and services an award agreement with DOT that
Surface Transportation projects outside and entering into contracts, subawards, included a certain amount of DOT
of the parameters of the streamlined and similar transactions that require funding and a remaining amount of
framework in Pathway Two may submit payment.’’ 57 As such, a recipient may funds from local sources, then the funds
a notice of intent to Treasury, as not de-obligate funds that were for the project may not be replaced with
described further below in the section obligated for specific uses that are SLFRF funds. The recipient could not
titled Pathway Two: Surface eligible under this section (e.g., by supplant Federal or non-Federal funds
Transportation Projects not Receiving cancelling, amending, renegotiating, or identified to DOT as part of the grant
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Funding from DOT. Based on these otherwise revising or abrogating a award or terminate or renegotiate an
notices of intent and comments to this contract, subaward, or similar existing contract for the construction of
interim final rule, Treasury will provide 57 See Final Rule FAQ 13.17 for additional
the project and use SLFRF funds to
instructions as to how recipients may information about obligations. This approach
replace the funds previously identified
apply for approval to carry out their applies a concrete standard that is known to SLFRF or obligated for that purpose. In this
proposed projects and guidance as to recipients and administrable by Treasury. scenario, recipients would be able to use
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65000 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
SLFRF funds to expand the scope of a with the project. Using SLFRF funds for significance to improve the safety,
project or cover unexpected costs, after these purposes is a way for recipients to efficiency, and reliability of the
consulting with DOT. supplement but not supplant funds in movement of freight and people in and
In the case of projects previously existing projects receiving funding from across rural and urban areas. For
included within a TIP or STIP that have DOT. In each case, the project must additional information about INFRA
received funding from DOT, recipients meet the requirements and restrictions Grants, see USDOT INFRA Grant
should reflect increased overall project that apply to Surface Transportation Program.59
funding resulting from the addition of projects funded through the SLFRF • National Highway Performance
SLFRF funds within the STIP or TIP, program. Program (NHPP) 60—602(c)(5)(B)(ii) of
even when the sources of project For eligible projects that have not yet the Social Security Act—The NHPP
funding may have changed prior to but will receive funding from DOT prior provides formula funding with the
identification in the DOT grant award or to the SLFRF program’s December 31, purposes of providing support for the
obligation. 2024, obligation deadline, recipients condition and performance of the
also may contribute SLFRF funds to the National Highway System (NHS) or for
a. Pathway One: Surface Transportation
project, as long as the project meets the the construction of new facilities on the
Projects Receiving Funding From DOT
requirements and restrictions that apply NHS; ensuring that investments of
This section of the interim final rule to Surface Transportation projects Federal-aid funds in highway
describes how recipients may use funded through the SLFRF program, construction are directed to support
SLFRF funds under Pathway One (i) in including the non-supplant progress toward the achievement of
the case of existing eligible projects that requirements. For these projects that performance targets established in an
are receiving funding from DOT to have not yet been funded, recipients asset management plan of a state for the
expand the project or to cover may have more flexibility to contribute NHS; and providing support for
additional unexpected costs associated SLFRF funds for purposes beyond activities to increase the resiliency of
with the project and (ii) in the case of expanding the scope of the project and the NHS to mitigate the cost of damages
eligible projects that have not yet but covering additional unexpected costs, from sea level rise, extreme weather
will receive funding from DOT prior to because there may be more ways to events, flooding, wildfires, or other
December 31, 2024, the obligation supplement DOT funding without natural disasters. For additional
deadline for the SLFRF program, to supplanting other funds. For example, information about NHPP, see
contribute SLFRF funds to the project, in addition to using SLFRF funds to Implementation Guidance for the
to expand the project, to cover expand project scope or to cover National Highway Performance Program
additional unexpected costs, or in other additional unexpected costs that may (NHPP) as Revised by the Bipartisan
ways that supplement DOT funding. In arise, recipients may also be able to Infrastructure Law.61
each case, the Surface Transportation commit SLFRF funds in the initial • Bridge Investment Program
project must be subject to DOT’s planning phase of the project as part of (BIP) 62—602(c)(5)(B)(iii) of the Social
oversight during the period that SLFRF the recipient’s cost-share obligation, to Security Act—The BIP awards
funds are used for the project. the extent that DOT rules permit Federal competitive discretionary grants to
Recipients seeking to use SLFRF funds funds to constitute a portion of the improve the safety, efficiency, and
for Surface Transportation projects project’s cost sharing or matching reliability of the movement of people
under Pathway One should consult with requirement. Recipients should note and freight by funding projects to
DOT and refer to the requirements that planned contributions of SLFRF replace, rehabilitate, preserve, or protect
discussed in the following subsection. funds to a project that has not yet bridges in the National Bridge
Generally, and as discussed further received funding from DOT will affect Inventory, including projects to replace
below, when using SLFRF funds under the determination of total Federal funds or rehabilitate bridge-sized culverts for
Pathway One, the statutory that would support the project and may the purpose of improving flood control
requirements that normally apply when affect calculations of the non-Federal and improved habitat connectivity. It
carrying out Surface Transportation funds cost-share contribution required has a focus on improving the condition
projects funded by DOT continue to in order to be in compliance with DOT of bridges in poor condition and
apply. In the case of some DOT-funded requirements. supporting activities to prevent bridges
programs like INFRA and RAISE, the Under Pathway One, recipients may in fair condition from dropping to poor
addition of other Federal funds— use SLFRF funds for projects eligible condition. For additional information
including SLFRF funds—to an existing under the programs described below. on the BIP, see Bridge Investment
project is subject to approval from DOT. This interim final rule briefly Program (BIP) Questions and Answers
This interim final rule describes how summarizes each program and (Q&As).63
recipients may use SLFRF funds under references existing implementation
Pathway One, summarizes the programs guidance, where available. Recipients 59 See the U.S. Department of Transportation’s
under which recipients may direct should refer to the relevant program INFRA Grants Program website at https://
www.transportation.gov/grants/infra-grants-
SLFRF funds toward eligible projects, guidance for DOT programs of interest program.
and outlines the requirements for further information and detail about 60 See 23 U.S.C. 119.
associated with this pathway. the types of projects eligible under those 61 U.S. Department of Transportation, Federal
Recipients using SLFRF funds under programs. Highway Administration, Implementation Guidance
Pathway One must comply with the • INFRA Grants 58—602(c)(5)(B)(i) of for the National Highway Performance Program
(NHPP) as Revised by the Bipartisan Infrastructure
requirement that SLFRF funds the Social Security Act—Also known as Law (Jun. 1, 2022), https://www.fhwa.dot.gov/
supplement and not supplant other Nationally Significant Multimodal specialfunding/nhpp/bil_nhpp_implementation_
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funds, described above. Freight & Highway Projects, INFRA guidance-05_25_22.pdf.
In the case of existing projects awards are competitive grants for 62 See 23 U.S.C. 124.
63 U.S. Department of Transportation, Federal
currently receiving funding from DOT, multimodal freight and highway
Highway Administration, Bridge Investment
recipients may use SLFRF funds to projects of national or regional Program (BIP) Questions and Answers (Q&As) (Aug.
expand the project and to cover 18, 2022), https://www.fhwa.dot.gov/bridge/bip/
additional unexpected costs associated 58 See 23 U.S.C. 117. qa.cfm.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65001
• Surface Transportation Block Grant Congestion Mitigation and Air Quality Æ improving the state of good repair
Program (STBG) 64—602(c)(5)(B)(iv) of (CMAQ) Improvement Program Fact of the NHFN;
the Social Security Act—The STBG Sheet.69 Æ using innovation and advanced
provides flexible funding that may be • Charging and Fueling Infrastructure technology to improve NHFN safety,
used for projects to preserve and Discretionary Grant Program (CFI efficiency, and reliability;
improve the conditions and Program) 70—602(c)(5)(B)(viii) of the Æ improving the efficiency and
performance on any Federal-aid Social Security Act—Established in the productivity of the NHFN;
highway, bridge and tunnel projects on Bipartisan Infrastructure Law, the CFI Æ improving State flexibility to
any public road, pedestrian and bicycle Program provides competitive grants to support multi-State corridor planning
infrastructure, and transit capital strategically deploy publicly accessible and address highway freight
projects, including intercity bus electric vehicle charging and alternative connectivity; and
terminals. For additional information on fueling infrastructure in the places Æ reducing the environmental
the STBG, see Implementation people live and work—urban and rural impacts of freight movement on the
Guidance for the Surface Transportation areas alike—in addition to along NHFN.
For additional information on the
Block Grant Program (STBG) as Revised designated Alternative Fuel Corridors.
NHFP, see Implementation Guidance for
by the Bipartisan Infrastructure Law.65 For additional information about the
• Highway Safety Improvement the National Highway Freight Program
CFI Program, see Charging and Fueling
Program (HSIP) 66—602(c)(5)(B)(vi) of as Revised by the Bipartisan
Infrastructure Grant Program.71
Infrastructure Law.75
the Social Security Act—The HSIP • Territorial and Puerto Rico • Rural Surface Transportation Grant
provides formula funding with the Highway Program 72—602(c)(5)(B)(ix) of Program 76—602(c)(5)(B)(xi) of the
purpose of helping to achieve a the Social Security Act—The Territorial Social Security Act—The Rural Surface
significant reduction in traffic fatalities and Puerto Rico highway program Transportation Grant Program provides
and serious injuries on all public roads, allocates funds to the Commonwealth of competitive grants to support projects to
including non-state-owned public roads Puerto Rico for a highway program, as improve and expand the surface
and roads on Tribal land. HSIP funds well as to American Samoa, the transportation infrastructure in rural
are typically available for defined Commonwealth of the Northern Mariana areas to increase connectivity, improve
highway safety improvement projects, Islands, Guam, and the U.S. Virgin the safety and reliability of the
as well as ‘‘specified safety projects.’’ Islands to assist in constructing and movement of people and freight, and
For additional information on the HSIP, improving a system of arterial and generate regional economic growth and
see the Highway Safety Improvement collector highways and necessary inter- improve quality of life. Grant funds
Program (HSIP) Eligibility Guidance.67 island connectors. For additional typically support highway, bridge, or
• Congestion Mitigation and Air information on the Territorial and tunnel projects eligible under the NHPP,
Quality Improvement Program Puerto Rico Highway program, see the the STBG program, or the Tribal
(CMAQ) 68—602(c)(5)(B)(vii) of the Territorial and Puerto Rico Highway Transportation Program; highway
Social Security Act—The CMAQ Program Fact Sheet.73 freight projects eligible under the NHFP;
provides a flexible funding source for • National Highway Freight Program highway safety improvement projects;
transportation projects and programs to (NHFP) 74—602(c)(5)(B)(x) of the Social projects on a publicly-owned highway
help meet the requirements of the Clean Security Act—The NHFP provides or bridge improving access to certain
Air Act. Funding is available to reduce funding intended to improve the facilities that support the economy of a
congestion and improve air quality for condition and performance of the rural area; integrated mobility
areas that do not meet the National National Highway Freight Network management systems, transportation
Ambient Air Quality Standards for (NHFN) and support several goals, demand management systems, or on-
ozone, carbon monoxide, or particulate including: demand mobility services. For
matter (nonattainment areas) and for Æ investing in infrastructure and additional information about the Rural
former nonattainment areas that are now operational improvements that Surface Transportation Grant Program,
in compliance (maintenance areas). A strengthen economic competitiveness, see the Rural Surface Transportation
wide range of transportation projects reduce congestion, reduce the cost of Grant website.77
leading to reduction in emissions are freight transportation, improve • Carbon Reduction Program
eligible for support under the CMAQ, reliability, and increase productivity; (CRP) 78—602(c)(5)(B)(xii) of the Social
including projects involving new Æ improving the safety, security, Security Act—Established in the
transit, alternative fuels, shared micro- efficiency, and resiliency of freight Bipartisan Infrastructure Law,79 CRP
mobility, traffic flow improvements, and transportation in rural and urban areas; provides funds by formula for a wide-
demand management. For additional range of projects designed to reduce
information on CMAQ, see the 69 U.S. Department of Transportation, Federal
transportation emissions, defined as
Highway Administration, Congestion Mitigation
64 See 23 U.S.C. 133. and Air Quality (CMAQ) Improvement Program
carbon dioxide emissions from on-road
65 U.S. Department of Transportation, Federal Fact Sheet (Feb. 8, 2022), https:// highway sources. For additional
Highway Administration, Implementation Guidance www.fhwa.dot.gov/bipartisan-infrastructure-law/
for the Surface Transportation Block Grant Program cmaq.cfm. 75 U.S. Department of Transportation, Federal
70 See 23 U.S.C. 151(f). Highway Administration, Implementation Guidance
(STBG) as Revised by the Bipartisan Infrastructure
Law (Jun. 1, 2022), https://www.fhwa.dot.gov/ 71 U.S. Department of Transportation, Federal for the National Highway Freight Program as
specialfunding/stp/bil_stbg_implementation_ Highway Administration, Charging and Fueling Revised by the Bipartisan Infrastructure Law (Dec.
guidance-05_25_22.pdf. Infrastructure Grant Program (Mar. 30, 2023), 14, 2022), https://ops.fhwa.dot.gov/freight/
66 See 23 U.S.C. 148. https://www.fhwa.dot.gov/environment/cfi/. documents/NHFP_Implementation_Guidance.pdf.
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67 U.S. Department of Transportation, Federal 72 See 23 U.S.C. 165 76 See 23 U.S.C. 173.
73 U.S. Department of Transportation, Federal 77 See the U.S. Department of Transportation’s
Highway Administration, Highway Safety
Improvement Program (HSIP) Eligibility Guidance Highway Administration, Territorial and Puerto Rural Surface Transportation Grant website at
(Feb. 2, 2022), https://safety.fhwa.dot.gov/hsip/ Rico Highway Program Fact Sheet (Feb. 24. 2022), https://www.transportation.gov/grants/rural-
rulemaking/docs/BIL_HSIP_Eligibility_ https://www.fhwa.dot.gov/bipartisan-infrastructure- surface-transportation-grant.
Guidance.pdf. law/territorial_puerto_rico_hp_fact_sheet.cfm. 78 See 23 U.S.C. 175.
68 See 23 U.S.C. 149. 74 See 23 U.S.C. 167. 79 Public Law 117–58.
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65002 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
information on eligible projects under public network that provides access to, development projects, mobility on-
CRP, see the Carbon Reduction Program adjacent to, or through Federal lands. demand projects that expand access and
(CRP) Implementation Guidance.80 For additional information on FLTP, see reduce transportation cost burden, and
• Promoting Resilient Operations for Implementation Guidance for the intermodal projects. The addition of
Transformative, Efficient, and Cost- Federal Lands Transportation Federal funds, including SLFRF funds,
Saving Transportation (PROTECT) 81— Program.86 to an existing RAISE project is subject
602(c)(5)(B)(xiii) of the Social Security • Federal Lands Access Program to the Department of Transportation’s
Act—Established in the Bipartisan (FLAP) 87—602(c)(5)(B)(xvi) of the approval. For more information on
Infrastructure Law, the PROTECT Social Security Act—FLAP provides RAISE grants, see Notice of Funding
Program provides both formula funding formula funding to improve Opportunity for the Department of
and competitive funding for projects transportation facilities that provide Transportation’s National Infrastructure
that, among other activities, provide access to, are adjacent to, or are located Investments (i.e., the Rebuilding
resilience improvements; strengthen within Federal lands. FLAP American Infrastructure with
and protect evacuation routes; and supplements state and local resources Sustainability and Equity (RAISE) Grant
protect at-risk coastal infrastructure. For for public roads, transit systems, and Program) under the Infrastructure
additional information on the PROTECT other transportation facilities, with an Investment and Jobs Act (‘‘Bipartisan
Formula Program, see Promoting emphasis on high-use recreation sites Infrastructure Law’’), Amendment No.
Resilient Operations for Transformative, and economic generators. For additional 2.89
Efficient, and Cost-Saving information on FLAP, see the • Transportation Infrastructure
Transportation (PROTECT) Formula Implementation Guidance for the Finance and Innovation Act (TIFIA) 90—
Program Implementation Guidance.82 Federal Lands Access Program.88 602(c)(5)(B)(xviii) of the Social Security
• Tribal Transportation Program • Rebuilding American Infrastructure Act—The TIFIA Program provides
(TTP) 83—602(c)(5)(B)(xiv) of the Social with Sustainability and Equity (RAISE) Federal credit assistance in the form of
Security Act—TTP provides formula Grant Program—602(c)(5)(B)(xvii) of the direct loans, loan guarantees, and
funding to Tribal governments to aid in Social Security Act—The RAISE Grant standby lines of credit to finance surface
providing safe and adequate Program helps communities build transportation projects of national and
transportation and public road access to transportation projects that have regional significance. Eligible projects
and within Indian reservations, Indian significant local or regional impact and typically include highways and bridges;
lands, and Alaska Native Village improve safety and equity. RAISE intelligent transportation systems;
communities, contributing to the provides funds through competitive intermodal connectors; transit vehicles
economic development, self- grants to state, local, Tribal, and and facilities; intercity buses and
determination, and employment of territorial governments, among others, facilities; freight transfer facilities;
Indians and Native Americans. TTP for surface transportation capital pedestrian bicycle infrastructure
funds a wide range of eligible projects, including highway, bridge, or networks; transit-oriented development;
transportation activities including the other road projects eligible under title rural infrastructure projects; passenger
construction and maintenance of roads 23 of the U.S. Code; public rail vehicles and facilities; surface
and bridges. For additional information transportation projects eligible under transportation elements of port projects;
about TTP, see Tribal Transportation chapter 53 of title 49 of the U.S. Code; and airports that meet certain standards
Program Fact Sheet.84 passenger and freight rail transportation of credit worthiness and readiness. For
• Federal Lands Transportation projects; port infrastructure additional information about TIFIA, see
Program (FLTP) 85—602(c)(5)(B)(xv) of investments; the surface transportation TIFIA Program Overview.91
the Social Security Act—FLTP provides components of an airport project eligible • Urbanized Formula Grants 92—
funds to improve the transportation for assistance under part B of subtitle 602(c)(5)(B)(xx) of the Social Security
infrastructure owned and maintained by VII of title 49 of the U.S. Code; Act—The Urbanized Area Formula
Federal agencies with land and natural intermodal projects; projects to replace Funding Program makes Federal
resource management responsibilities. or rehabilitate a culvert or prevent resources available for transit capital
Eligible projects under FLTP include stormwater runoff; projects investing in assistance in urbanized areas and for
construction and maintenance of transit surface transportation facilities that are transportation-related planning.93
facilities and transportation projects located on Tribal land; and other surface
89 U.S. Department of Transportation, Notice of
eligible under Title 23 that are on a transportation infrastructure projects
Funding Opportunity for the Department of
that the Secretary of Transportation Transportation’s National Infrastructure
80 U.S. Department of Transportation, Federal considers to be necessary to advance the Investments (i.e., the Rebuilding American
Highway Administration, Carbon Reduction goals of the program—including public Infrastructure with Sustainability and Equity
Program (CRP) Implementation Guidance (Apr. 21, (RAISE) Grant Program) under the Infrastructure
2022), https://www.fhwa.dot.gov/environment/
road and non-motorized projects that
Investment and Jobs Act (‘‘Bipartisan Infrastructure
sustainability/energy/policy/crp_guidance.pdf. are not otherwise eligible under title 23 Law’’), Amendment No. 2 (Jan. 3, 2023), https://
81 See 23 U.S.C. 176. of the U.S. Code, transit-oriented www.transportation.gov/sites/dot.gov/files/2023-02/
82 U.S. Department of Transportation, Federal RAISE%202023%20NOFO%20Amendment2.pdf.
Highway Administration, Promoting Resilient 86 U.S. Department of Transportation, Federal 90 See 23 U.S.C. Chapter 6.
Operations for Transformative, Efficient, and Cost- Highway Administration, Implementation Guidance 91 See the U.S. Department of Transportation’s
Saving Transportation (PROTECT) Formula for the Federal Lands Transportation Program (Jun. TIFIA Program Overview website at https://
Program Implementation Guidance (Jul. 29, 2022), 29, 2022), https://highways.dot.gov/sites/ www.transportation.gov/buildamerica/financing/
https://www.fhwa.dot.gov/environment/ fhwa.dot.gov/files/docs/federal-lands/programs/ tifia.
sustainability/resilience/policy_and_guidance/ federal-lands-transportation-program/8186/fltp- 92 See 49 U.S.C. 5307.
protect_formula.pdf. guidance-cleared.pdf.
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93 While Urbanized Area Formula Grants
83 See 23 U.S.C. 202. 87 See 23 U.S.C. 204.
typically may be used to support operating
84 U.S. Department of Transportation, Federal 88 U.S. Department of Transportation, Federal expenses, operating expenses are not an eligible use
Highway Administration, Tribal Transportation Highway Administration, Implementation Guidance of SLFRF spending for projects eligible under
Program Fact Sheet (Oct. 26, 2022), https:// for the Federal Lands Access Program (Aug. 6, section 602(c)(5)(B)(xx) of the Social Security Act.
www.fhwa.dot.gov/bipartisan-infrastructure-law/ 2018), https://highways.dot.gov/sites/fhwa.dot.gov/ See operating expenses within the Pathway One
ttp.cfm. files/docs/federal-lands/programs/federal-lands- applicable requirements section for more
85 See 23 U.S.C. 203. access-program/6971/flap-implem-guidance.pdf. information.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65003
Eligible activities under the Urbanized and the acquisition of public the replacement, removal, and repair of
Formula grants typically include: transportation services. For additional culverts or weirs that meaningfully
planning, engineering, design, and information about Formula Grants for improve or restore fish passage for
evaluation of transit projects and other Rural Areas, see Formula Grants Rural anadromous fish. Anadromous fish
technical transportation-related studies; Areas Program Guidance.99 species are born in freshwater such as
capital investments in bus and bus- • State of Good Repair Grants 100— streams and rivers, spend most of their
related activities such as replacement, 602(c)(5)(B)(xxiii) of the Social Security lives in the marine environment, and
overhaul, and rebuilding of buses, crime Act—The State of Good Repair Grants migrate back to freshwater to spawn. For
prevention and security equipment and Program provides capital assistance for additional information on the Culvert
construction of maintenance and maintenance, replacement, and AOP Program, see the National Culvert
passenger facilities; and capital rehabilitation projects of high-intensity Removal, Replacement, and Restoration
investments in new and existing fixed fixed guideway and bus systems to help Grants (Culvert AOP Program)
guideway systems including rolling transit agencies maintain assets in a website.105
stock, overhaul and rebuilding of state of good repair. Capital projects • Bridge Replacement, Rehabilitation,
vehicles, track, signals, eligible for State of Good Repair Grants Preservation, Protection, and
communications, and computer funds typically include projects to Construction Program (Bridge Formula
hardware and software. In addition, replace and rehabilitate rolling stock; Program or BFP) 106—602(c)(5)(B)(xxvii)
associated transit improvements and track; line equipment and structures; of the Social Security Act—Established
certain expenses associated with signals and communications; power by the Bipartisan Infrastructure Law,
mobility management programs are equipment and substations; passenger BFP provides formula funds for
eligible under the program. For stations and terminals; security highway bridge replacement,
additional information about Urbanized equipment and systems; maintenance rehabilitation, preservation, protection,
Formula Grants, see Urbanized Area facilities and equipment; and and construction projects on public
Formula Program Guidance.94 operational support equipment roads. For additional information of
• Fixed Guideway Capital Investment computer hardware and software. For BFP, see Bridge Formula Program (BFP)
Grants 95—602(c)(5)(B)(xxi) of the Social additional information about State of Implementation Guidance.107
Security Act—The Fixed Guideway Good Repair Grants, see State of Good • Additionally, as provided by
Capital Investment Grants Program is a Repair Grant Program Guidance.101 section 602(c)(5) of the Social Security
discretionary grant program that funds • Grants for Buses and Bus Act, Surface Transportation projects
transit capital investments, including Facilities 102—602(c)(5)(B)(xxiv) of the also include activities to carry out
heavy rail, commuter rail, light rail, Social Security Act—The Grants for metropolitan transportation planning 108
streetcars, and bus rapid transit. More Buses and Bus Facilities Program and projects that further the completion
details are available in the Federal provides funding to help support capital of a designated route of the Appalachian
Transit Administration’s Capital projects to replace, rehabilitate, and Development Highway System
Investment Grants Policy Guidance.96 purchase buses, vans, and related (ADHS) 109—a system of designated
• Formula Grants for Rural Areas 97— equipment, and to construct bus-related corridors and roadways within the 13
602(c)(5)(B)(xxii) of the Social Security facilities, including technological States that make up the Appalachian
Act—The Formula Grants for Rural changes or innovations to modify low or Region. With regard to metropolitan
Areas Program provides capital and no emission vehicles or facilities. For transportation planning, requirements
planning assistance to support public additional information about Grants for leading to the development of
transportation in rural areas with Buses and Bus Facilities, see Buses and transportation improvement plans are
populations of less than 50,000, where Bus Facilities Program Guidance.103 described in section 134 of title 23 of
many residents often rely on public • National culvert removal, the U.S. Code and section 5303 of title
transit to reach their destinations.98 The replacement, and restoration grant 49 of the U.S. Code.
program also provides funding for program (Culvert AOP Program) 104—
training and technical assistance b. Pathway One: Applicable
602(c)(5)(B)(xxv) of the Social Security
through the Rural Transportation Requirements
Act—Established by the Bipartisan
Assistance Program. Eligible activities Infrastructure Law, the Culvert AOP Recipients using SLFRF funds for
typically include planning, capital, job Program awards grants for projects for Surface Transportation projects under
access and reverse commute projects, Pathway One must comply with certain
99 U.S. Department of Transportation, Federal
94 U.S. Department of Transportation, Federal Transit Administration, Formula Grants Rural Areas 105 U.S. Department of Transportation, Federal
Transit Administration, Urbanized Area Formula Program Guidance and Application Instructions, 79 Highway Administration, National Culvert
Program Guidance, 79 FR 2930 (Feb. 27, 2020), FR 63663 (Feb. 27, 2020), https:// Removal, Replacement, & Restoration Grants
https://www.transit.dot.gov/regulations-and- www.transit.dot.gov/regulations-and-guidance/fta- (Culvert Hydraulics Aquatic Organisms Passage
guidance/fta-circulars/urbanized-area-formula- circulars/formula-grants-rural-areas-program- Program) website Program Overview (Jan. 31, 2023),
program-program-guidance-and. guidance-and-application. https://www.fhwa.dot.gov/engineering/hydraulics/
95 See 49 U.S.C. 5309. 100 See 49 U.S.C. 5337. culverthyd/aquatic/culvertaop.cfm.
96 U.S. Department of Transportation, Federal 101 U.S. Department of Transportation, Federal 106 See title VIII of division J of Public Law 117–
Transit Administration, Capital Investment Grants Transit Administration, State of Good Repair Grant 58.
Policy Guidance (Jan. 12, 2023), https:// Program Guidance and Application Instructions 107 U.S. Department of Transportation, Federal
www.transit.dot.gov/sites/fta.dot.gov/files/2023-01/ (May 29, 2020), https://www.transit.dot.gov/ Highway Administration, Bridge Formula Program
CIG-Policy-Guidance-January-2023.pdf. regulations-and-guidance/fta-circulars/state-good- (BFP) Implementation Guidance (Jan. 14, 2022),
97 See 49 U.S.C. 5311. repair-grant-program-guidance-and-application. https://www.fhwa.dot.gov/bridge/bfp/
102 See 49 U.S.C. 5339. 20220114.cfm.
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98 While Rural Area Formula Grants typically
103 U.S. Department of Transportation, Federal 108 See section 602(c)(5)(B)(v) of the Social
may be used to support operating expenses,
operating expenses are not an eligible use of SLFRF Transit Administration, Buses and Bus Facilities Security Act. See also 23 U.S.C. 134 for more
spending for projects eligible under section Program Guidance and Application Instructions details.
602(c)(5)(B)(xxii) of the Social Security Act. See (Feb. 27, 2020), https://www.transit.dot.gov/ 109 See section 602(c)(5)(B)(xix) of the Social
operating expenses within the Pathway One regulations-and-guidance/fta-circulars/bus-and- Security Act. See also 40 U.S.C. 14501 for more
applicable requirements section for more bus-facilities-program-guidance-and-application. details on the Appalachian Development Highway
information. 104 See 49 U.S.C. 6703. System.
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65004 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
requirements and restrictions • Prevailing Wage and Employee provide that SLFRF funds may not be
established by the 2023 CAA, in Protection Requirements—The Surface used for operating expenses of the
addition to the other applicable Transportation projects are generally Surface Transportation projects.
provisions of section 602 and 603 of the subject to wage and employee Specifically, recipients that use SLFRF
Social Security Act, the 2022 final rule, protection requirements, including the funds for projects eligible under
and recipients’ award terms and requirements of 23 U.S.C. 113 and 49 Urbanized Formula Grants, Fixed
conditions. As described earlier in this U.S.C. 5333(a) and (b), applying Davis- Guideway Capital Investment Grants,
interim final rule, recipients may only Bacon prevailing wage protections for Formula Grants for Rural Areas, State of
use the greater of 30% of their award highway and transit projects, Good Repair Grants, or Grants for Buses
and $10 million (not to exceed their respectively, receiving Federal financial and Bus Facilities may not use SLFRF
total award) for Surface Transportation assistance. funds for operating expenses of these
projects (described in this section) and • Title VI of the Civil Rights Act of projects. DOT typically defines
Title I projects (described in the 1964—Title VI of the Civil Rights Act of operating expenses as those costs
following section), taken together. As 1964 states that no person in the Unites necessary to operate and manage a
also described earlier in this interim States shall, on the grounds of race, public transportation system. Operating
final rule, recipients using SLFRF funds color, or national origin, be excluded expenses usually include costs such as
for Surface Transportation projects must from participation in, be denied the driver salaries, the cost of fuel, and the
obligate funds by December 31, 2024, benefits of, or be otherwise subjected to cost of equipment and supplies having
and expend funds by September 30, discrimination under any program or a useful life of less than one year. For
2026. In the section that follows, this activity for which the recipient receives this purpose, operating expenses do not
interim final rule describes the Federal assistance. As with all activities include preventive maintenance
additional requirements that apply to funded with a recipients’ SLFRF award, activities. This limitation does not apply
Surface Transportation projects funded the requirements of Title VI and to other Surface Transportation projects
with SLFRF funds under Pathway One. Treasury’s implementing regulations at or to other uses of SLFRF funds,
Pathway One: Application of Titles 31 CFR part 22 apply to SLFRF funds including under the revenue loss
23, 40, and 49 of the U.S. Code. Sections used for Surface Transportation eligible use category.
602(c)(5)(C)(iii) and 603(c)(6)(B)(iii) of projects. Pathway One: Projects that
the Social Security Act provide that the • Buy America Provisions—Buy Demonstrate Progress Towards a State
requirements of titles 23, 40, and 49 of America requirements were established of Good Repair or Support Achieving
the U.S. Code apply to Surface pursuant to section 165 of the Surface Performance Targets. Section
Transportation projects, except as Transportation Assistance Act of 1982 602(c)(5)(C)(iii)(III) of the Social
otherwise determined by the Secretary to ensure that transportation Security Act provides that, except as
or the head of a Federal agency to which infrastructure projects are built with otherwise determined by the Secretary
American-made products.111 These or the head of the Federal agency to
the Secretary has delegated authority.
requirements have been implemented which the Secretary has delegated
When using SLFRF funds under
by various DOT modes through statute authority, states may use funds for
Pathway One, the statutory
and regulation.112 Surface Transportation projects, as
requirements that normally apply when
• Planning Requirements—Generally, applicable, that demonstrate progress in
carrying out such projects continue to
projects that are eligible for funding achieving a state of good repair as
apply. Recipients should consult with
under title 23 of the U.S. Code or 49 required by the state’s asset
DOT before using SLFRF funds for these
U.S.C. Chapter 53 must meet planning management plan under 23 U.S.C.
projects. The responsibility for
requirements laid out in law or 119(e) and that support the achievement
completing or ensuring compliance with
regulation, including the requirement of one or more performance targets of
all requirements falls to the recipient, as
that the project be included within a the state established under 23 U.S.C.
would typically be the case for a DOT-
Statewide Transportation Improvement 150. Treasury interprets this provision
funded project in the absence of SLFRF
Program, which is a statewide to impose a mandatory requirement for
funds. Immediately below, this interim
prioritized listing or program of states to comply with one of the two
final rule summarizes some of the
transportation projects covering a period prongs in section 602(c)(5)(C)(iii)(III).
requirements that generally apply:
of four years that is consistent with the Treasury understands the statute’s
• Uniform Relocation Assistance and provision that states ‘‘may’’ use funds
Real Property Acquisition Policies Act long-range statewide transportation
plan, metropolitan transportation plans, for applicable projects that meet this
of 1970 (Uniform Act) 110—The Uniform requirement to mean that states may
Act is a Federal law that establishes and relevant Transportation
Improvement Program. Recipients using only use funds for such projects that
minimum standards for Federally meet this requirement, because this
funded programs and projects that SLFRF funds for Surface Transportation
projects under Pathway One must provision is included in the section
require the acquisition of real property titled ‘‘Application of Requirements’’
or displace persons from their homes, continue to comply with applicable
planning requirements. alongside two other subparagraphs that
businesses, or farms. The Act’s impose mandatory requirements when
protections and assistance apply to the Pathway One: Limitations on
Operating Expenses. Sections 602(c)(5) recipients use funds on Surface
acquisition, rehabilitation, or Transportation projects and because
demolition of real property for Federal and 603(c)(6) of the Social Security Act
otherwise, the provision would have no
or Federally funded projects. The 111 See Public Law 97–424, 96 Stat. 2097 (Jan. 6, practical effect.113 But Treasury reads
provisions of the Uniform Act and its 1983).
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implementing regulations apply to all 112 See, e.g., 23 U.S.C. 313 (Federal Highway 113 To treat the provisions of section
activities funded with a recipient’s Administration Buy America statute); 49 U.S.C. 602(c)(5)(C)(iii)(III) as completely optional would
SLFRF award, as described in the 5323(j) (Federal Transit Administration Buy give these provisions no meaning, because states
SLFRF award terms and conditions. America statute); 49 CFR part 661 (Federal Transit would be permitted to carry out projects in the
Administration Buy America regulation); and 23 manner contemplated by the provision regardless of
CFR 635.410 (Federal Highway Administration Buy whether the statute identified this ability or not.
110 42 U.S.C. 4601 et seq. America regulation). Such a reading would render the provisions as
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65005
the word ‘‘and’’ as disjunctive, such that the overall amount of funds required amount of Federal funds that may be
states need only comply with either from non-Federal sources, as is the case used in a project, regardless of whether
subparagraph (aa) or (bb).114 While it with the State of Good Repair Grant those funds are provided by DOT or
may be possible for a state to carry out Formula Program (49 U.S.C. 5337(e)), another Federal source. This is true, for
some types of Surface Transportation the Railcar Vehicle Replacement example, of the State of Good Repair
projects in a way that both demonstrates Program (49 U.S.C. 5337(f)), and Grants Grant Formula Program (49 U.S.C.
progress in achieving a state of good for Buses and Bus Facilities Program (49 5337(e)), the Railcar Vehicle
repair as required by the state’s asset U.S.C. 5339). In the case of other Replacement Program (49 U.S.C.
management plan under 23 U.S.C. programs, the addition of Federal funds, 5337(f)), and Grants for Buses and Bus
119(e) and that supports the like SLFRF, will not increase the overall Facilities Program (49 U.S.C. 5339)
achievement of one or more amount of funds required from non- noted above. In those and other similar
performance targets of the state Federal sources. scenarios, recipients can contribute
established under 23 U.S.C. 150, As described above, the requirements SLFRF funds up to the maximum
Treasury is concerned that an of titles 23, 40, and 49 of the U.S. Code Federal funds limit without an
interpretation that requires states to apply to recipients using SLFRF funds accompanying increase in non-Federal
meet both criteria would effectively read for Surface Transportation projects share, but once that maximum is
certain programs out of the list of under Pathway One, except as otherwise reached, the statutory cost share
programs that Congress specifically determined by the Secretary. This applicable to the project will apply to
provided in section 602(c)(5)(B) of the provision permits Treasury to determine the SLFRF funds. However, in the case
Social Security Act. not to apply certain requirements of the of many other programs, the approach
This interim final rule provides that cross-referenced statutes when such described above will provide an avenue
only projects eligible under title 23 of requirements would conflict with the for recipients to use funds for Surface
the U.S. Code, or that otherwise would existing SLFRF framework or otherwise Transportation projects under Pathway
be subject to the requirements of title are likely to preclude recipients from to One without requiring additional non-
23, will be subject to the requirement to exercising the additional authorities Federal share contributions. Recipients
either demonstrate progress in achieving provided by the statute. For these using SLFRF funds for Surface
a state of good repair under 23 U.S.C. reasons, recipients using SLFRF funds Transportation projects under Pathway
119(e) or support the achievement of for Surface Transportation projects One must consult with DOT to
one or more state performance targets under Pathway One will not be required determine the applicable non-Federal
under 23 U.S.C. 150. Section to contribute cost-sharing or matching cost share requirements.
602(c)(5)(C)(iii)(III) of the Social funds alongside those SLFRF funds. In
Security Act provides that this other words, the use of SLFRF funds on Pathway One: Delegation of
requirement applies to Surface its own will not result in the application Authority. Sections 602(c)(5)(C)(iv) and
Transportation projects ‘‘as applicable,’’ of an additional cost-share requirement 603(c)(6)(B)(iv) of the Social Security
and it would not make sense for these beyond the cost-share requirement that Act provide that the Secretary may
conditions to apply to projects eligible already applies to DOT grantees delegate oversight and administration of
under titles 40 or 49 of the U.S. Code carrying out projects with DOT funds. the requirements applicable to Surface
as that would effectively make such This approach is consistent with the Transportation projects to the
projects unavailable to states, despite way recipients are permitted to use appropriate Federal agency. Given
the inclusion of these types of projects SLFRF funds under the 2022 final rule, DOT’s expertise and experience with
in section 602(c)(5)(B) of the Social which does not require recipients to oversight and administration of their
Security Act. provide cost sharing or matching funds own infrastructure projects, Treasury is
Pathway One: Application of Non- in order to use their SLFRF funds.115 If delegating authority for oversight and
Federal Cost Share Requirements to Treasury were to apply cost-share administration of Surface
SLFRF Funds. Generally, the non- requirements to the SLFRF funds used Transportation projects under Pathway
Federal cost share provisions associated in Pathway One, on top of the cost-share One. As such, recipients proposing to
with projects and programs requirements that already apply to the spend SLFRF on such projects must
administered by DOT require a certain projects as funded by DOT, recipients follow DOT guidance for determining
percentage of funds to be contributed would be required to source additional the eligibility of using SLFRF funds for
from non-Federal sources. When other matching funds before being able to a proposed project. Recipients using
Federal funds are added to a carry out a Surface Transportation SLFRF funds for such projects will be
transportation infrastructure project, the project, which would frustrate the required to comply with the relevant
total amount of Federal funds associated flexibility provided by the statutory existing DOT reporting requirements
with the project increases. In the case of framework and inhibit SLFRF associated with an existing Surface
some programs, this addition increases recipients’ ability to use funds already Transportation project that is receiving
received prior to the approaching DOT funds. Recipients using SLFRF
surplusage. Instead, statutes should be read to give obligation and expenditure deadlines. funds under Pathway One will also be
effect to all provisions, ‘‘so that no part will be required to report certain information to
inoperative or superfluous.’’ See, e.g., Ysleta Del
Because SLFRF funds are Federal
Sur Pueblo v. Texas, 596 U.S. _, 124 S. Ct. 1929, funds, using SLFRF funds under Treasury, including, among other
1939 (2022) (internal citation omitted). Pathway One will still impact the cost- things, the amount of SLFRF funds
114 As discussed in United States v. Fisk, 70 U.S.
share requirements that apply to certain directed toward Surface Transportation
445, 447 (1865), it can be necessary ‘‘to construe ‘or’
Surface Transportation projects due to projects and Title I projects to ensure
as meaning ‘and,’ and again ‘and’ as meaning ‘or’’’ that recipients comply with the cap on
differences in applicable non-Federal
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(emphasis omitted). While the word ‘‘and’’ usually
is conjunctive and the literal meaning of the words cost share requirements across DOT funds associated with these eligible use
‘‘and’’ and ‘‘or’’ generally should be followed, it projects and programs. In some cases, categories. See the section titled
may be appropriate to interpret ‘‘and’’ as Reporting for additional information.
disjunctive when the statutory meaning is
DOT programs are capped in the
questionable or confusing. See also Singer, Norman
Treasury and DOT will work together to
J. et al., Sutherland Statutes and Statutory 115 See section 7 of the SLFRF Award Terms and issue guidance to provide recipients
Construction § 21:14 (7th ed. 2010). Conditions. additional clarity on how the delegation
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65006 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
of oversight and administration will to obtain approval pursuant to a specific be limited to the set of actions or
apply to Pathway One projects. requirement under titles 23, 40 or 49 or activities identified by DOT as meeting
the regulations adopted by DOT the criteria for categorical exclusion as
c. Pathway Two: Surface Transportation
thereunder. For example, a project that listed under 23 CFR 771.116(c)(1)–(22),
Projects Not Receiving Funding From
involves new construction, 771.117(c)(1)–(30), and 771.118(c)(1)–
DOT
reconstruction, resurfacing (except for (16). The recipient also must determine
This section describes Pathway Two, maintenance resurfacing), restoration, or that those actions do not involve
through which recipients may use rehabilitation of a national highway unusual circumstances, as described in
SLFRF funds for Surface Transportation must meet the design standards 23 CFR 771.116(b), 771.117(b), and
projects that are not receiving funding approved by DOT; if the recipient 771.118(b). Such unusual circumstances
from DOT, whether or not SLFRF funds wishes to vary from these standards, it include significant environmental
are blended with other sources of funds. must apply to DOT for an exception.116 impacts; substantial controversy on
This second pathway is available to all The eligibility of projects under the environmental grounds; significant
SLFRF recipients, including those that RAISE program is described in the impact on properties protected by
do not routinely apply for or receive ‘‘Notice of Funding Opportunity for the section 4(f) of the Department of
funding directly from DOT. Department of Transportation’s Transportation Act of 1966 118 or section
In this interim final rule, Treasury is National Infrastructure Investments (i.e., 106 of the National Historic
articulating a streamlined framework the Rebuilding American Infrastructure Preservation Act (NHPA); 119 or
under Pathway Two for recipients to with Sustainability and Equity (RAISE) inconsistencies with any Federal, state,
undertake certain projects that are Grant Program) under the Infrastructure or local law, requirement, or
expected to pose less financial, Investment and Jobs Act (‘‘Bipartisan administrative determination relating to
compliance, and environmental risk. In Infrastructure Law’’), Amendment No. the environmental aspects of the action.
this streamlined framework, Treasury 2’’ (2023 RAISE Grant NOFO) under ‘‘3. In considering whether the effects of a
has determined not to require recipients Other’’ in ‘‘C. Eligibility proposed action are significant,
to submit an application to, or receive Information.’’ 117 These projects include recipients should analyze the
approval from, Treasury to conduct a highway, bridge, or other road projects potentially affected environment and
project that meets certain criteria, as eligible under title 23 of the U.S. Code; degree of the effects of the action
discussed further below. public transportation projects eligible
To pursue projects outside the consistent with how a Federal agency
under chapter 53 of title 49 of the U.S. would analyze it, as described in 40
thresholds described in the streamlined Code; passenger and freight rail
framework, recipients must submit a CFR 1501.3(b). For example, an action
transportation projects; port may be significant if—in the short-term
notice of intent to Treasury through the infrastructure investments; the surface
process described further below. or the long-term and either individually
transportation components of an airport or cumulatively—it greatly alters or
Treasury will evaluate the projects project eligible for assistance under part
included in these notices of intent, impacts planned growth or land use for
B of subtitle VII of title 49 of the U.S. the area; requires the relocation of large
along with comments to this interim Code; intermodal projects; projects to
final rule, to design and implement the numbers of people; has a strong effect
replace or rehabilitate a culvert or on any natural, cultural, recreational,
framework for approving these projects. prevent stormwater runoff; projects
For information, refer to the section historic, or other resource; significantly
investing in surface transportation impacts air, noise, or water quality;
titled Pathway Two: Notice of Intent for facilities that are located on Tribal land;
Projects Outside Streamlined greatly affects travel patterns; or has
and other surface transportation
Framework. some other form of environmental
infrastructure projects that the Secretary
As summarized earlier, Treasury has impact that is significant.
of Transportation considers to be
determined to adopt a streamlined Without the streamlined framework,
necessary to advance the goals of the
approach for projects that qualify for the recipients likely would not be able to
RAISE program—including public road
RAISE grant program and that meet engage within required timelines in the
and non-motorized projects that are not
criteria that indicate lower risk. Projects types of projects that Congress has
otherwise eligible under title 23 of the
eligible under the DOT RAISE program authorized.120 As approximately 30,000
U.S. Code, transit-oriented development
are among the types of projects added SLFRF recipients could seek to use
projects, mobility on-demand projects
by the 2023 CAA as eligible uses of that expand access and reduce funds for hundreds of Surface
SLFRF. Under the RAISE program, as transportation cost burden, and Transportation projects under Pathway
detailed in the RAISE Notice of Funding intermodal projects. Two, application of the statutory and
Opportunity, recipients must submit For a RAISE-eligible project to qualify regulatory approval requirements to
applications to DOT and receive for the streamlined approach, it must such a volume of projects likely would
approval from DOT for their proposed satisfy the following criteria: preclude recipients from carrying out
projects. • Contribute no more than $10 such projects while meeting the
In this streamlined approach, million in SLFRF funds. The recipient’s statutory deadlines for obligation and
Treasury has determined not to require contribution of SLFRF funding to the expenditure of funds. By contrast,
recipients to submit an application to, project under Pathway Two must not Treasury expects far fewer recipients to
or receive approval from, Treasury to exceed $10 million. seek to use SLFRF funds for higher-risk
conduct a project that would be eligible • Limited to activities that typically projects involving greater complexity,
under the RAISE grant program and do not have a significant environmental given the approaching obligation
meets the other criteria applicable to the impact. The entire project scope must deadline of December 31, 2024. The
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streamlined framework, as would
118 See 23 U.S.C. 138.
normally be required when DOT 116 See 23 CFR part 625.
117 U.S. Department of Transportation, FY 2023 119 See 54 U.S.C. 306108.
administers the program pursuant to the 120 Although Treasury is only adopting the
RAISE Grants Notice of Funding Opportunity,
RAISE Notice of Funding Opportunity. https://www.transportation.gov/sites/dot.gov/files/ streamlined approach for projects eligible for the
Depending on the nature of the project, 2023-02/RAISE%202023%20NOFO% RAISE program, as discussed above, this program
a recipient may nevertheless be required 20Amendment2.pdf. includes most eligible types of projects.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65007
approval requirements apply to Surface Environmental risk is addressed by the a wide range of projects including: road
Transportation projects that do not meet requirement to qualify for one of the repairs, sidewalk installment and
the above streamlined framework NEPA categorical exclusions, absent any replacement, bike and pedestrian trails,
criteria, and Treasury will design a unusual circumstances, which is cross- pedestrian bridges, replacement of
process for recipients seeking to finance referenced in the third criterion. existing vehicle bridges, intermodal or
larger projects, based in part on the Categorical exclusions (absent unusual transit-oriented infrastructure build-
comments to this interim final rule, as circumstances) represent the class of outs, marine facility investments, and
discussed further below. actions that DOT has determined, after railway repairs and expansion. These
Recipients using SLFRF funds for an review by the Council on Environmental projects were generally focused on
eligible project under Pathway Two Quality, do not typically individually or maintenance or upgrades of existing
must maintain records to support their cumulatively have a significant effect on infrastructure and thus were
determination that the project meets the the human environment and for which, significantly less likely to expand the
relevant requirements and the criteria therefore, neither an environmental overall footprint of surface
described above, including qualifying as assessment nor an environmental transportation projects. This suggests
an ‘‘eligible project’’ under the RAISE impact statement is normally required that these types of projects tend to carry
grant program, not exceeding $10 under DOT’s environmental review fewer complexities and are the types of
million in SLFRF funds, and being process.122 Further, the risk of a project Surface Transportation projects with
limited to activities that typically do not being ineligible for a specific DOT which nearly all SLFRF recipients are
have a significant environmental impact program is less of a concern under familiar as part of the normal course of
as outlined above. Recipients should be Pathway Two than it would be under maintaining surface transportation in
prepared to attest to having completed certain specific DOT programs, given their respective geographic areas.
these determinations as part of their that the scope of eligible projects as Approximately half of TIGER, BUILD,
ongoing reporting to Treasury. Treasury added by the 2023 CAA is so wide. and RAISE awards under $10 million
will amend its reporting guidance to There is generally less risk of a recipient fund transportation infrastructure; the
provide reporting requirements not having the financial or technical other half are planning or research
applicable to projects conducted under capabilities to complete a project in the grants. Treasury observed in its review
Pathway Two. case of a project that would meet the that nearly 80% of the transportation
Treasury aligned the streamlined $10 million threshold. infrastructure awards under $10 million
framework for projects under Pathway As noted above, projects eligible did not meaningfully expand the
Two with the projects available under under the RAISE grant program footprint of existing infrastructure.
the RAISE grant program because these substantially overlap with the projects Furthermore, of the awards that may
projects substantially overlap with the available under the other programs have required a footprint expansion,
projects available under the other referenced in section 602(c)(5)(B) of the nearly half of those awards were for bike
programs referenced in section Social Security Act, and the program is and pedestrian trails and bridges, which
602(c)(5)(B) of the Social Security Act. available on a competitive basis to most are expected to be less environmentally
Furthermore, the RAISE program’s SLFRF recipients. These projects, impactful, time intensive, and complex
availability on a competitive basis to therefore, represent the types of projects than new roads, vehicle bridges, rail
most SLFRF recipients means that the that SLFRF recipients may be expected lines, or multimodal infrastructure.
program and its requirements are to undertake under Pathway Two, and Based on this analysis, nearly 90% of
already familiar to many recipients, Treasury qualitatively reviewed recent awards did not require an expansion of
enabling them to quickly and clearly RAISE grants as well as earlier grants the footprint of a project and over 75%
assess the eligibility of a proposed awarded through the similar TIGER and of projects were maintenance or upgrade
project and meet the obligation and BUILD programs, covering fiscal years oriented. When reviewing awards above
expenditure deadlines. 2012 through 2022, to develop a better $10 million, Treasury found increasing
Based on Treasury’s initial understanding of the types of projects complexity among awards that was not
conversations with DOT and that recipients may choose to present in significant numbers below
stakeholders with an interest in Surface undertake.123 Treasury observed that the $10 million threshold. This
Transportation projects, it is Treasury’s projects funded by these grants complexity involved awards that
expectation that compliance with the generally present reduced financial crossed multi-jurisdictional boundaries
streamlined framework will complexity and compliance risk and are or significantly expanded the footprint,
substantially address the risks and narrower in scope. Adjusted for such as bridge reconstruction and
policy concerns associated with projects inflation, applicants awarded less than widening over a major river between
that the requirement to submit an $10 million in TIGER, BUILD, or RAISE two states and a project for a
application for DOT approval under the grant funding have generally carried out multimodal transportation center.
RAISE program is meant to address. Although compliance with the
The requirement to obtain DOT objective is not relevant to the SLFRF program, streamlined framework criteria does not
under which recipients are provided funds by alone address these risks as fully as
approval allows DOT to assess whether Treasury in advance for projects of their own
the project meets eligibility choosing.
agency review of the project would,
requirements, whether a recipient has 122 See 23 CFR 771.116, 771.117, and 771.118. Treasury believes it reasonable to permit
the financial and technical capability to 123 The TIGER, BUILD, and RAISE grant programs projects funded with $10 million or less
design and carry out the project, are discretionary grants awarded by DOT to fund in SLFRF funds and that fit within the
road, rail, transit, and port projects that promise to DOT NEPA categorical exclusions to go
whether the recipient has received achieve national objectives. The programs have
forward without the application of
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required permits and will comply with different names but share similar goals and
applicable law, and how the project will eligibility requirements. The names reflect the approval requirements to enable
impact the environment.121
changing priorities and themes of the DOT over recipients to successfully pursue these
time. The programs were first created in 2009 as projects within the time remaining in
part of the American Recovery and Reinvestment
121 Given that RAISE is a competitive grant Act of 2009 and have since funded hundreds of the program.
program, the approval process also involves the projects in all 50 states, the District of Columbia, Pathway Two: Notice of Intent for
selection of the most meritorious projects, but this and Puerto Rico. Projects Outside Streamlined
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65008 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
Framework. As described earlier, this section) and Title I projects requirements to projects under Pathway
Treasury recognizes that recipients may (described in the following section), Two not qualifying for the streamlined
want to use SLFRF funds (without any taken together. For example, an SLFRF framework at a later date, following
funding from DOT) to pursue projects recipient with an allocation of $20 review of the comments to this interim
that do not meet the three criteria for the million would have $10 million (as $10 final rule and the notices of intent
streamlined framework described above million is greater than 30% of the submitted by recipients.
(i.e., a project not eligible under the allocation, or $6 million) to direct to Pathway Two: Application of Titles
RAISE program, a project above the $10 Surface Transportation projects and 23, 40, and 49 of the U.S. Code. The
million threshold, or a project including Title I projects. If this recipient chose to 2023 CAA provides that, except as
activities that do not fall within the expend $10 million toward a Surface otherwise determined by the Secretary,
categorical exclusions). To do so, Transportation project under the the requirements of titles 23, 40, and 49
recipients must submit a notice of intent streamlined framework in Pathway of the U.S. Code apply to SLFRF funds
to Treasury. The notice of intent must Two, it would have expended the full used for Surface Transportation
be submitted to NOI-SLFRF@ amount of SLFRF funds available under projects. Generally, the requirements
Treasury.gov and is due by December the cap and would not be able to pursue provided within the following sections
20, 2023. Ideally, the notice of intent any additional Surface Transportation of titles 23, 40, and 49 apply to
will provide the following information: projects or any Title I projects. recipients’ use of SLFRF funds under
• Project description, including Recipients using SLFRF funds under Pathway Two, because these sections
description of how the project meets the Pathway Two must also comply with govern the types of Surface
applicable requirements under the the requirement that SLFRF funds Transportation projects that recipients
relevant Surface Transportation supplement and not supplant other may undertake pursuant to the 2023
program; funds, described earlier in this interim CAA:
• Dollar value of SLFRF-financed final rule. Also as described earlier in • Title 23: All parts of title 23
portion of the project, including this interim final rule, for Surface • Title 40: Chapters 141 and 145
confirmation that the SLFRF-funded Transportation projects, recipients must • Title 49: Chapters 53, 55, 67, 471, and
portion will not exceed the greater of obligate funds by December 31, 2024, subtitle V
$10 million or 30% of the recipient’s and expend funds by September 30,
More specifically, applicable
total SLFRF award; 2026. In the section that follows, this
provisions include those relating to the
• Total expected project cost; interim final rule describes how the
following requirements:
• Presence of other Federal funding; requirements of NEPA and titles 23, 40,
• Status of NEPA review; • Underlying project requirements.
and 49 of the U.S. Code apply to SLFRF
• Recipients’ plans to source the For example, if a recipient intends to
funds used for Surface Transportation
project in accordance with the Buy projects under Pathway Two. use SLFRF funds under Pathway Two
America requirements set forth in titles Pathway Two: NEPA. As described for an INFRA project that would be
23, 40, and 49 of the U.S. Code, as above, recipients using funds for eligible under title 23 (as contemplated
applicable; Surface Transportation projects that by the RAISE program), then in addition
• Brief assessment of project qualify for the streamlined framework to complying with the requirements
readiness, including recipient’s under Pathway Two, and that are established in the RAISE NOFO, the
assessment of its ability to obligate and therefore not subject to approval recipient must also comply with the
expend funds for the SLFRF-financed requirements, are not required to project eligibility and execution
portion of the project in accordance conduct NEPA environmental reviews. requirements that govern the INFRA
with the December 31, 2024 obligation Recipients are reminded, however, that program, set forth at 23 U.S.C. 117.
deadline and September 30, 2026, projects supported with payments from • Design, planning, construction,
expenditure deadline; and SLFRF may still be subject to NEPA operation, maintenance, vehicle weight
• Brief assessment of recipient’s review and other environmental statutes limit, and toll requirements with respect
institutional, managerial, and financial such as section 106 of the NHPA that to particular projects. For a discussion
capability to ensure proper planning, impose conditions on a Federal agency’s of planning requirements specifically
management, and completion of the approval of a project if they are also related to STIPs and TIPs, please see
project. funded by other Federal financial below.
Treasury will evaluate the projects assistance programs or have certain • Location requirements for particular
included in these notices of intent, Federal licensing or registration projects. For example, pursuant to 23
along with comments to this interim requirements. In addition, a project that U.S.C. 133(c), recipients of the Surface
final rule, to design and implement a qualifies for the streamlined framework Transportation Block Grant program
framework for approving these projects. may still be subject to limitations or may not undertake a project on a road
prohibitions as a result of the functionally classified as a local road or
d. Pathway Two: Applicable a rural minor collector unless the road
application of other environmental
Requirements was on a Federal-aid highway system on
statutes.
Recipients using SLFRF funds under For projects under Pathway Two January 1, 1991, subject to certain
Pathway Two must comply with certain outside of the streamlined framework, exceptions. Recipients using SLFRF
requirements and restrictions. These recipients must submit a notice of intent funds for projects pursuant to sections
requirements and restrictions are in as outlined above, and the requirements 602(c)(5)(B)(iv) and 603(c)(6)(A) of the
addition to the eligibility criteria of NEPA and other environmental laws, Social Security Act as added by the
applicable to the streamlined Pathway such as section 106 of the NHPA, that 2023 CAA, which provided that projects
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Two framework discussed above. As impose limits on a Federal agency’s eligible under the Surface
described earlier in this interim final approval of a project, apply to these Transportation Block Grant program are
rule, recipients may only use the greater Surface Transportation projects. eligible uses of the SLFRF, must comply
of 30% of their award and $10 million Treasury will provide additional with the location requirements of 23
(not to exceed their award) for Surface information about the application and U.S.C. 133(c) with respect to such
Transportation projects (described in administration of environmental projects. Recipients seeking to use funds
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65009
under the streamlined framework under Transit Administration (FTA), Federal of the U.S. Code do not apply to
Pathway Two are reminded that the Railroad Administration (FRA), or other recipients’ use of SLFRF funds for
‘‘public road and nonmotorized projects relevant DOT administrations. For Surface Transportation projects under
not otherwise eligible under title 23’’ example, for projects that ordinarily Pathway Two when such requirements
prong of the 2023 RAISE NOFO would would be overseen by FHWA, would conflict with the existing SLFRF
include local road projects. applicable Federal laws include those framework or otherwise are likely to
• Project approval requirements. The set forth in title 23 of the U.S. Code, preclude recipients from exercising the
approval requirements of titles 23, 40, chapters 141 and 145 of title 40 of the additional authorities provided by the
and 49 of the U.S. Code apply to U.S. Code (if undertaking a project statute. For these reasons, the following
Pathway Two projects other than those related to the completion of a types of provisions generally do not
that qualify for the streamlined designated route of the Appalachian apply:
framework described above. Treasury Development Highway System), chapter • Grant size requirements.
has determined not to require recipients 67 of title 49 of the U.S. Code (if Limitations on the size of grants that
to submit an application to, or receive undertaking a project related to national DOT can award to grantees do not apply
approval from, Treasury to conduct a culvert removal, replacement, or to SLFRF recipients using funds to carry
project that would be eligible under the restoration), and applicable out Surface Transportation projects. For
RAISE grant program and meets the regulations.124 For projects that example, under the Rural Surface
criteria of the streamlined framework of ordinarily would be overseen by the Transportation Grant Program, DOT
Pathway Two. As discussed above, FTA, applicable Federal laws include generally may only award grants in
depending on the nature of the project, the requirements of chapters 53, 55, and amounts not less than $25 million.127
a recipient may nevertheless be required 67 of title 49 of the U.S. Code and SLFRF recipients are not subject to this
to obtain approval pursuant to a specific chapter VI of title 49 of the Code of funding minimum when using SLFRF
requirement under titles 23, 40 or 49 or Federal Regulations. For projects that funds for projects eligible under the
the regulations adopted by DOT ordinarily would be overseen by the Rural Surface Transportation Grant
thereunder. FRA, applicable Federal laws include Program. These limitations conflict with
• Procurement requirements. For those described in chapters 55 and 67 the SLFRF statutory framework and are
example, the requirements of 23 U.S.C. and subtitle V of title 49 of the U.S. likely to preclude recipients from
112 generally apply. Please see Code. exercising the additional authorities
discussion below in the section titled Restrictions that apply to projects provided by the statute: they apply by
Pathway Two: Buy America regardless of the source of funds of the their terms to DOT rather than to
Requirements for a discussion of the project apply as they would to any other recipients, and recipients have already
specific applicability of Buy American project carried out by a recipient. For received their SLFRF payments from
requirements under 23 U.S.C. 313 and example, the design and construction Treasury. Instead, recipients are subject
the Infrastructure Investment and Jobs standards set forth in 23 CFR part 625 to the aggregate limit on the use of
Act. apply to construction, reconstruction, SLFRF for Surface Transportation
• Wage and labor requirements. For resurfacing (except for maintenance projects and Title I projects discussed
example, the requirements of 23 U.S.C. resurfacing), restoration, or above. Recipients wishing to use the
113, imposing Davis-Bacon prevailing rehabilitation of a highway that is part streamlined framework for a particular
wage protections for highway projects, of the national highway system, project are also limited to using $10
apply. regardless of what funds are used for million of the SLFRF for such project.
• Compliance requirements. such activities.125 For all of the • Allocation requirements that
Compliance provisions apply to the requirements under titles 23, 40, and 49 require states to distribute funds
extent that they require recipients to that apply to recipients’ use of funds to received under certain programs to their
establish and maintain measures to undertake projects under this local governments or to spend funds
oversee the eligible projects that they framework, the associated DOT received under certain programs for the
are undertaking. regulations also apply, unless Treasury benefit of particular areas. Treasury has
• Definitions of terms used in the states otherwise.126 determined for example, that the
provisions above. Pathway Two: Inapplicable requirements of 23 U.S.C. 133(h) are not
In addition, the RAISE program requirements of title 23, 40, and 49 of applicable to the SLFRF program, as
includes eligibility for projects with the U.S. Code. The Secretary has they conflict with the SLFRF statutory
applicable requirements that are found determined that certain sections of the framework and are likely to preclude
outside of titles 23, 40, and 49. If a relevant chapters of titles 23, 40, and 49 certain recipients from exercising the
recipient would like to use SLFRF funds additional authorities provided by the
for a project eligible under the RAISE 124 For an illustrative list of the other applicable statute. The 2023 CAA amendments
program but governed by laws outside laws, rules, regulations, executive orders, polices, make clear that SLFRF recipients are
titles 23, 40, and 49, the general guidelines, and requirements as they relate to a permitted to use funds for projects
principles described above for titles 23, RAISE grant project overseen by the FHWA, see carried out by the recipient itself.
https://www.transportation.gov/grants/raise/raise-
40, and 49 will apply, and recipients fy2022-fhwa-exhibits-october-18-2022. Furthermore, all SLFRF recipients are
may ask Treasury for more detail about 125 See 23 CFR 625.3(d). Application of these eligible to use their funds for Surface
the specific requirements that apply to requirements to projects funded under the SLFRF Transportation projects, so it is
the particular project. includes the provision for determinations by the unnecessary to require states to further
Recipients using SLFRF funds for Division Administrator in certain instances as
provided for by 23 CFR 625.3(e).
distribute amounts for the specific
Surface Transportation projects under benefit of their localities that may not
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126 The 2023 CAA provides that the requirements
Pathway Two must meet the relevant of titles 23, 40, and 49 of the U.S. Code apply to receive DOT funding directly. Finally,
requirements outlined above, which funds used for Surface Transportation projects, even if Treasury were to apply these
will depend on the project type and except as otherwise determined by the Secretary. allocation requirements to the SLFRF
Treasury is also applying the associated regulations
whether the project ordinarily would be because they generally inform and provide context program, a state that wanted to use
overseen by the Federal Highway for how to apply with the requirements set forth in
Administration (FHWA), Federal the statute. 127 See 23 U.S.C. 173(i).
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65010 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
SLFRF funds for a project eligible under context on how specific projects fit States.130 Recipients generally must
a program subject to an allocation within broader transportation satisfy the Buy America requirements of
requirement could in most if not all investments. The requirement that titles 23, 40, and 49 of the U.S. Code
cases avoid the requirement by citing a certain projects be addressed in these when funds are used on Surface
different program without an allocation planning documents, however, is Transportation projects under Pathway
requirement as the authority for its uses inconsistent with the 2023 CAA Two. However, recipients are not
of funds. amendments’ provision of authority to required to satisfy the Buy America
• Non-Federal cost-share local governments themselves to requirements in the case of Surface
requirements. As discussed under undertake Surface Transportation Transportation projects meeting the
Pathway One, titles 23, 40, and 49 projects with funds on hand rather than criteria for streamlined projects under
include cost-share requirements that through funding overseen by state or Pathway Two that result in lower-risk
generally apply to projects under regional entities and therefore would uses of funds. Treasury expects that
transportation programs. However, likely preclude certain recipients from recipients may seek to use funds for
recipients using SLFRF funds for exercising the additional authorities hundreds of lower-risk projects, and
Surface Transportation projects under provided by the statute. Accordingly, application of the Buy America
Pathway Two are not required to these planning requirements do not requirements to such a volume of
contribute cost-sharing or matching apply to recipients’ use of SLFRF funds projects likely would preclude
funds alongside those SLFRF funds. for Surface Transportation projects recipients from carrying out such
This approach is consistent with the under Pathway Two. projects while meeting the statutory
way recipients spend SLFRF funds deadlines for obligation and
However, as discussed above,
under the 2022 final rule, which does expenditure of funds. Treasury expects
requirements that apply to projects
not require recipients to provide cost that developing the recipient
regardless of the source of funds of the
sharing or matching funds in order to compliance process and addressing
project apply as they would to any other
use their SLFRF funds.128 If Treasury requests for waivers for potentially
were to apply cost-share requirements to project carried out by a recipient.
hundreds of lower-risk projects in time
the SLFRF funds used in Pathway Two, Pursuant to 23 CFR 450.218(h), a STIP
for recipients to carry out such projects
recipients would be required to source must contain all regionally significant
while meeting the statutory deadlines
additional matching funds before being projects requiring an action by the
for obligation and expenditure of funds
able to carry out a Surface FHWA or FTA despite source of funds,
could inhibit recipients’ ability to use
Transportation project, which would and must also contain (if appropriate
SLFRF funds in the time remaining in
frustrate the flexibility provided by the and included in any TIPs), all regionally
the program in line with the flexibility
2023 CAA and inhibit recipients’ ability significant projects proposed to be
provided by the statutory framework. By
to use funds already received prior to funded with Federal funds, among
contrast, Treasury expects far fewer
the approaching obligation and others. 129 For this reason, if a project
recipients to seek to use SLFRF funds
expenditure deadlines. receiving SLFRF funds under this
for higher-risk projects involving greater
• Reporting requirements that would framework is regionally significant and
complexity, in light of the approaching
normally apply when DOT provides requires an action by the FHWA or the
obligation deadline of December 31,
funding for a project. SLFRF recipients FTA, it will still be required to be
2024, and expenditure deadline of
generally are not required to report their included in the STIP or TIP. If a project
September 30, 2026. The Buy America
use of SLFRF funds for a project under receiving SLFRF funds under this
requirements apply to Surface
Pathway Two to DOT or any other framework is included in a TIP, for
Transportation projects that do not meet
agency other than Treasury. Instead, informational and conformity purposes,
the criteria, and Treasury will work
recipients are required to provide a it also may be required to be included
with recipients seeking to fund projects
detailed accounting of their uses of in the STIP.
outside of the streamlined framework,
funds and report such information as Pathway Two: Buy America as discussed further above.
Treasury shall require pursuant to Requirements. Under titles 23 and 49 of Pathway Two: Projects that
section 602(d)(2) and 603(d). Treasury the U.S. Code, programs overseen by the demonstrate progress towards a state of
will amend its reporting guidance to FHWA, FTA, and FRA are subject to good repair or support achieving
provide reporting requirements Buy America domestic content performance targets. Consistent with the
applicable to projects conducted under procurement preference provisions requirements applicable to Pathway
Pathway Two. related to steel, iron, and manufactured One, states using SLFRF funds under
Pathway Two: STIP and TIP. The goods. These Buy America provisions Pathway Two for Surface Transportation
statutory provisions of titles 23, 40, and provide that DOT shall not obligate projects eligible under title 23 of the
49 related to STIP and TIP inclusion, funds to carry out projects under titles U.S. Code, or that otherwise would be
generally do not apply to SLFRF funds 23 and 49 unless steel, iron, and subject to the requirements of title 23,
used for Surface Transportation projects manufactured products used in such must either demonstrate progress in
under Pathway Two. Typically, project are produced in the United achieving a state of good repair or
applicants for RAISE funding need to support the achievement of one or more
demonstrate that a project that is 129 ‘‘Regionally significant project’’ is defined in
performance targets. This requirement
required to be included in the relevant 23 CFR 450.104 to mean ‘‘a transportation project would not apply when states use SLFRF
state, metropolitan, and local planning . . . that is on a facility that serves regional
transportation needs (such as access to and from the funds for Surface Transportation
documents has been or will be included area outside the region; major activity centers in the projects eligible under programs
in such documents. Such local planning
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region; major planned developments such as new authorized by laws outside of title 23 of
documents include the STIP or TIP. retail malls, sports complexes, or employment the U.S. Code, for the reasons discussed
This requirement for inclusion in centers; or transportation terminals) and would
normally be included in the modeling of the above.
planning documents provides useful metropolitan area’s transportation network. At a
minimum, this includes all principal arterial 130 See 23 U.S.C. 313 for FHWA, 49 U.S.C. 5323
128 See section 7 of the SLFRF Award Terms and highways and all fixed guideway transit facilities for FTA, and 49 U.S.C. 22905(a) and 49 U.S.C.
Conditions. that offer an alternative to regional highway travel.’’ 24395 for FRA.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65011
Pathway Two: Limitations on requirement that SLFRF funds associated with these eligible use
Operating Expenses. Consistent with the supplement and not supplant other categories.
requirements described in Pathway One, funds, described earlier in this interim As discussed in the 2022 final rule,
recipients may not use SLFRF funds final rule. recipients may continue to use SLFRF
under this pathway for operating As discussed above, the requirements funds available under the revenue loss
expenses in projects that would be of titles 23, 40, and 49 of the U.S. Code eligible use category to satisfy non-
eligible under Urbanized Formula include cost-share requirements that Federal matching requirements. See the
Grants, Fixed Guideway Capital generally apply to projects under 2022 final rule for further information.
Investment Grants, Formula Grants for transportation programs, and these Question 1: What, if any, additional
Rural Areas, State of Good Repair requirements apply to the use of SLFRF clarification should Treasury provide as
Grants, or Grants for Buses and Bus for Surface Transportation projects. relates to determining whether Surface
Facilities. For this purpose, operating However, given the specific provision in Transportation projects are eligible uses
expenses do not include preventive sections 602(c)(5)(A) and 603(c)(6)(A) of of the SLFRF?
maintenance activities. Public the Social Security Act that SLFRF may Question 2: What additional
transportation projects eligible under be used to meet the non-Federal share information or clarification is needed
chapter 53 of title 49 of the U.S. Code requirements of the three programs for recipients to understand the
are eligible projects under the RAISE referenced above, if a recipient uses applicable program requirements for
grant program and therefore are SLFRF funds to satisfy the non-Federal Pathway One for Surface Transportation
available for SLFRF recipients to pursue share requirements for projects eligible projects?
under Pathway Two, pursuant to other under one of those programs, DOT will Question 3: What are the advantages
requirements as outlined above. Given not treat the SLFRF funds as Federal and disadvantages of the eligibility
the statutory limitation on using SLFRF funds for this limited purpose and will criteria for the streamlined framework
funds for operating expenses on projects credit SLFRF toward applicable cost- outlined in Pathway Two? Do these
eligible under the above-mentioned share or non-Federal match criteria adequately account for project
programs, such limits also apply to requirements accordingly. For example, risk in a manner that is both accurate
projects eligible under the programs under the INFRA program, Federal and administrable? Why or why not?
with statutory limitations on using funds other than the participating DOT Question 4: What additional
SLFRF funds for operating expenses that funds generally do not satisfy non- information or clarification is needed
recipients may pursue under Pathway Federal cost share requirements, and for recipients to understand the
Two. This limitation does not apply to Federal funds together must contribute applicable program requirements for
other Surface Transportation projects not more than 80% of a project’s costs. Pathway Two?
under Pathway Two or to other uses of SLFRF funds used to cover the Question 5: With respect to Pathway
SLFRF funds, including under the applicable non-Federal cost share Two, what information should Treasury
revenue loss eligible use category. requirements of a project under Pathway consider in developing the framework
Three will not be treated as Federal for projects outside the streamlined
e. Pathway Three: Non-Federal Share funds and therefore are not considered
Requirements for Certain Surface framework, in addition to the
against the 80% limit on Federal information that recipients will provide
Transportation Projects funding sources. Recipients using in the notices of intent? What types of
This section discusses the third SLFRF funds to satisfy non-Federal cost
pathway for using SLFRF funds for projects do recipients intend to pursue
share requirements under Pathway
Surface Transportation projects. under Pathway Two that would not be
Three must consult with DOT to
Sections 602(c)(5)(A) and 603(c)(6)(A) of covered by the streamlined approach?
understand the applicable non-Federal
the Social Security Act provide that cost share requirements and how SLFRF 2. Title I Projects
SLFRF funds may be used to satisfy funds may be used for these purposes. Background
non-Federal share requirements for Although the statute expressly
projects eligible under INFRA Grants permits recipients to use SLFRF funds The 2023 CAA amends sections 602
(23 U.S.C. 117), Fixed Guideway Capital to satisfy non-Federal cost share and 603 of the Social Security Act to
Investment Grants (49 U.S.C. 5309), or requirements for the above-referenced permit recipients to use SLFRF funds
Mega Grants (49 U.S.C. 6701), as well as programs, as with any use of funds to for certain infrastructure projects,
projects eligible for credit assistance meet non-Federal cost share including projects eligible under Title I
under the TIFIA program (23 U.S.C. requirements, the requirements of the Housing and Community
chapter 6). Recipients may also use associated with the project, as Development Act of 1974 (Title I
SLFRF funds to repay a loan provided administered by DOT, continue to apply projects).131 As described earlier in this
under the TIFIA program. These eligible to the use of all the funding for the interim final rule, recipients may only
activities are referred to as Pathway project unless otherwise provided by use the greater of 30% of their SLFRF
Three. DOT. award and $10 million, not to exceed a
Recipients may use SLFRF funds Under Pathway Three, recipients will recipient’s allocation, for all Surface
under Pathway Three for projects that be required to comply with the relevant Transportation projects (described in
have, or will prior to the SLFRF existing DOT reporting requirements the prior section) and Title I projects
obligation deadline, receive funding associated with the Surface (described in this section) taken
from DOT under one of the above- Transportation project for which they together.
referenced programs. Recipients must are using SLFRF funds for non-Federal In title I of the HCDA (Title I),
comply with the requirement that they share requirements. Recipients will be Congress consolidated several complex
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may only use the greater of 30% of their required to report certain information to and overlapping Federal assistance
award and $10 million for Surface Treasury, including the amount of programs focused on community
Transportation projects and Title I SLFRF funds directed toward Surface development into a more flexible block
projects, taken together. Recipients Transportation projects and Title I of funds distributed through a formula
using SLFRF funds under Pathway projects, to ensure that recipients
Three must also comply with the comply with the cap on funds 131 See 42 U.S.C. 5301 et seq.
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65012 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
allocation, known as the Community category remain unchanged. As such, environmental reviews.137 Accordingly,
Development Block Grant (CDBG) and recipients wishing to pursue these types it is more feasible for recipients to
administered by the Department of of projects with SLFRF funds may want determine to use SLFRF funds for Title
Housing and Urban Development to continue doing so under the public I projects, to submit required
(HUD).132 Annual allocations through health and negative economic impacts environmental information prior to
the CDBG program are based on eligible use category rather than undertaking projects, and to obtain
population and various other measures, complying with the additional Treasury approval, all in time for the
including poverty, age of housing, and requirements of the new Title I projects 2024 obligation and 2026 expenditure
housing overcrowding.133 CDBG funds eligible use category. deadlines, even if a large number of
are available to states and units of The new Title I projects eligible use SLFRF recipients decide to spend funds
general local government (cities and category makes additional activities under this eligible use category. Second,
counties); Tribal governments are available to SLFRF recipients, up to the as mentioned above, many of the
eligible for Indian CDBG (ICDBG) grants cap on funds for this eligible use eligible activities under Title I projects
that are awarded on a mainly category. As described in the section are already available to SLFRF
competitive basis in the form of single titled Use of Funds to Satisfy Non- recipients under the public health and
purpose grants, and occasionally on a Federal Share Requirements, this negative economic impacts eligible use
noncompetitive, first-come first-served includes using SLFRF funds for non- category, including using funds for
basis to alleviate imminent threats to Federal match or cost-share capital expenditures, for which
public health or safety.134 requirements of a Federal financial recipients are able to use their full
There are varied ways that different assistance program in support of SLFRF award toward eligible uses and
government entities may be eligible for activities that would be eligible under are not subject to the limitations
CDBG.135 To reflect the structure of the Title I.136 By permitting state, local, and discussed in this section. In the case of
SLFRF program, under which each Tribal governments to use SLFRF funds Surface Transportation projects,
recipient received an individual award for Title I projects, the statute provides recipients are only able to undertake
from Treasury and expends funds on its additional flexibility for recipients to similar activities as a government
own behalf, Treasury’s implementation use SLFRF funds to meet the needs of service through the revenue loss eligible
of the Title I eligible use category for their communities and provides clarity use category. For these reasons,
non-Tribal recipients aligns to HUD’s for recipients that may already have Treasury anticipates that recipients will
treatment of entitlement grants under experience pursuing projects under undertake fewer projects under the Title
CDBG. For Tribal governments using Title I. The Title I requirements for I projects eligible use category.
SLFRF funds under the Title I eligible programs administered by HUD are Prohibition on Supplanting Other
use category, Treasury’s implementation already familiar to many SLFRF Funds. The 2023 CAA provides that
generally reflects HUD’s treatment of recipients, which will help state, local, funds used for Title I projects shall
Tribal government grantees under and Tribal governments to supplement ‘‘supplement, and not supplant, other
ICDBG single purpose grants, as further funding more easily for existing projects Federal, State, territorial, Tribal, and
described below. under Title I or to pursue new projects local government funds (as applicable)
As discussed in the 2022 final rule, using a familiar set of program otherwise available for such uses.’’ The
various types of activities that are requirements. Below, this interim final phrase ‘‘other . . . funds available for
eligible under the CDBG program are rule discusses eligible projects and such uses’’ refers to (i) in the case of
also eligible uses of the SLFRF program applicable requirements for the Title I non-Federal funds, non-SLFRF funds
under the public health and negative eligible use category. that have been obligated for specific
economic impacts eligible use category, Unlike Pathway Two for Surface uses that are eligible under the Title I
including homeownership assistance, Transportation projects, discussed in eligible use category or (ii) in the case
investing in affordable housing the previous section, the interim final of Federal funds, funds that a Federal
preservation and repairs, and rule does not provide a ‘‘streamlined agency has committed to a particular
rehabilitation or demolition of blighted framework’’ for Title I projects. Title I project pursuant to an award agreement
or abandoned properties. As noted projects differ from Surface or otherwise.
above, the 2023 CAA did not alter the Transportation projects in several Under prong (i), for the purpose of
existing four eligible use categories meaningful ways. First, as discussed identifying non-Federal funds that have
under the SLFRF program, and the above, the project approval and been obligated for specific uses, the
eligible uses articulated in the 2022 certification requirements of titles 23, definition of ‘‘obligation’’ used in the
final rule in the public health and 40, and 49 of the U.S. Code and title I 2022 final rule applies, which is ‘‘an
negative economic impacts eligible use of the HCDA generally must be satisfied order placed for property and services
prior to recipients obligating and and entering into contracts, subawards,
132 See 42 U.S.C. 5301. expending funds on Surface and similar transactions that require
133 See 42 U.S.C. 5306.
Transportation projects and Title I payment.’’ 138 As such, under prong (i),
134 See 24 CFR 1003.100(a).
projects. However, under CDBG, there is
135 HUD’s implementation of CDBG varies based
no formal approval on a project-by 137 While CDBG activities are outlined in
on the type of CDBG grantees, with specific planning documents submitted to HUD, these
treatment for entitlement grants (including project-basis by HUD other than in the planning documents cover a grantee’s programmatic
metropolitan city and urban county grantees), case of projects subject to certain plans for all HUD awards (not just those authorized
nonentitlement funds (including HUD-administered under Title I) on an annual basis with respect to
Small Cities and Insular Area programs), and state- 136 SLFRF funds also remain available under the action plans and a multi-year basis with respect to
administered CDBG nonentitlement funds. For revenue loss eligible use category up to the amount consolidated plans. Based on the structure of the
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example, in the state CDBG program, a state’s of revenue lost due to the pandemic for the SLFRF program, certification and approval
primary function is to administer CDBG grants for provision of government services. As described in requirements associated with these plans are
non-entitlement units of government, rather than to the 2022 final rule, the provision of government irrelevant for the SLFRF program. In any event,
undertake eligible activities as grantees themselves. services means any service traditionally provided HUD does not affirmatively approve CDBG grantees’
Meanwhile, entitlement grantees of CDBG are able by a government, which means that recipients planning documents, but the agency may
to expend their CDBG allocations directly and could also choose to use SLFRF funds in the disapprove plans as necessary.
without being subject to certain limitations that revenue loss eligible use category for community 138 See Final Rule FAQ 13.17 for additional
exist under the state CDBG program. development activities. information about obligations. This approach
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65013
a recipient may not de-obligate funds 1.5 times their annual allocation sitting • Acquisition of certain real property
that were obligated for specific uses that in their line of credit at the U.S. for a public purpose, subject to certain
are eligible under this section (e.g., by Treasury’’—continue to apply to CDBG limitations;
cancelling, amending, renegotiating, or funds.139 Accordingly, Treasury • Disposition of certain property,
otherwise revising or abrogating a encourages SLFRF recipients that are subject to certain limitations and rules;
contract, subaward, or similar also CDBG grantees to continue to spend • Acquisition, construction,
transaction that requires payment) and their CDBG funds in compliance with reconstruction, rehabilitation, or
replace those previously obligated funds such requirements. installation of public facilities and
with SLFRF funds under this eligible improvements, clearance and
use category. a. Eligible Title I Projects remediation activities;
The restriction in prong (ii), on Recipients may use SLFRF funds for • Public services, subject to the
replacing funds that a Federal agency Title I projects, which includes any limitation discussed below;
has committed to a particular project projects that are currently eligible • Interim assistance where immediate
pursuant to an award agreement or activities, programs, and projects under action is required for certain activities
otherwise, applies to all funding sources CDBG and ICDBG, as described further such as street repair, and costs to
covered by the commitment. Prong (ii) below. Principally, Title I authorizes complete an urban renewal project
does not apply to HUD funds provided CDBG and ICDBG, as well as several under Title I;
to a CDBG grantee for activities other grant programs with largely • Relocation payments for relocated
included in its annual action plan, overlapping eligible activities as families, businesses, nonprofit
because imposition of this restriction CDBG.140 As discussed below, grants organizations, and farm operations,
would be inconsistent with the made under these other Title I programs under certain conditions;
substantial flexibility that the CDBG do not cover eligible activities • Payments to housing owners for
program otherwise provides its grantees. incremental to what is allowable under loss of certain rental income;
For example, a CDBG grantee’s annual CDBG and ICDBG, and thus their • Certain housing services;
action plan reflects planned spending • Acquisition, construction,
incorporation here would not make any
on activities across multiple HUD- reconstruction, rehabilitation, or
additional eligible uses under Title I
administered programs, and grantees installation of privately owned utilities;
available to SLFRF recipients.
have significant flexibility to amend • Rehabilitation and reconstruction of
plans to reflect adjusted planned In the Title I eligible use category, housing, conversion of structures to
spending throughout the year. recipients may use SLFRF funds for any housing, or construction of certain
Thus, a recipient may not de-obligate of the activities listed in section 105(a) housing;
funds and replace those previously of the HCDA (42 U.S.C. 5305(a)). When • Homeownership assistance;
obligated funds with SLFRF funds carrying out these activities, recipients • Technical assistance to entities to
under this eligible use category. Nor should comply with the related increase capacity to carry out CDBG-
may a recipient use SLFRF funds to eligibility requirements set forth at 24 eligible projects;
replace Federal or non-Federal funds CFR 570.201–570.209 with respect to • Assistance to certain institutions of
identified in a Federal commitment, recipients that are not Tribal higher education to carry out eligible
such as an award agreement. governments and 24 CFR 1003.201– activities;
However, a recipient may use SLFRF 1003.209 with respect to Tribal • Administration activities including
funds (1) to provide additional funding governments. Recipients may refer to general management, oversight, and
to a project without reducing the additional HUD guidance for further coordination costs, fair housing
amount of other funds obligated to such information about the projects eligible activities, indirect costs, and submission
project, thereby funding additional under CDBG, including guidance about of applications for Federal programs;
activities or expanding the scope of complying with the national objectives • Planning activities including the
projects; (2) to undertake a project for and other program requirements.141 development of plans and studies,
which funds have not been previously Below is an illustrative list of Title I policy planning, and management and
obligated or identified in a Federal projects for which recipients may use capacity building activities; and
commitment, such as an award SLFRF funds pursuant to section 105(a) • Satisfying the non-Federal share
agreement. For example, if a recipient of the HCDA: requirements of a Federal financial
had obligated non-SLFRF funds for the assistance program in support of
construction of a community garden, 139 CDBG grantees have a line of credit that activities that would be eligible under
SLFRF funds under this eligible use includes the amount of CDBG funds that are the CDBG and ICDBG programs, as
available for those grantees. According to program discussed below.
category could be used to provide rules on timely expenditures, ‘‘a grantee cannot
additional resources to that project or to have more than 1.5 times their annual allocation
Use of SLFRF Funds to Satisfy Non-
undertake a separate eligible project, but sitting in their line of credit at the U.S. Treasury.’’ Federal Match of Cost-Share
the recipient could not terminate or Moreover, if a grantee ‘‘chronically has more than Requirements Under Title I. As noted
1.5 times their allocation in their line of credit as above, recipients may use SLFRF funds,
renegotiate an existing contract for the of 60 days prior to the end of the grantee’s program
construction of that garden and use year, HUD can withhold future grants until the
subject to the cap on funds for this
SLFRF funds to replace the funds grantee effectively spends their existing resources.’’ eligible use category, to meet the non-
previously obligated for that purpose. For more information, see Basically CDBG for Federal match or cost-share
Entitlements, Chapter 11: Financial Management, requirements of a Federal financial
SLFRF recipients that are also CDBG Section 11.7 (‘‘Timely Expenditure of Funds’’)
grantees (but not ICDBG grantees) (Sept. 2017), available at https://www.hud.gov/sites/
assistance program in support of
should note that HUD program documents/DOC_16480.PDF. activities that would be eligible under
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requirements related to timely 140 See 42 U.S.C. 5301 et seq. the CDBG and ICDBG programs and
expenditures of CDBG funds—providing 141 See e.g., Department of Housing and Urban would comply with all applicable CDBG
Development, Guide to National Objectives and and ICDBG requirements. Recipients
that ‘‘a grantee cannot have more than Eligible Activities for CDBG Entitlement
Communities, Chapter 2: Categories of Eligible
should analyze the projects and
applies a concrete standard that is known to SLFRF Activities (Jan. 2014), available at https:// activities for which they intend to use
recipients and administrable by Treasury. www.hud.gov/sites/documents/DOC_17133.PDF. SLFRF funds to meet non-Federal share
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65014 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
requirements to confirm that the project they are not separately eligible • Section 108 Loan Guarantee
or activity would constitute an eligible categories of activities under Title I for Program 148
activity under section 105 of the HCDA purposes of the SLFRF program. For While the 2023 CAA amended the
and would comply with HUD’s example, recipients may be familiar SLFRF program to permit recipients to
statutory, regulatory, and other with CDBG-Disaster Recovery (CDBG– use SLFRF funds for Title I projects,
requirements applicable to CDBG and DR) and CDBG-Mitigation (CDBG–MIT). some of these programs address HUD’s
ICDBG activities. These forms of supplemental assistance programmatic authorities rather than
As articulated in the 2022 final rule, appropriate emergency supplemental expanding eligible uses available to
SLFRF funds remain available under the funds on a case-by-case basis for HUD grantees. Therefore, these
revenue loss eligible use category to specific disasters and permit recipients, programs are not relevant for purposes
meet non-Federal matching in addition to their regular CDBG credit of implementing this Title I eligible use
requirements. For discussion of the use line or ICDBG grants, to spend funds on under the SLFRF program. For example,
of SLFRF funds for non-Federal certain eligible activities related to Special Purpose Grants are
matching requirements under the disaster relief, long-term recovery, competitively awarded by HUD to the
revenue loss eligible use category or as restoration of housing and same recipients as CDBG and ICDBG, as
otherwise authorized by statute, see the infrastructure, economic revitalization well as an expanded set of recipient
2022 final rule. For discussion of the and mitigation. When additional funds types (e.g., Historically Black Colleges
use of SLFRF funds for non-Federal are appropriated through CDBG–DR or and Universities as direct recipients of
matching requirements for Surface CDBG–MIT, HUD is typically granted grants) to undertake certain of the
Transportation projects, see the Surface authority to grant waivers and impose activities available under CDBG. This
Transportation projects section. alternative requirements to those program expands HUD’s grantmaking
Use of Loans and Revolving Loan existing Title I requirements that govern authority rather than expanding eligible
Funds Towards Eligible Activities Under the CDBG and ICDBG programs. Such uses available to grantees under Title I,
Title I. CDBG and ICDBG grantees waivers or alternative requirements are and therefore is not included as a new
generally may utilize financing vehicles not applicable to this eligible use eligible project under the SLFRF
such as loans and revolving loan funds category, as this supplemental program. Similarly, the John Heinz
to carry out eligible activities. For assistance is not a project under Title I Neighborhood Development Program
example, sections 105(a)(14), (22), and and such authority is not provided for authorizes HUD to provide Federal
(25) of the HCDA provide that CDBG in the HCDA, but rather in the matching funds to eligible neighborhood
recipients may use their funds to individual CDBG–DR or CDBG–MIT development organizations on a
provide loans or finance revolving loan appropriations. competitive basis, expanding the
funds for certain activities.142 Nonetheless, recipients considering entities to which HUD may award grants
Recipients using SLFRF funds for using SLFRF funds to respond to both rather than expanding eligible uses for
Title I projects may extend credit, by the near- and long-term consequences of Title I grantees.
making loans using SLFRF funds or disasters are reminded that the eligible Similarly, the Section 108 Loan
using SLFRF to establish revolving loan activities under section 105 of Title I are Guarantee Program authorizes HUD to
funds, to support activities that are very flexible and may address certain provide loan guarantees to recipients of
eligible uses of funds under CDBG. Such disaster relief and disaster mitigation CDBG, as opposed to authorizing an
activities are subject to Treasury’s needs. Accordingly, SLFRF recipients eligible activity by grantees
existing guidance on loans under the may pursue such activities under the themselves.149 The Urban Development
SLFRF program,143 as well as Treasury’s Title I projects eligible use as long as all Action Grant program authorizes HUD
guidance on program income, in light of requirements are met. In addition, to issue grants to cities and urban
the nature of the SLFRF program where recipients may provide emergency relief counties experiencing severe economic
these funds are available for a limited from the physical and negative distress to help stimulate economic
time, not on a recurring basis, and economic impacts of natural disasters, development activity needed to aid in
subject to approaching obligation and including mitigation activities, through economic recovery by undertaking
expenditure deadlines.144 As a the eligible use category discussed in eligible activities under CDBG, as
reminder, extensions of credit with the section titled Emergency Relief from enumerated under section 105(a) of the
SLFRF funds are subject to program Natural Disasters of this interim final HCDA.150 Both of these programs
requirements as described in the rule. address HUD’s programmatic authority
Applicable Requirements for Title I and do not provide HUD grantees
Other Title I Programs Not Available
Projects section of this interim final rule eligible activities beyond those already
Under the SLFRF Program. Certain
and the cap on funds that applies to this available under CDBG and ICDBG, and
sections of Title I authorize HUD to
eligible use category. therefore these programs are not
make grants and loans to governments
Other Supplemental Assistance. From relevant for purposes of implementing
under different programs in addition to
time to time, Congress appropriates this Title I eligible use under the SLFRF
CDBG. These programs are listed below
additional funding for certain activities program.
and, other than the section 108 Loan Additionally, HUD can award
that are generally available under CDBG Guarantee program, are considered
but are limited to addressing specific imminent threat grants under ICDBG to
inactive by HUD: Tribal governments. Imminent threat
challenges that communities face. Even
though these activities largely mirror • Special Purpose Grants 145 grants alleviate an imminent threat to
those eligible under Title I, this • Urban Development Action Grant public health or safety that requires
Program 146 immediate resolution and are awarded
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supplemental assistance is not
authorized under Title I. Accordingly, • John Heinz Neighborhood only after the HUD Office of Native
Development Program 147 American Programs determines that
142 See 42 U.S.C. 5305(a).
143 See id. 145 See 42 U.S.C. 5307. 148 See 42 U.S.C. 5308.
144 See id. at FAQ 13.11. How does Treasury treat 146 See 42 U.S.C. 5318. 149 See 42 U.S.C. 5308.
program income? 147 See 42 U.S.C. 5318a. 150 See 42 U.S.C. 5318.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65015
such conditions exist and if funds are the projects listed above are not eligible SLFRF. In the section that follows, this
available for such grants.151 Grants uses of SLFRF funds as a Title I project, interim final rule discusses the
made under this program do not they still may be eligible uses of SLFRF requirements of Title I that apply to
authorize eligible activities incremental funds under other SLFRF eligible use recipients using SLFRF funds under this
to what is allowable under ICDBG single categories. See the 2022 final rule for eligible use category and the
purpose grants, and thus their additional information. As with all requirements of Title I that do not apply
incorporation here would not make any other eligible uses in the SLFRF to recipients using SLFRF funds under
additional eligible uses under Title I program, the general restrictions on use this eligible use category.
available to SLFRF recipients. outlined in the 2022 final rule apply to Treasury has determined not to apply
Accordingly, imminent threat grants are SLFRF funds used for Title I projects, certain requirements of Title I when
not separately eligible as Title I projects. unless the applicable requirements of such requirements conflict with the
Given the eligible activities available to Title I provide otherwise. existing SLFRF framework or otherwise
ICDBG grantees under imminent threat b. Applicable Requirements for Title I are likely to preclude recipients from
grants are the same as are available Projects exercising the additional authorities
under single purpose grants, Tribal provided by the statute. For example,
government recipients of SLFRF are still Recipients using SLFRF funds for and as discussed above, Treasury
able to use SLFRF funds for projects Title I projects must comply with determined that the project-level
they generally could fund with ICDBG certain requirements and restrictions. approval and certification requirements
imminent threat grants under the Title These requirements and restrictions are generally must be satisfied prior to
I projects eligible use category. As in addition to the eligibility
recipients obligating and expending
described further below, the requirements discussed above. As
funds on Title I projects. Under CDBG,
applicability of program requirements described earlier in this interim final
while projects are outlined in planning
for Tribal governments will mirror the rule, recipients may only use the greater
documents submitted to HUD, there is
program requirements grantees comply of 30% of their award and $10 million
no formal approval on a project-by
with under ICDBG single purpose (not to exceed their award) for Title I
project-basis by HUD other than projects
grants. As noted above, recipients may projects (described in this section) and
subject to certain environmental
provide emergency relief from the Surface Transportation projects
reviews.155 Accordingly, only these
physical and negative economic impacts (described above), taken together. Also
project-level requirements must be
of natural disasters, including as described earlier in this interim final
satisfied, as described further below. On
mitigation activities, through the rule, for Title I projects, recipients must
the other hand, recipients are not
eligible use category discussed in the obligate funds by December 31, 2024
required to provide the Title I
section titled Emergency Relief from and expend funds by September 30,
certification requirements that apply at
Natural Disasters of this interim final 2026. In the section that follows, this
the consolidated and annual planning
rule. interim final rule describes how the
level, because that level of planning and
Ineligible Activities Under Title I. The requirements of Title I, NEPA, and the
the associated certifications conflict
HUD regulations implementing the associated implementing regulations
with the SLFRF program framework
eligible activities under CDBG and apply to SLFRF funds used for Title I
under which recipients already have
ICDBG provide that certain projects are projects.
The 2023 CAA provides that, except funds in hand and are authorized to use
generally not eligible CDBG activities, funds for discrete projects, rather than
and accordingly, SLFRF recipients may as otherwise determined by the
Secretary, the requirements of Title I being required to design an annual
not use SLFRF funds for those process for how funding will be used.
projects.152 The activities that are and NEPA apply to SLFRF funds used
for Title I projects. Accordingly, state, Furthermore, to require recipients to
generally ineligible under CDBG and prepare consolidated and annual plans
ICDBG are the following, subject to local, and Tribal governments that use
SLFRF funds for Title I projects and undergo a public review process
certain exceptions as described more likely would preclude recipients from
fully at 24 CFR 570.207 with respect to generally must comply with Title I
requirements and the associated exercising the additional authorities
SLFRF recipients that are not Tribal provided by the statute, under which
governments and 24 CFR 1003.207 with regulations, except where noted
below.154 In addition, recipients must recipients have limited time remaining
respect to Tribal government recipients: to determine how to obligate and
comply with NEPA requirements, as
• Buildings or portions thereof used for expend funds. In contrast, certain of the
implemented by Title I and the
the general conduct of government applicable requirements discussed
associated HUD regulations, and as
• General government expenses below also would apply at the aggregate
• Political activities adapted to the SLFRF program by
CDBG funding level, like the primary
• Purchase of equipment Treasury. Unless Title I provides
objective, but those requirements are
• Operating and maintenance expenses otherwise or Treasury has otherwise
more readily adaptable as project-level
• New housing construction clarified, SLFRF recipients should
requirements, consistent with the
• Income payments continue to comply with SLFRF
SLFRF framework, and Treasury has
Recipients may reference the regulations and guidance as found in
taken that approach as described further
‘‘Activities Specified as Ineligible’’ the 2022 final rule, SLFRF Compliance
below. The requirements of Title I
section of HUD’s Guide to National and Reporting Guidance, and other
generally apply to recipients using
Objectives and Eligible Activities for guidance released by Treasury for
SLFRF funds for Title I projects, with
CDBG Entitlement Communities for some modification to harmonize the
Communities, Chapter 2: Categories of Eligible
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more information.153 However, while Activities, 2–87 (Jan. 2014), available at https:// provisions with the SLFRF framework,
www.hud.gov/sites/documents/DOC_17133.PDF. as discussed further below. The
151 See 24 CFR 1003.100(a).
152 See 24 CFR 570.207 and 1003.207.
154 Treasury is applying the regulations associated
statutory requirements include the
with the applicable provisions of Title I because following:
153 See e.g., Department of Housing and Urban they generally inform and provide context for how
Development, Guide to National Objectives and to apply with the requirements set forth in the
Eligible Activities for CDBG Entitlement statute. 155 See 42 U.S.C. 5304(g) and 24 CFR part 58.
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65016 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
• Activity eligibility requirements, implement the statutory definition by Under the HUD CDBG regulations,
including the following requirements aligning low- and moderate-income non-Tribal CDBG grantees may elect to
articulated in section 105 of the designations for CDBG activities to apply the 70% requirement to their
HCDA: Section 8’s very low- and low-income CDBG funds expended over a 1-, 2-, or
Æ CDBG Primary Objective thresholds respectively,160 which HUD 3-year period, and a majority of these
requirement publishes annually.161 CDBG grantees CDBG grantees elect a 3-year period. For
Æ CDBG National Objectives are then required to comply with the example, a non-Tribal CDBG grantee
requirement requirements of 24 CFR 570.200(a)(3) that elects a 3-year period must use at
Æ Public Services Cap and its cross-referenced provisions to least 70% of its CDBG funds over that
• Definitions relevant for project determine compliance with the primary 3-year period to principally benefit low-
administration, oversight, and objective, including requirements and moderate-income persons. For
execution associated with area benefit activities, ICDBG grants, the 70% requirement
• Procurement requirements limited clientele activities, housing applies to each single purpose grant.164
• Wage and labor requirements activities, and job creation or retention Treasury is implementing the primary
• Environmental requirements and activities. objective requirement by requiring
related project approval requirements With respect to Tribal governments, recipients to direct at least 70% of their
(environmental certifications) HUD awards ICDBG single-purpose SLFRF funds used for Title I projects
For each of the applicable grants on a competitive basis and over the course of the SLFRF program
requirements, the associated HUD determines that an applicant sufficiently to projects that principally benefit low-
addresses the primary objective based, and moderate-income persons. Non-
regulations generally will apply as well.
in part, on data made available by the Tribal recipients must refer to low- and
Specifically, HUD regulations related to
Federal government, including HUD, moderate-income thresholds as defined
these requirements apply where they:
and on data provided by Tribes. by HUD regulations at 24 CFR 570.3,
• Enumerate and clarify eligible Specifically, HUD regulations for ICDBG which align such income thresholds to
activities under CDBG grantees implement the statutory data published most recently by HUD
• Specify cost caps or the method to definition of low- and moderate-income for Section 8 low- and very low-income
calculate costs caps persons by defining a ‘‘low and levels. To determine if an activity
• Direct recipients to the applicability moderate income beneficiary’’ as a principally benefits low- and moderate-
of other Federal laws and regulations family, household, or individual whose income persons, the requirements of 24
CDBG Primary Objective. Section income does not exceed 80 percent of CFR 570.200(a)(3) apply.
101(c) of the HCDA describes the the median income for the area, as Tribal government recipients must
‘‘primary objective’’ of Title I as ‘‘the determined by HUD, with adjustments refer to the low- and moderate-income
development of viable urban for smaller and larger households or thresholds as defined by HUD at 24
communities, by providing decent families.162 The regulations permit HUD CFR. 1003.4, and to the requirements of
housing and a suitable living to adjust the ceiling based on HUD’s 24 CFR 1003.208 to determine if an
environment and expanding economic findings that such variations are activity principally benefits low- and
opportunities, principally for persons of necessary because of unusually high or moderate-income persons, subject to the
low and moderate income.’’ 156 Section low household or family incomes. following clarification. Recognizing that
101(c) of the HCDA further provides ICDBG grantees then follow the some Tribes do not have access to the
that not less than 70% of the aggregate provisions of 24 CFR 1003.208 to above-referenced Census Bureau data
funds provided to non-Tribal CDBG determine compliance with the primary and may not have the ability to conduct
grantees under section 106 of the HCDA objective, including requirements a survey within the short-time frame
shall be used for the support of associated with area benefit activities, necessary to meet SLFRF obligation
activities that benefit persons of low and limited clientele activities, housing deadlines, Treasury is providing an
moderate income. Under ICDBG, Tribal activities, and job creation or retention alternative to satisfy the definition of
governments must use not less than activities. In each of these activity areas, ‘‘low and moderate income’’ as part of
70% of each single purpose grant to the regulations provide criteria for the complying with the primary objective
principally benefit low- and moderate- activity to be considered to benefit low- requirement. Instead of relying on
income persons.157 This 70% threshold and moderate-income persons. In some Census data, Tribal governments may
requirement is referred to as the instances, the criteria rely on Census demonstrate that beneficiaries of Title I
‘‘primary objective’’ requirement. Bureau data or instead Tribes may assistance are low or moderate income
Section 102(a)(20) of the HCDA provide survey data.163 based on an attestation by the Tribe that
defines low- and moderate-income these beneficiaries are receiving or are
persons to mean families and 160 See 24 CFR 570.3. eligible to receive needs-based services
individuals whose incomes do not 161 HUD’s Office of Policy Development and provided by the Tribe. Needs-based
Research publishes annual income limits for certain services are defined as services
exceed 80% of median income of the housing-related programs, and develops these limits
area involved, based on data published based on Median Family Income estimates and Fair
administered by the Tribal government
most recently by HUD, with adjustments Market Rent area definitions. See https:// on the basis of an individual’s income.
for smaller and larger families; 158 it also www.huduser.gov/portal/datasets/il.html#2022_ Tribal governments undertaking Title I
data. projects may rely on this self-attestation,
authorizes HUD to establish income 162 See 24 CFR 1003.4.
thresholds that are higher or lower in lieu of relying on Census Bureau or
163 See e.g., 24 CFR 1003.208(a)(3), which states
because of unusually high or low that ‘‘in determining whether there is a sufficiently
Section 8 data, when complying with
incomes in such area.159 HUD
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large percentage of low- and moderate-income
regulations for CDBG grantees persons residing in the area served by an activity reflect current relative income levels in an area, or
. . . the most recently available decennial census where census boundaries do not coincide
information shall be used to the fullest extent sufficiently well with the service area of an activity,
156 See 42 U.S.C. 5301(c).
feasible, together with the Section 8 income limits may conduct (or have conducted) a current survey
157 See 24 CFR 1003.208.
that would have applied at the time the income of the residents of the area to determine the percent
158 See 42 U.S.C. 5302(a)(20)(a). of such persons that are low and moderate income.’’
information was collected by the Census Bureau.
159 See 42 U.S.C. 5302(a)(20)(b). Grantees that believe that the census data does not 164 See 24 CFR 1003.208.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65017
the primary objective requirement. If a The total amount of SLFRF funds and other financial resources are not
Tribal government prefers to used for Title I projects from the cost available to meet such needs.167
demonstrate that its project satisfies the incurred date of December 29, 2022 ICDBG grantees administering single
primary objective in accordance with through September 30, 2026 must meet purpose grants are not subject to the
the terms of 24 CFR 1003.4 and the primary objective requirements as same requirement that activities must
1003.208, rather than providing the described above. By applying these align with at least one national
alternative attestation, the Tribe may do requirements over the course of the objective. As discussed above, Tribal
so. As described earlier in this section, SLFRF program, this interim final rule governments administering an ICDBG
recipients may use SLFRF funds to aligns CDBG primary objective single purpose grant must use at least
supplement, but not supplant, an compliance for SLFRF funds used for 70% of each grant to principally benefit
existing CDBG or ICDBG project. Title I projects with the obligation and low- and moderate-income persons, but
Accordingly, where Tribal governments expenditure deadlines on SLFRF funds otherwise may use their ICDBG grant
use SLFRF funds to supplement funds in general. Although CDBG state and aligned to purposes as approved in their
for existing ICDBG projects, the Tribal local government grantees have the ICDBG application.168
government may rely on HUD’s prior option to elect their own 1-, 2-, or 3- Treasury is implementing the national
determination of compliance with the year reporting periods, and ICDBG objectives requirement by providing that
requirements of 24 CFR 1003.208 for the Tribal grantees apply the CDBG primary for non-Tribal SLFRF recipients, each
existing project, since HUD would have objective requirement for their specific Title I project funded by SLFRF funds
already vetted the existing projects must satisfy at least one CDBG national
grant allocations, SLFRF recipients are
during the ICDBG application process. objective in accordance with relevant
As discussed in the 2021 interim final not required to obligate or expend
SLFRF funds on an annual basis and HUD regulations set forth at 24 CFR
rule, many Tribal communities have 570.208.169 Thus all recipients, except
households with a wide range of income instead must comply with obligation
and expenditure deadlines over the full for Tribal governments, using SLFRF
levels due in part to non-Tribal member, funds for Title I projects must meet at
high income residents living in the period of performance, with flexibility
to adjust and add programs prior to the least one national objective as described
community.165 Further, mixed income above, and compliance with this
communities, with a significant share of obligation deadline. This alignment
requirement will be assessed separately
Tribal members at the lowest levels of makes the CDBG primary objective
from existing CDBG national objectives
income, are often not included in requirement administrable by SLFRF
requirements applicable to CDBG
eligible qualified census tracts. recipients over the SLFRF period of
grantees. Tribal government recipients
Additionally, as discussed in the 2022 performance and coordinates related
that use SLFRF funds for Title I projects
final rule, Tribal governments may face reporting with SLFRF program closeout
are not subject to this requirement,
administrability challenges with timelines. Recipients may reference
reflecting that there is no requirement
operationalizing an income-based Chapter 4 of HUD’s Guide to National
for Tribal government grantees under
standard, and data on incomes of Tribal Objectives and Eligible Activities for
ICDBG to use their funds for any
members in a respective Tribe is not CDBG Entitlement Communities for
specific national objective outside of the
readily available as presently this data more details on how to satisfy the primary objective. For more information
is not collected at the Tribal primary objective requirement with on the CDBG national objectives, see
membership level.166 their funds. Recipients’ use of SLFRF Chapter 3 of HUD’s Guide to National
For these reasons, using decennial funds for Title I projects and their Objectives and Eligible Activities for
Census Bureau data in determining if an compliance with the primary objective CDBG Entitlement Communities.170
activity benefits low- and moderate- will be assessed separately from HUD’s Applicability of Public Services Cap.
income beneficiaries as described in 24 assessment of CDBG grantees’ Section 105(a)(8) of the HCDA provides
CFR 1003.208(a)(3) would present compliance with requirements for use of that the provision of public services is
similar challenges for many of the their CDBG funds. an eligible activity under Title I 171 but
SLFRF Tribal government recipients, CDBG National Objectives. In that not more than 15% of a grantee’s
where location-based Census data may
addition to describing the CDBG
inaccurately portray the income and
primary objective requirement, section 167 See 24 CFR 570.208(a)–570.208(c) and
economic conditions of a Tribe. Department of Housing and Urban Development,
101(c) of the HCDA also provides that
Additionally, requiring Tribes to Guide to National Objectives and Eligible Activities
states and units of general local for CDBG Entitlement Communities, Chapter 3:
conduct and provide survey data on
governments may only use CDBG funds Meeting a National Objective (Jan. 2014), available
residents of their areas would frustrate
their ability to utilize SLFRF funds for for the support of community at https://www.hudexchange.info/sites/onecpd/
development activities that are directed assets/File/CDBG-National-Objectives-Eligible-
Title I projects within the obligation and Activities-Chapter-3.pdf.
expenditure timelines provided by the toward certain specific objectives, 168 See 24 CFR 1003.208.
2023 CAA. If a Tribe delivers needs- which are referred to as the national 169 See CFR 570.208 and Department of Housing
based services (e.g., housing services, objectives. HUD regulations provide that and Urban Development, Guide to National
the national objectives of the CDBG Objectives and Eligible Activities for CDBG
child assistance, etc.), the Tribe Entitlement Communities, Chapter 2: Categories of
generally also has verified income program are to: Eligible Activities (Jan. 2014), available at https://
eligibility of the recipients of those • Benefit low- and moderate-income www.hudexchange.info/sites/onecpd/assets/File/
services, as Tribes ordinarily restrict persons, CDBG-National-Objectives-Eligible-Activities-
Chapter-2.pdf.
eligibility for these activities based on • Prevent or eliminate slums or 170 See Department of Housing and Urban
the income of applicants. blight, and Development, Guide to National Objectives and
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Eligible Activities for CDBG Entitlement
165 See 86 FR 26786 (May 17, 2021). • Meet other community Communities, Chapter 3: Meeting a National
166 For instance, data from the American development needs having a particular Objective (Jan. 2014), available at https://
Community Survey is based on geographical urgency because existing conditions www.hudexchange.info/sites/onecpd/assets/File/
location rather than Tribal membership. U.S. CDBG-National-Objectives-Eligible-Activities-
Census Bureau, My Tribal Area, https://
pose a serious and immediate threat to Chapter-3.pdf.
www.census.gov/Tribal/Tribal_glossary.php. the health or welfare of the community 171 See 42 U.S.C. 5305(a)(8).
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65018 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
CDBG allocation may be spent on requirement.175 The planning and As described in the 2022 final rule,
eligible ‘‘public services’’ activities.172 administrative cap is applied annually recipients can also use SLFRF funds
This 15% public services cap is applied to CDBG grantees and on a grant-by- under the public health and negative
annually to CDBG grantees and on a grant basis for ICDBG grantees. economic impacts category to support a
grant-by-grant basis for ICDBG grantees. Treasury is implementing this broad set of uses to restore and support
Treasury is implementing this requirement by providing that not more public sector employment, including
requirement by providing that not more than 20% of SLFRF funds used for Title filling vacancies or adding additional
than 15% of SLFRF funds used for Title I projects over the course of the SLFRF employees up to 7.5% over pre-
I projects over the course of the SLFRF program may be spent on planning and pandemic levels. Furthermore,
program may be spent under the ‘‘public administrative costs, in accordance with recipients may use earned income from
services’’ category, in accordance with relevant HUD regulations set forth at 24 interest earned on SLFRF payments to
relevant HUD regulations set forth at 24 CFR 570.200(g), 570.205, and 570.206 defray administrative expenses of the
CFR 570.201(e) for non-Tribal recipients for non-Tribal recipients and at 24 CFR program.177 Finally, recipients may use
and at 24 CFR 1003.201(e) for Tribal 1003.205 and 1003.206 for Tribal funds under the revenue loss eligible
recipients. Thus, the total amount of recipients. Thus, the total amount of use category for the provision of
SLFRF funds used for Title I projects for SLFRF funds used for Title I projects for government services, which may
costs incurred from December 29, 2022 costs incurred from December 29, 2022 include various activities, such as
through September 30, 2026 must meet through September 30, 2026 must meet administrative expenses.
the public services cap as described the planning and administrative costs Labor Standards Requirements.
above, and compliance with this cap as described above, and compliance Section 110 of the HCDA provides that
requirement will be assessed separately with this requirement will be assessed Federal prevailing wage rate
from existing CDBG and ICDBG public separately from existing CDBG and requirements in accordance with the
services cap compliance on CDBG and ICDBG planning and administrative Davis-Bacon Act and other regulations
ICDBG grantees. The approach to align costs cap compliance for CDBG and related to contractors and
public services cap compliance to ICDBG grantees. As discussed above, subcontractors per 40 U.S.C. 3145 apply
SLFRF program obligation and recipients are not required to obligate or to construction work financed by Title
expenditure deadlines and the expend SLFRF funds on an annual basis I.178 HUD regulations and guides clarify
accompanying rationale mirror the and instead must comply with that these labor standards include the
approach taken for SLFRF recipients’ obligation and expenditure deadlines Davis-Bacon Act, the Copeland Anti-
compliance to the CDBG primary over the full period of performance, Kickback Act, the Contract Work Hours
objective, as outlined earlier in this with flexibility to adjust and add and Safety Standards Act, and Section
section. This alignment makes the programs prior to the obligation 3 of the Housing and Urban
public services cap administrable by deadline. Accordingly, this alignment Development Act of 1968, and apply to
SLFRF recipients over the SLFRF period makes the planning and administrative CDBG projects.179 Section 107(e)(2) of
costs cap administrable by SLFRF the HCDA provides the authority to
of performance and coordinates related
recipients over the SLFRF period of waive the labor standards requirements
reporting with SLFRF program closeout
performance and coordinates related under section 110 of the HCDA for
timelines. For more information on
reporting with SLFRF program closeout ICDBG grants, and HUD waives
activities considered public services for
timelines. For more information on applicability of such labor standards for
purposes of the 15% cap, or more
activities considered planning and ICDBG grantees in 24 CFR 1003.603.
information on the public services cap
administrative costs for purposes of the Treasury is implementing this
itself, see Chapter 7 of HUD’s ‘‘Basically
20% cap, or more information on the requirement by providing that
CDBG’’ Guide.173
planning and administrative costs cap prevailing wage rate requirements in
Applicability of Planning and itself, see Chapter 11 of HUD’s accordance with the Davis-Bacon Act
Administrative Costs Cap. Section ‘‘Basically CDBG’’ Guide.176 and other labor standards applied by
105(a)(13) of the HCDA provides that While the 20% planning and HUD to construction work under Title I
the payment of reasonable administrative costs cap will apply to apply to Title I projects funded by non-
administrative costs and carrying recipients using funds for Title I Tribal recipients of the SLFRF program,
charges related to the planning and projects, recipients should note that the in accordance with HUD regulations for
execution of community development 2022 final rule provides additional Title I labor standards requirements set
and housing activities is an eligible flexibility for recipients to use SLFRF forth at 24 CFR 570.603 for non-Tribal
activity under Title I.174 HUD funds on administrative expenses. In recipients.180 SLFRF recipients are
regulations implement this provision for addition to the ability to use SLFRF
non-Tribal recipients at 24 CFR 570.205 funds for certain types of administrative 177 See Treasury’s SLFRF Final Rule FAQ 2.15:
and 570.206 and for Tribal recipients at expenses under the public health and ‘‘Can I use SLFRF funds to raise public sector wages
24 CFR 1003.205 and 206. In addition, negative economic impacts eligible use and hire public sector workers?,’’ available at
HUD regulations at 24 CFR 570.200(g) https://home.treasury.gov/system/files/136/SLFRF-
category, Treasury clarified in the 2022 Final-Rule-FAQ.pdf.
provide that non-Tribal grantees may final rule that coverage of direct and 178 See 42 U.S.C. 5310.
expend no more than 20% of any CDBG indirect administrative expenses is a 179 See Department of Housing and Urban
annual grant for planning and program permissible use of SLFRF funds under Development, Basically CDBG, Chapter 16: Labor
administrative costs. HUD regulations other eligible use categories, with Standards, Sections 16.1.1 (Sept. 2017), available at
for Tribal governments include the same https://www.hud.gov/sites/documents/CDBG
further detail provided in Treasury’s CHAPTER16.PDF.
Compliance and Reporting Guidance.
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180 In other SLFRF eligible use categories, labor
172 See 42 U.S.C. 5305(a)(8).
standards requirements pursuant to the Davis-
173 See Department of Housing and Urban 175 See 24 CFR 1003.206. Bacon Act generally do not apply to projects funded
Development, Basically CDBG for Entitlements, 176 Department of Housing and Urban solely with SLFRF funds (except for certain SLFRF-
Chapter 7: Public Services (Sept. 2017), available at Development, Basically CDBG for Entitlements, funded construction projects undertaken by the
https://www.hud.gov/sites/documents/DOC_ Chapter 11: Financial Management, Sections 11.1– District of Columbia). See Treasury’s SLFRF Final
16476.PDF. 11.2 (Sept. 2017), available at https://www.hud.gov/ Rule FAQ 6.15: ‘‘Are eligible water, sewer, and
174 See 42 U.S.C. 5305(a)(13). sites/documents/DOC_16480.PDF. broadband infrastructure projects, eligible capital
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65019
encouraged to consult HUD guidance Act (IIJA) apply to recipients substantive and procedural information
that provides general information on undertaking projects with SLFRF funds for compliance with this provision,
labor standards and directs CDBG under Title I that relate to broadband including providing that certain projects
grantees to do the following: infrastructure.189 Recipients should do not require grantees to request
• Include all applicable labor refer to program guidance, guides, and release of funds or submit a
standards language and the appropriate FAQs provided by the Department of certification.
wage decision in construction bid and Commerce’s National Before recipients use SLFRF funds for
contract documents,181 Telecommunications and Information Title I projects that trigger the
• Enforce labor standards Administration for more information environmental compliance process
requirements during construction, such about BEAD requirements.190 contemplated by Title I and 24 CFR part
as good construction management As outlined in the 2022 final rule, in 58, the SLFRF recipients must comply
techniques and issuance of notices to addition to broadband-related activities with the environmental review
proceed and payments tied to available under eligible Title I projects, requirements set forth in the HUD
compliance with the labor requirements, recipients also may undertake statute and regulations, submit a
payroll reviews, and worker broadband infrastructure projects to certification to Treasury, and receive
interviews,182 make necessary investments to expand approval. Because SLFRF funds have
• Pay any wage restitution promptly affordable access to broadband internet. already been distributed to recipients,
where underpayments of wages have Broadband projects available under the recipients are not required to submit a
occurred and are found during payroll broadband eligible use category are not request for release of funds. As noted
or other reviews,183 and subject to BEAD program requirements above, under Title I, CDBG grantees
• Maintain documentation to and there is no limit on the amount of directly or indirectly assume all
demonstrate compliance with labor SLFRF funds a recipient may dedicate responsibilities for environmental
standards requirements such as bid and to such projects. review, decision making, and action
contract documents, payroll forms, Environmental Requirements. The pursuant to NEPA, and this approach
signed statements of compliance, and 2023 CAA provides that the also applies to recipients using the
documentation of on-site job requirements of NEPA apply to SLFRF funds for Title I projects.
interviews.184 recipients’ use of SLFRF funds for Title Following issuance of this interim final
Consistent with the ICDBG program, I projects. Accordingly, and for the rule, Treasury will publish guidance
these labor standards will not apply to reasons discussed above, recipients describing the environmental
Title I projects funded by Tribal using funds for Title I projects must compliance process in greater detail,
government recipients of SLFRF satisfy NEPA environmental review including the certification’s contents
funds.185 For more information on Title requirements based on the procedures and the process for submitting it.
I labor standards requirements, see set forth in section 104(g) of the HCDA, As noted above, under the regulations
Chapter 16.1.1 of HUD’s ‘‘Basically as implemented at 24 CFR part 58, and at 24 CFR part 58, certain projects do
CDBG’’ Guide,186 HUD’s ‘‘Davis-Bacon as adapted to the SLFRF program by not require HUD grantees to submit a
and Labor Standards: Agency/ Treasury. certification or obtain HUD’s approval
Contractor Guide,’’ 187 and HUD’s Section 104(g) of the HCDA for funds to be released for a particular
‘‘Davis-Bacon and Labor Standards: authorizes the HUD Secretary, in lieu of project. Similarly, SLFRF recipients are
Contractor Guide Addendum.’’ 188 the environmental protection not required to submit certifications or
BEAD Program Requirements. The procedures otherwise applicable obtain Treasury approval for a Title I
2023 CAA provides that the pursuant to NEPA, to promulgate project that either is:
requirements of the Broadband Equity, regulations providing for the release of • An ‘‘exempt activity’’ as
Access, and Deployment (BEAD) funds for particular projects to contemplated by 24 CFR 58.34(a), or
program as outlined in section 60102 of recipients of Title I assistance who • ‘‘Categorically excluded’’ and not
the Infrastructure Investment and Jobs assume all of the responsibilities for subject to 24 CFR 58.5, as contemplated
environmental review, decision making, by 24 CFR 58.35(b), provided that the
expenditures under the public health and negative and action pursuant to NEPA. Section extraordinary circumstances described
economic impacts eligible use category, and eligible 104(g) further provides that the HUD
projects under the revenue loss eligible use category in 24 CFR 58.35(c) are not present.
subject to the Davis-Bacon Act?,’’ available at
Secretary shall approve the release of If a project meets either of the two
https://home.treasury.gov/system/files/136/SLFRF- funds for projects subject to these criteria above, recipients may begin
Final-Rule-FAQ.pdf. procedures 15 days after the grantee has using SLFRF funds for the project right
181 See Department of Housing and Urban
requested release of funds and away. Recipients should refer to HUD’s
Development, Basically CDBG for Entitlements, submitted a certification. The HUD
Chapter 16: Labor Standards, Section 16.1.2 (Sept. definition of extraordinary
2017), available at https://www.hud.gov/sites/ Secretary’s approval of the certification circumstances provided at 24 CFR
documents/CDBGCHAPTER16.PDF. is deemed to satisfy her responsibilities 58.2(a)(3).191 If a recipient determines
182 See id. at Section 16.1.3. under NEPA and other provisions of law
183 See id. at Section 16.1.4.
identified in the regulations insofar as 191 24 CFR 58.2(a)(3) defines extraordinary
184 See id. at Section 16.1.5.
those responsibilities relate to the circumstances as a situation in which an
185 See 24 CFR 1003.603.
release of funds for projects covered by environmental assessment (EA) or environmental
186 See Department of Housing and Urban
the certification. HUD regulations at 24 impact statement (EIS) is not normally required but,
Development, Basically CDBG for Entitlements, due to unusual conditions, an EA or EIS is
Chapter 16: Labor Standards, Sections 16.1.1 (Sept. CFR part 58 provide additional appropriate. Indicators of unusual conditions are:
2017), available at https://www.hud.gov/sites/ (i) actions that are unique or without precedent; (ii)
documents/CDBGCHAPTER16.PDF. 189 See 42 U.S.C. 802(c)(5)(C)(iii)(II) and
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actions that are substantially similar to those that
187 See Department of Housing and Urban 803(c)(6)(B)(iii)(II). normally require an EIS; (iii) actions that are likely
Development, Davis-Bacon and Labor Standards: 190 See Section 1.2 of NTIA’s BEAD Program to alter existing HUD policy or HUD mandates; or
Agency Contractor Guide (Aug. 2022), available at ‘‘Letter of Intent and Initial Planning Funding Grant (iv) actions that, due to unusual physical conditions
https://files.hudexchange.info/resources/ Application Guidance,’’ available at https:// on the site or in the vicinity, have the potential for
documents/Davis-Bacon-and-Labor-Standards- broadbandusa.ntia.doc.gov/sites/default/files/2022- a significant impact on the environment or in which
Agency-and-Contractor-Guide.pdf. 05/BEAD%20Planning% the environment could have a significant impact on
188 See id. 20Application%20Guidance.pdf. users of the facility.
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65020 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
that its project presents extraordinary preclude recipients from exercising the available. For example, sections 108,
circumstances, the recipient must additional authorities provided by the 111, 112, and 113 of the HCDA provide
submit a certification to Treasury and statute. HUD regulations associated with certain authorities and impose certain
receive approval prior to using SLFRF the statutory provisions noted above responsibilities on HUD that it would
funds for the project, as will be also do not apply to recipients using not make sense to impose on Treasury’s
discussed in Treasury’s forthcoming SLFRF funds for Title I projects. administration of Title I projects,
guidance regarding the environmental Prerequisite for Receiving, and including those related to providing
compliance process. Distribution of, CDBG Grants. Generally, loan guarantees, remedying
To claim an activity or project as the requirements under section 104 of noncompliance, providing grants to
exempt pursuant to 24 CFR 58.34(a), the HCDA noted above are prerequisites settle outstanding urban renewal loans,
recipients must document in writing for receiving annual CDBG allocations promulgating regulations, and reporting.
their determination that the activity or or relate to how HUD may distribute Question 1: What, if any, additional
project is exempt and meets the funds to its grantees. As discussed clarification should Treasury provide as
conditions specified for such above, the planning prerequisites and it relates to determining eligibility of
exemption. For categorically excluded associated certifications conflict with projects under the Title I eligible use, or
projects, recipients are required to the SLFRF program framework under complying with program requirements
maintain a well-organized written which recipients already have funds in such as CDBG national objectives or
record of the process and hand and are authorized to use funds for spending caps?
determinations, including those related discrete projects, rather than being
Question 2: What additional
to the evaluation of whether the project required to design an annual process for
information or clarification is needed
presents extraordinary circumstances, how funding will be used. Furthermore,
for recipients to understand Treasury’s
made with respect to the categorical to require recipients to prepare
guidance on how recipients can use
exclusion, which HUD refers to as an consolidated and annual plans and
loans and revolving loan funds to
Environmental Review Record. Treasury undergo a public review process likely
support Title I eligible uses?
will provide additional information on would preclude recipients from
the Environmental Review Record exercising the additional authorities Question 3: What if any additional
requirements following issuance of this provided by the statute, under which flexibilities would benefit recipients in
interim final rule. recipients have limited time remaining terms of the use of revolving loan funds
Inapplicable sections of Title I. This to determine how to obligate and across the SLFRF program or for
the following sections of Title I do not expend funds. While such requirements particular uses in the Title I projects
apply to SLFRF-funded Title I projects: will not apply to SLFRF funds used for eligible use category? Please include a
discussion of how additional flexibilities
• Section 103 of the HCDA (authorizing Title I projects, Treasury encourages
recipients to engage with their would comply with the December 31,
HUD to make grants)
• Sections 104(a)–(f), (h)–(j), and (l)–(m) communities on the projects they are 2024 obligation and December 31, 2026
of the HCDA (certain CDBG grant undertaking with SLFRF funds in expenditure deadlines.
prerequisites, including consolidated general. For example, certain SLFRF Question 4: What additional
plan, annual plan, plan publication, recipients are required to publish and information or clarification is needed
citizen participation, and associated submit to Treasury a Recovery Plan for recipients to understand Treasury’s
certifications; performance and performance report that must be posted guidance on how to comply with
evaluation submission to HUD; on an easily discoverable web page on environmental review requirements for
revolving loan fund distributions; the recipient’s public-facing website. Title I projects?
program income provisions applicable The Recovery Plan provides the public Question 5: What activities not
to certain CDBG grantees; eligible and Treasury both retrospective and already eligible under the public health
CDBG grantees; and community prospective information on the projects and negative economic impacts eligible
development plans) recipients are undertaking or planning use category, as articulated in the 2022
• Sections 105(b), (d), (e), and (g) of the to undertake with program funding, and final rule, are recipients interested in
HCDA (services provided by HUD; how they are planning to ensure undertaking under the Title I projects
HUD directive to establish regulations program outcomes are achieved in an eligible use category?
and guidance) effective, efficient, and equitable
III. Discussion of Revenue Loss and
• Sections 106–109 of the HCDA (HUD manner.192
HUD Programmatic Authority. Certain Program Administration Provisions
allocation and distribution
requirements; other grant programs additional provisions are not applicable The 2023 CAA codified the ‘‘standard
under Title I; and nondiscrimination to the SLFRF program because they allowance’’ discussed in the 2022 final
requirements) conflict with the SLFRF framework in rule under the revenue loss eligible use
• Sections 111–122 of the HCDA that they are only relevant in the context category. The section that follows
(noncompliance remedies; other grant of HUD’s programmatic authorities discusses the revenue loss eligible use
authorizations; administrative rather than Treasury’s administration of category as described in the 2022 final
requirements including as relates to Title I projects and recipients’ use of rule, as well as the program
reporting, duplication of benefits, and funds for the eligible projects and administration provisions to support
agency consultation; interstate activities that the statute makes recipients in understanding how this
agreements; transition provisions; interim final rule will interact with
192 Treasury publishes the Recovery Plans
emergency funding provisions) previously established elements of the
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submitted by recipients each year on its website.
As noted above and discussed further For additional detail on Treasury’s guidance on SLFRF program. As noted above, the
below, Treasury has determined not to SLFRF recipients’ compliance and reporting 2023 CAA generally did not alter the
apply the foregoing requirements of responsibilities, see https://home.treasury.gov/ existing eligible uses articulated in the
policy-issues/coronavirus/assistance-for-state-local-
Title I because such requirements and-tribal-governments/state-and-local-fiscal-
2022 final rule. Recipients may continue
conflict with the existing SLFRF recovery-funds/recipient-compliance-and-reporting- to use SLFRF funds for the eligible uses
framework or otherwise are likely to responsibilities. described under the 2022 final rule.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65021
A. Revenue Loss revenue loss by calculating revenue loss anticipation of the issuance of this
Summary of the 2022 final rule: As according to the formula or claiming up interim final rule. Treasury considered
stated above, the ARPA amended the to $10 million, not to exceed a adopting March 3, 2021, as the date that
Social Security Act to provide that recipient’s allocation. recipients may begin incurring costs
SLFRF funds may be used ‘‘for the Recipients need not make any under the new eligible uses but declined
provision of government services to the changes to their current revenue loss to do so because these eligible uses are
extent of the reduction in revenue of determination and may continue with available on a prospective basis and
such . . . government due to the their previous determination. Recipients because March 3, 2021, would be
COVID–19 public health emergency who would like to update their revenue inconsistent with the non-supplant
relative to revenues collected in the loss determination will be able to requirement applicable to the majority
most recent full fiscal year of the . . . update their revenue loss determination, of projects and activities available under
government prior to the emergency.’’ In as appropriate, through the April 2025 the new eligible uses.193
the 2022 final rule, Treasury provided reporting period. Upon update, any
As discussed earlier in this interim
two options for how recipients may prior revenue loss election will be
final rule, under the emergency relief
determine their amount of revenue loss. superseded. Recipients continue to be
from natural disasters eligible use
A recipient may claim a standard required to employ a consistent
category, recipients must comply with
allowance of up to $10 million in total, methodology across the period of
the December 31, 2024, obligation
not to exceed the recipient’s allocation, performance (i.e., choose either the
deadline and the December 31, 2026,
for the entire period of performance, or standard allowance or the full formula)
expenditure deadline articulated in the
calculate revenue loss on an annual and may not elect one approach for
2022 final rule. For Surface
basis according to the four-step formula certain reporting years and the other
Transportation projects and Title I
described in the 2022 final rule. The approach for different reporting years.
Recipients must still communicate to projects, funds must be obligated by
2022 final rule also provided additional December 31, 2024 and must be
Treasury the method for determining
clarifications, including how recipients expended by September 30, 2026. This
revenue loss, calculating according to
that are determining revenue loss expenditure deadline is three months
the formula or claiming up to
according to the formula should earlier than the December 31, 2026,
$10,000,000, not to exceed the
calculate general revenue and select expenditure deadline that applies to the
recipient’s allocation.
their calculation date. The 2022 final other eligible uses.
rule maintained Treasury’s definition of B. Program Administration Provisions The 2022 final rule provides that a
government services articulated in the cost is considered to have been incurred
1. Timeline for Use of SLFRF Funds
2021 interim final rule which provided for purposes of the December 31, 2024,
that, generally speaking, services Summary of the 2022 final rule: In the
2022 final rule, Treasury maintained the statutory deadline if the recipient has
provided by recipient governments are incurred an obligation with respect to
‘‘government services,’’ unless Treasury timeline for using SLFRF funds outlined
in the 2021 interim final rule. Recipient such cost by December 31, 2024. The
has stated otherwise. 2022 final rule defines an obligation as
The 2022 final rule also noted that may only use funds to cover costs
incurred during the period beginning ‘‘an order placed for property and
Treasury intended to amend its
March 3, 2021, and ending December services and entering into contracts,
reporting forms to provide a mechanism
31, 2024. The final rule provided that a subawards, and similar transactions that
for recipients to make a one-time,
cost shall be considered to have been require payment.’’ Treasury is
irrevocable election to utilize either the
incurred if the recipient has incurred an maintaining this definition of obligation
revenue loss formula or the standard
obligation with respect to such cost. for the new eligible uses provided in the
allowance. Treasury’s guidance and
Under the 2022 final rule, recipients 2023 CAA.
Final Rule FAQs included directions for
recipients to indicate this choice in their must expend all funds by December 31,
193 The statute’s application of the non-supplant
Project and Expenditure Reports due 2026. The 2023 CAA did not alter these provision to the Surface Transportation projects
April 30, 2022, and as described in timelines for existing eligible uses eligible use category and Title I projects eligible use
subsequent guidance, recipients were described in the 2022 final rule. The category but not to the emergency relief from
able to update their revenue loss eligible uses added by the 2023 CAA are natural disasters eligible use category makes sense
only if recipients may not use SLFRF funds to cover
election, as appropriate, in future subject to slightly different treatment, as expenses incurred prior to the enactment of the
reporting cycles through the April 2023 discussed below. 2023 CAA. The concern that recipients would
reporting period. Upon update, any Consolidated Appropriations Act, supplant, after the date of enactment, funds
prior revenue loss election was 2023: For the three eligible uses added previously dedicated to eligible uses is not
by the 2023 CAA (emergency relief from particularly relevant in the case of natural disasters,
superseded. which are generally unexpected and impose
The Consolidated Appropriations Act, natural disasters, Surface Transportation extraordinary costs on state, local, and Tribal
2023: The 2023 CAA provided SLFRF projects, and Title I projects), recipients governments.
funds may be used ‘‘for the provision of may use SLFRF funds to cover costs The use of December 29, 2022 is also supported
government services up to an amount incurred beginning December 29, 2022, by comparing the 2023 CAA amendments to the
Infrastructure Investment and Jobs Act (IIJA)
equal to the greater of— which is the date that the 2023 CAA amendments to the ARPA from November 2021. In
(i) the amount of the reduction in was enacted. Consistent with the the IIJA, Congress included a ‘‘clarification of
revenue of such . . . government due to discussion in the 2021 interim final rule authority’’ to use SLFRF funds to meet match
the COVID–19 public health emergency with respect to the original eligible uses, requirements for authorized Bureau of Reclamation
water projects. The clarification stated that the
relative to revenue collected in the most SLFRF funds are available for the new
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amendments took effect ‘‘as if included in the
recent full fiscal year of such . . . eligible uses on a prospective basis. enactment’’ of the ARPA. Accordingly, in the final
government prior to the emergency; or: Similarly, consistent with the 2021 rule, Treasury incorporated this eligible use and
(ii) $10,000,000.’’ interim final rule, permitting recipients applied the March 3, 2021 cost incurred date that
applied to all the other eligible uses in the ARPA.
Thus, the 2023 CAA codified the to incur costs beginning December 29, The absence of similar language in the 2023 CAA
framework articulated in the 2022 final 2022, provides flexibility for recipients suggests Congress did not intend to apply the same
rule that recipients may determine their that may have been incurring costs in retroactive approach.
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65022 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
2. Use of Funds for Match or Cost-Share any additional requests for information. reporting forms, Compliance and
Requirements The 2022 final rule also maintained Reporting Guidance, and User Guide to
Summary of the 2022 final rule: In the Treasury’s flexibility to extend or further describe recipients’ reporting
2022 final rule, Treasury discussed its accelerate reporting deadlines and to responsibilities for SLFRF funds
determination that SLFRF funds modify requested content for the Interim directed toward these eligible uses.
Report, Project and Expenditure reports, As described above, Treasury is
available for the provision of
and Recovery Plan Performance reports. delegating authority to DOT to oversee
government services, up to the amount
Since the publication of the 2021 and administer Surface Transportation
of the recipient’s reduction in revenue
interim final rule, Treasury issued projects under Pathway One. As such,
due to the public health emergency,
supplementary reporting guidance in recipients using SLFRF funds for such
generally may be used to meet the non-
the Compliance and Reporting Guidance projects will be required to comply with
Federal cost-share or matching
and in the User Guide: Treasury’s Portal the relevant existing DOT reporting
requirements of other Federal programs.
for Recipient Reporting (User Guide).194 requirements associated with the
The final rule also clarified that SLFRF Surface Transportation project that is
Treasury continues to issue updated
funds beyond those that are available receiving DOT funding for which they
guidance prior to each reporting period
under the revenue loss eligible use are adding SLFRF funds. DOT may
clarifying any modifications to
category for the provision of government provide additional guidance, as
requested report content.
services may not be used to meet the The Consolidated Appropriations Act, appropriate, for recipients using SLFRF
non-Federal match or cost-share 2023: Generally, recipients using SLFRF funds under Pathway One for a Surface
requirements of other Federal programs funds for the eligible uses provided in Transportation project that is receiving
other than as specifically provided for the 2023 CAA will be required to report funding from DOT. Recipients using
by statute. For example, as discussed in on these uses of funds in their Project SLFRF funds under Pathway One will
the 2022 final rule, section 40909 of the and Expenditure reports and Recovery also be required to report certain
Infrastructure Investment and Jobs Act Plan Performance reports. For example, information to Treasury, including the
provides that SLFRF funds may be used recipients using funds to provide amount of SLFRF funds directed toward
to meet the non-Federal match emergency relief from natural disasters Surface Transportation projects and
requirements of any authorized Bureau will generally be required to provide Title I projects to ensure that recipients
of Reclamation project, and section information regarding the declaration or comply with the cap on funds
60102 of the Infrastructure Investment designation associated with a natural associated with these eligible use
and Jobs Act provides that SLFRF funds disaster and for mitigation activity categories.
may be used to meet the non-Federal expenditures greater than $1 million, a Recipients using SLFRF funds under
match requirements of the broadband written justification. Recipients using Pathway Two for a Surface
infrastructure program authorized under funds for Surface Transportation Transportation project that is not
that section. See the 2022 final rule for projects under Pathway One will receiving funding from DOT and funded
further discussion. generally be required to confirm which solely with SLFRF funds will only have
The Consolidated Appropriations Act, DOT program they are directing funds reporting responsibilities to Treasury.
2023: As discussed above, the 2023 and attest to meeting additional Under Pathway Three, recipients will
CAA did not alter the existing eligible statutory requirements like supplement, be required to comply with the relevant
uses of SLFRF funds. Recipients may not supplant and state of good repair. existing DOT reporting requirements
still use SLFRF funds in the revenue Recipients using funds for Surface associated with the Surface
loss eligible use category to meet non- Transportation projects under Pathway Transportation project which they are
Federal matching requirements, as Two will generally be required to using SLFRF funds for non-Federal
described in the 2022 final rule. As provide additional information share requirements. Recipients will also
described in the Surface Transportation regarding the parameters of the be required to report certain information
projects section of this interim final streamlined framework and attest to to Treasury, including the amount of
rule, the 2023 CAA provided that meeting additional statutory SLFRF funds directed toward Surface
recipients may use SLFRF funds for requirements like supplement, not Transportation projects and Title I
non-Federal matching requirements for supplant and state of good repair. projects to ensure that recipients
certain Surface Transportation Recipients using funds for Title I comply with the cap on funds
programs. As described in the Title I projects will generally be required to associated with these eligible use
projects section of this interim final provide information regarding the categories.
rule, the 2023 CAA provided that category of CDBG activities, the primary
recipients may use SLFRF funds for 4. Uniform Guidance
objective, and the national objectives,
Title I projects, which includes using and attest to meeting additional Summary of the 2022 final rule: The
funds for non-Federal cost share and statutory requirements like supplement, 2022 final rule states that recipients of
matching requirements of a Federal not supplant and environmental SLFRF funds are subject to the
financial assistance program in support certifications. Like all eligible use provisions of the Uniform Guidance (2
of activities that would be eligible under categories in the SLFRF program, CFR part 200) from the date of award to
the CDBG and ICDBG programs. See the recipients will be required to provide the end of the period of performance on
sections titled Surface Transportation general financial information and a December 31, 2026, unless otherwise
projects and Title I projects of this project description for the new eligible specified in this rule or program specific
interim final rule for further uses categories discussed in this interim guidance.
information. final rule. Treasury intends to update its The Consolidated Appropriations Act,
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2023: Consistent with the 2022 final
3. Reporting 194 U.S. Department of the Treasury, Recipient rule, recipients using SLFRF funds,
Summary of the 2022 final rule: The Compliance and Reporting Responsibilities (Nov. 5, whether for the eligible uses described
2021), https://home.treasury.gov/policy-issues/
2022 final rule maintained Treasury’s coronavirus/assistance-for-state-local-and-tribal-
in the 2022 final rule or the eligible uses
authority to collect information from governments/state-and-local-fiscal-recovery-funds/ described in this interim final rule, are
recipients through requested reports and recipient-compliance-and-reporting-responsibilities. subject to the provisions of the Uniform
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65023
Guidance, unless stated otherwise by spend SLFRF funds annually by $200 approaches, those approaches that
Treasury.195 Recipients using SLFRF for million or more, with an effect on the maximize net benefits (including
Surface Transportation projects and economy. potential economic, environmental,
Title I projects, respectively, must also As explained below, this regulation public health and safety, and other
comply with the administrative meets a substantial need: ensuring that advantages; distributive impacts; and
requirements described above in the recipients—states, territories, Tribal equity); (4) to the extent feasible, specify
Surface Transportation projects and governments, and local governments— performance objectives, rather than the
Title I projects sections. of SLFRF funds fully understand the behavior or manner of compliance a
requirements and parameters of the regulated entity must adopt; and (5)
IV. Comments and Effective Date program as set forth in the Social identify and assess available alternatives
This interim final rule is being issued Security Act and are able to deploy to direct regulation, including providing
without advance notice and public funds in a manner that best reflects economic incentives—such as user fees
comment to allow for immediate Congress’ intent to provide necessary or marketable permits—to encourage the
implementation of the changes to the relief to recipient governments desired behavior, or providing
SLFRF program resulting from the adversely impacted by the COVID–19 information that enables the public to
amendments made by the State, Local, public health emergency. Furthermore, make choices. Executive Order 13563
Tribal, and Territorial Fiscal Recovery, as required by Executive Order 12866 as also requires an agency ‘‘to use the best
Infrastructure, and Disaster Relief amended, Treasury has weighed the available techniques to quantify
Flexibility Act, part of the Consolidated costs and benefits of this interim final anticipated present and future benefits
Appropriations Act, 2023, Public Law rule and varying alternatives and has and costs as accurately as possible.’’
117–328 (Dec. 29, 2022). As discussed reasonably determined that the benefits OMB’s Office of Information and
below, the requirements of advance of this interim final rule to recipients Regulatory Affairs (OIRA) has
notice and public comment do not and their communities far outweigh any emphasized that these techniques may
apply ‘‘to the extent that there is costs. The rule has been reviewed by the include ‘‘identifying changing future
involved . . . a matter relating to agency Office of Management and Budget compliance costs that might result from
. . . grants.’’ This interim final rule (OMB) in accordance with Executive technological innovation or anticipated
implements statutory conditions on the Order 12866 as amended. behavioral changes.’’
eligible uses of the SLFRF funds and Based on the analysis that follows and
addresses the potential consequences of Executive Orders 12866, 13563, and
the reasons stated elsewhere in this
ineligible uses. In addition and as 14094
document, Treasury believes that this
discussed below, the Administrative Under Executive Order 12866, as interim final rule is consistent with the
Procedure Act also provides an amended by Executive Order 14094, principles set forth in Executive Orders
exception to ordinary notice-and- OMB must determine whether this 12866, 13563, and 14094. This
comment procedures ‘‘when the agency regulatory action is ‘‘significant,’’ and Regulatory Impact Analysis discusses
for good cause finds (and incorporates therefore, subject to the requirements of the need for regulatory action, the
the finding and a brief statement of the Executive Order and subject to potential benefits, and the potential
reasons therefor in the rules issued) that review by OMB. Section 3(f) of costs. Treasury has assessed the
notice and public procedure thereon are Executive Order 12866 as amended potential costs and benefits, both
impracticable, unnecessary, or contrary defines a significant regulatory action as quantitative and qualitative, of this
to the public interest.’’ This good cause an action likely to result in a rule that regulatory action, and is issuing this
justification also supports waiver of the may, among other things, have an interim final rule only on a reasoned
60-day delayed effective date for major annual effect on the economy of $200 determination that the benefits exceed
rules under the Congressional Review million or more. This interim final rule the costs. In choosing among alternative
Act at 5 U.S.C. 808(2). Although this may shift spending decisions by regulatory approaches, Treasury
interim final rule is effective recipient governments by $200 million, selected those approaches that would
immediately, comments are solicited therefore, it is subject to review by OMB maximize net benefits.
from interested members of the public under section 3(f)(1) of Executive Order
12866 as amended. Need for Regulatory Action
and from recipient governments on all
aspects of this interim final rule. These Treasury has also reviewed these This interim final rule implements
comments must be submitted on or regulations under Executive Order new eligible uses for the $350 billion
before November 20, 2023. 13563, which supplements and SLFRF program provided in the 2023
explicitly reaffirms the principles, CAA, which Congress passed to provide
V. Regulatory Analyses structures, and definitions governing additional flexibility in how state, local,
Executive Orders 12866, 13563, and regulatory review established in and Tribal governments respond to the
14094 Executive Order 12866. To the extent unique needs of their communities. As
permitted by law, section 1(b) of the agency charged with execution of
Regulatory Impact Assessment Executive Order 13563 requires that an these programs, Treasury has concluded
This interim final rule is a agency: (1) propose or adopt regulations that this interim final rule is needed to
‘‘significant regulatory action’’ under only upon a reasoned determination ensure that recipients of SLFRF funds
section 3(f)(1) of Executive Order 12866 that their benefits justify their costs fully understand the requirements and
for the purposes of Executive Orders (recognizing that some benefits and parameters of the program as modified
12866 and 13563 because it may shift costs are difficult to quantify); (2) tailor by the 2023 CAA and deploy funds in
how state, local, and Tribal governments its regulations to impose the least a manner that best reflects Congress’
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burden on society, consistent with mandate for targeted fiscal relief. This
195 See FAQ Section 13. ‘‘Uniform Guidance’’ obtaining regulatory objectives taking interim final rule provides additional
U.S. Department of the Treasury, Coronavirus State into account, among other things, and to flexibility in the use of $350 billion in
and Local Fiscal Recovery Funds Final Rule:
Frequently Asked Questions (Apr. 2023), https://
the extent practicable, the costs of grant funds already disbursed from the
home.treasury.gov/system/files/136/SLFRF-Final- cumulative regulations; (3) select, in Federal government to state, local, and
Rule-FAQ.pdf. choosing among alternative regulatory Tribal governments. As noted earlier,
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65024 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
Treasury has disbursed nearly all of the provisions in this interim final rule will Surface Transportation Projects
$350 billion appropriated SLFRF funds. contribute to greater realization of
Treasury has sought to implement the benefits from the program. Treasury In the eligible use category Surface
program in ways that maximize its considered issuing guidance rather than Transportation projects, Treasury
potential benefits while minimizing its an interim final rule; however, Treasury provides three pathways under which
costs. It has done so by: aiming to target determined that issuing an interim final recipients may direct SLFRF funds
relief in key areas according to the rule that amends the regulatory text of towards Surface Transportation projects,
congressional mandate; offering clarity subject to the cap on SLFRF funds for
the 2022 final rule was appropriate to
to state, local, and Tribal governments this eligible use. First, recipients may
bring the regulatory requirements in line
while maintaining their flexibility to use SLFRF funds under Pathway One
with the 2023 CAA.
respond to local needs; and limiting for Surface Transportation projects
administrative burdens. Emergency Relief From Natural receiving funding from DOT. Recipients
Disasters who use SLFRF funds for these projects
Analysis of Benefits
must comply with all related DOT
Relative to a pre-2023 CAA baseline, The eligible use category for requirements for these projects. Second,
no additional resources are provided to providing emergency relief from natural recipients may use SLFRF funds under
state, local, and Tribal governments disasters or the negative economic Pathway Two for Surface Transportation
under the SLFRF program. Instead, impacts of natural disasters covers a projects, that are not receiving funding
state, local, and Tribal governments will range of eligible uses of funds, including from DOT, whether or not SLFRF funds
have additional flexibility in how they temporary emergency housing, food are blended with other sources of funds.
use available SLFRF funds, that have assistance, financial assistance for lost This second pathway is available to all
already been disbursed, with the option wages, other immediate needs, and SLFRF recipients, including those that
to pursue additional eligible uses under mitigation activities. Treasury has do not routinely apply for or receive
this interim final rule to meet the needs structured this eligible use to minimize funding directly from DOT. Treasury is
of their communities. Treasury believes recipient administrative burden while articulating a streamlined framework for
that this additional flexibility may also maintaining flexibility for recipients to undertake certain projects
generate substantial additional recipients to provide emergency relief to (1) fit the description of ‘‘eligible
economic activity, although given the projects’’ under the RAISE grant
address the particular needs of their
flexibility accorded to recipients in the program as described in the 2023 Notice
communities after experiencing a
use of funds, it is not possible to
natural disaster or prior to a natural of Funding Opportunity; (2) contribute
precisely estimate the extent to which
disaster that is expected to occur SLFRF funds no greater than $10
this will occur and the timing with
imminently, or to avert the threat of a million, and (3) with an entire project
which it will occur.
This interim final rule provides future natural disaster. In this interim scope that is limited to actions or
benefits by implementing the new final rule, Treasury enumerated eligible activities that typically do not have a
eligible use categories, as defined in the uses of SLFRF funds to provide significant environmental impact,
2023 CAA: providing emergency relief emergency relief from the physical and absent unusual circumstances, as
from natural disasters or the negative negative economic impacts of natural described in 23 CFR 771.116(b),
economic impacts of natural disasters, disasters. Some of these enumerated 771.117(b), and 771.118(b). Recipients
using funds for Surface Transportation eligible uses include temporary that use SLFRF funds for these projects
projects, and using funds for Title I emergency housing, food assistance, must comply certain requirements, as
projects. financial assistance for lost wages, articulated in the Surface
These benefits are achieved in this emergency protective measures, debris Transportation projects section, and
interim final rule through a broadly removal, repairing damage to public only report these projects to Treasury.
flexible approach that sets clear infrastructure, home repairs for Recipients seeking to use SLFRF funds
guidelines on these additional eligible uninsured primary residences, cash for Surface Transportation projects
uses of SLFRF funds and provides state, assistance, and mitigation activities to under Pathway Two outside of the
local, and Tribal government officials avert the potential impacts of a future parameters of the streamlined
discretion to direct SLFRF funds to framework must submit a notice of
natural disaster. In addition to the
areas of greatest need within their intent to Treasury. Treasury will use the
enumerated eligible uses, Treasury
jurisdiction, within available eligible notices of intent it receives along with
provides a framework whereby recipient
use categories. While preserving comments on this interim final rule to
may identify a natural disaster and
recipients’ overall flexibility, this develop a pathway for these types of
identify emergency relief that responds projects. Third, recipients may use
interim final rule includes several
to the physical or negative economic SLFRF funds under Pathway Three for
provisions that implement statutory
impacts of a natural disaster. The non-Federal share requirements for
requirements and will help support use
of SLFRF funds to achieve the intended emergency relief must be related and certain DOT programs, as well as to
benefits. Preserving flexibility for reasonably proportional to the to the repay TIFIA loans. By providing three
recipients not only serves an important impact identified. By enumerating pathways for recipients to pursue
public policy goal by allowing them to eligible uses, Treasury is reducing Surface Transportation projects with
meet particularized and diverse needs of administrative burden for recipients SLFRF funds, Treasury is providing
their local communities but also through a clear list of uses of SLFRF flexibility for recipients to use SLFRF
enhances the economic benefits of this funds they may consider providing as funds for DOT projects they are already
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interim final rule by allowing recipients appropriate. By providing a framework pursuing and for recipient to also
to choose eligible uses of funds that for recipients to design their own pursue new projects, particularly for
provide the highest utility in their emergency relief, Treasury is providing those recipients that do not have any
jurisdictions. flexibility for recipients to direct SLFRF existing projects funded by DOT, subject
The remainder of this section clarifies funds to the needs of their unique to the requirements outlined in the
how Treasury’s approach to key communities. Surface Transportation projects section.
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65025
Title I Projects Executive Order 13132 Assuming 5 U.S.C. 553 applied,
Executive Order 13132 (entitled Treasury would still have good cause
The Title I projects eligible use under sections 553(b)(3)(B) and
category discusses how recipients may Federalism) prohibits an agency from
publishing any rule that has federalism 553(d)(3) for not undertaking section
direct SLFRF funds toward Title I 553’s requirements. The 2023 CAA
implications if the rule either imposes
projects, subject to the cap on funds for amends sections 602 and 603 of the
substantial, direct compliance costs on
this eligible use category. In this eligible Social Security Act to make SLFRF
state, local, and Tribal governments, and
use category, Treasury has provided that is not required by statute, or preempts available to provide emergency relief
recipients may use SLFRF funds for state law, unless the agency meets the from natural disasters or their negative
CDBG and ICDBG projects, in alignment consultation and funding requirements economic impacts, along with authority
with the applicable administrative of section 6 of the Executive order. This to use funds for an extensive list of
provisions. By aligning with CDBG and interim final rule does not have eligible uses related to infrastructure,
ICDBG, programs with which many Federalism implications within the incorporated into the Social Security
recipients already are familiar, Treasury meaning of the Executive order and Act by cross-reference to other statutory
is reducing administrative burden. does not impose substantial, direct provisions. As noted above, Congress
Treasury also discusses the CDBG and compliance costs on state, local, and authorized use of funds for emergency
ICDBG provisions that apply to SLFRF Tribal governments or preempt state law relief. American Fed’n of Gov’t
funds. By analyzing which provisions within the meaning of the Executive Employees v. Block, 655 F.2d 1153,
are applicable to the unique Order. The compliance costs are 1156 (D.C. Cir. 1981). Expeditious
requirements of the SLFRF program, imposed on state, local, and Tribal promulgation of the interim final rule
including modifying certain governments by sections 602 and 603 of would make these funds available to
requirements for this eligible use the Social Security Act, as modified by provide emergency relief to natural
category in light of the SLFRF period of the 2023 CAA. Pursuant to the disasters more quickly and would avoid
performance and the statutory requirements set forth in section 8(a) of a delay that would be contrary to the
requirement that SLFRF funds be Executive Order 13132, Treasury public interest. In addition, SLFRF
certifies that it has complied with the funds are available to cover costs
obligated by December 31, 2024 and
requirements of Executive Order 13132. incurred through December 31, 2024.
expended by September 30, 2026,
Following the ordinary requirements of
Treasury is further reducing Administrative Procedure Act notice-and-comment rulemaking would
administrative burden for recipients. result in the passage of a significant
The Administrative Procedure Act
Analysis of Costs (APA), 5 U.S.C. 551 et seq., generally amount of time before recipients are
requires public notice and an able to use funds for time sensitive
This regulatory action will not opportunity for comment before a rule needs related to natural disaster relief,
generate significant administrative costs becomes effective. However, the APA and it would provide recipients a very
relative to a pre-2023 CAA baseline. provides that the requirements of 5 limited amount of time to plan for and
This interim final rule may result in U.S.C. 553 do not apply ‘‘to the extent finance newly eligible infrastructure
state, local, and Tribal governments that there is involved . . . a matter projects before the obligation deadline
shifting SLFRF funds to new eligible relating to agency . . . grants.’’ This arrives in the following year. By linking
uses included in the Social Security Act interim final rule implements statutory the effectiveness of the amendments
but does not result in additional funds conditions on the eligible uses of the with the promulgation of a rule or
being disbursed to SLFRF recipients. In SLFRF grants and addresses potential issuance of guidance on a 60-day
addition, SLFRF recipients generally consequences of ineligible uses. The timeline, as provided in the 2023 CAA,
have already established processes rule is thus ‘‘both clearly and directly Congress ‘‘clearly envisioned very
required to administer their SLFRF related to a Federal grant program.’’ speedy adoption of the mandated
funds, oversee subrecipients and National Wildlife Federation v. Snow, changes.’’ Petry v. Block, 737 F.2d 1193,
beneficiaries, and file periodic reports 561 F.2d 227, 232 (D.C. Cir. 1976). The 1200 (D.C. Cir. 1984). Further, Congress,
with Treasury. As such, Treasury rule sets forth the ‘‘process necessary to ‘‘by setting an effective date so close to
maintain state . . . eligibility for the date of enactment, expressed its
expects that the total costs required to
Federal funds,’’ id., as well as other belief that implementation of the
administer SLFRF funds will not change
‘‘integral part[s] of the grant program,’’ amendments to the [program] was
significantly. Treasury expects that the
Center for Auto Safety v. Tiemann, 414 urgent.’’ Philadelphia Citizens in Action
administrative burden associated with
F. Supp. 215, 222 (D.D.C. 1976). As a v. Schweiker, 669 F.2d 877, 884–885 (3d
the SLFRF program will remain Cir. 1982) (finding good cause under
result, the requirements of 5 U.S.C. 553
moderate for a grant program of its size. do not apply. circumstances, including statutory time
Under the final rule implementing the The APA also provides an exception limits, where APA procedures would
SLFRF program as enacted in the ARPA, to ordinary notice-and-comment have been ‘‘virtually impossible,’’ like a
Treasury noted administrative costs as a procedures ‘‘when the agency for good circumstance in which an agency
generally allowable use of SLFRF funds, cause finds (and incorporates the promulgated a regulation to implement
which defrays administrative expenses finding and a brief statement of reasons a statute that was enacted on August 13
to recipients that may be needed to therefor in the rules issued) that notice and became effective on October 1).
comply with reporting requirements. and public procedure thereon are Finally, there is an urgent need for
Treasury is maintaining this approach to impracticable, unnecessary, or contrary States to undertake the planning
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administrative costs in this interim final to the public interest.’’ 5 U.S.C. necessary for sound fiscal policymaking,
rule. Treasury has also made clear in 553(b)(3)(B); see also 5 U.S.C. 553(d)(3) which requires an understanding of how
guidance that SLFRF funds may be used (creating an exception to the funds provided under the ARPA will
to cover certain expenses related to requirement of a 30-day delay before the augment and interact with existing
administering programs established effective date of a rule ‘‘for good cause budgetary resources. The statutory
using SLFRF funds. found and published with the rule’’). urgency and practical necessity are good
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65026 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
cause to forego the ordinary CRA allows agencies to dispense with have been reviewed and approved by
requirements of notice-and-comment the requirements of section 801 when OMB pursuant to the Paperwork
rulemaking. the agency for good cause finds that Reduction Act (44 U.S.C. Chapter 35)
such procedure would be impracticable, (PRA) and assigned control number
Congressional Review Act
unnecessary, or contrary to the public 1505–0271. Under the PRA, an agency
The Administrator of OIRA has interest and the rule shall take effect at may not conduct or sponsor, and a
determined that this rule qualifies under such time as the agency promulgating respondent is not required to respond
the definition set forth in 5 U.S.C. the rule determines. 5 U.S.C. 808(2). to, an information collection unless it
804(2) for purposes of Subtitle E of the Pursuant to section 808(2), for the
Small Business Regulatory Enforcement displays a valid OMB control number.
reasons discussed above, Treasury for This interim final rule is not altering the
and Fairness Act of 1996 (also known as good cause finds that a 60-day delay to
the Congressional Review Act or CRA). previously approved information
provide public notice is impracticable
Under the CRA, such a rule generally collections for the SLFRF program. The
and contrary to the public interest.
may take effect no earlier than 60 days table below includes the estimates of
after the rule is published in the Federal Paperwork Reduction Act hourly burden under this program that
Register. 5 U.S.C. 801(a)(3). The information collections have been approved in previously
Notwithstanding this requirement, the associated with the SLFRF program approved information collections.
Number Cost to
Total
Number responses Total Hours per respondents
Reporting burden
respondents per responses response ($48.80 per
in hours
respondent hour *)
Recipient Payment Form ...................................... 5,050 1 5,050 .25 (15 minutes) .... 1,262.5 $61,610
Acceptance of Award Terms ................................ 5,050 1 5,050 .25 (15 minutes) .... 1,262.5 61,610
Title VI Assurances .............................................. 5,050 1 5,050 .50 (30 minutes) .... 2,525 123,220
Tribal Employment Information Form ................... 584 1 584 .75 (45 minutes) .... 438 21,374
Request for Extension Form ................................ 96 1 96 1 ............................ 96 4,685
Annual Recovery Plan Performance Report ........ 430 1 430 100 ........................ 43,000 2,098,400
NEU Distribution Template ................................... 55 2 110 10 .......................... 1,100 53,680
Non-UGLG Distribution Template ........................ 55 2 110 5 ............................ 550 26,840
Transfer Forms ..................................................... 1,500 1 1,500 1 ............................ 1,500 73,200
NEU Agreements and Supporting Documentation 26,000 1 26,000 .5 ........................... 13,000 634,400
Project and Expenditure Report (quarterly) ......... 2,000 4 8,000 6 ............................ 48,000 2,342,400
Project and Expenditure Report (annual) ............ 29,000 1 29,000 6 ............................ 174,000 8,491,200
Total .............................................................. 64,770 .................... 78,880 ............................... 284,209 13,869,339
* Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants and Auditors, on the internet at https://
www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (visited March 28, 2020). Base wage of $33.89/hour increased by 44 per-
cent to account for fully loaded employer cost of employee compensation (benefits, etc.) for a fully loaded wage rate of $48.80.
Regulatory Flexibility Analysis health emergency, Tribal governments, 35.6 Eligible uses.
Transportation. 35.7 Pensions.
The Regulatory Flexibility Act (RFA) 35.8 Tax.
generally requires that when an agency For the reasons stated in the 35.9 Compliance with applicable laws.
issues a proposed rule, or a final rule preamble, the United States Department 35.10 Recoupment.
pursuant to section 553(b) of the APA or of the Treasury amends 31 CFR part 35 35.11 Payments to States.
another law, the agency must prepare a as follows: 35.12 Distributions to nonentitlement units
regulatory flexibility analysis that meets of local government and units of general
the requirements of the RFA and PART 35—PANDEMIC RELIEF local government.
publish such analysis in the Federal PROGRAMS Authority: 42 U.S.C. 802(f); 42 U.S.C.
Register. 5 U.S.C. 603, 604. 803(f); section 102(c) of Division LL of the
Rules that are exempt from notice and ■ 1. The authority citation for part 35 Consolidated Appropriations Act, 2023 (Pub.
comment under the APA or any other continues to read as follows: L. 117–328).
law are also exempt from the RFA Authority: 42 U.S.C. 802(f); 42 U.S.C.
§ 35.1 Purpose.
requirements, including the requirement 803(f); 31 U.S.C. 321; 12 U.S.C. 5701–5710;
to conduct a regulatory flexibility Division N, Title V, Subtitle B, Pub. L. 116– This part implements sections 602
analysis, when among other things the 260, 134 Stat. 1182 (12 U.S.C. 4703a); Section and 603 of the Social Security Act, as
agency for good cause finds that notice 104A, Pub. L. 103–325, 108 Stat. 2160, as added by section 9901 of the American
amended (12 U.S.C. 4701 et seq.); Pub. L. Rescue Plan Act (Subtitle M of Title IX
and public procedure are impracticable,
117–2, 135 Stat. 4 (42 U.S.C. 802 et seq.).
unnecessary, or contrary to the public of Pub. L. 117–2) and amended by
interest. Because this rule is exempt ■ 2. Revise Subpart A to read as follows: section 102 of Division LL of the
from the notice and comment Consolidated Appropriations Act, 2023
requirements of the APA, Treasury is Subpart A—Coronavirus State and (Pub. L. 117–328).
not required to conduct a regulatory Local Fiscal Recovery Funds
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§ 35.2 Applicability.
flexibility analysis. Sec.
35.1 Purpose. This part applies to states, territories,
List of Subjects in 31 CFR Part 35 Tribal governments, metropolitan cities,
35.2 Applicability.
Community development, Disaster 35.3 Definitions. nonentitlement units of local
assistance, Executive compensation, 35.4 Reservation of authority, reporting. government, counties, and units of
State and Local Governments, Public 35.5 Use of funds. general local government that accept a
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65027
payment or transfer of funds made to routine contributions made by an Emergency relief means assistance
under section 602 or 603 of the Social employer to pension funds as part of the that is needed to save lives and to
Security Act. employer’s obligations related to protect property and public health and
payroll, such as either a pension safety, or to lessen or avert the threat of
§ 35.3 Definitions. contribution consisting of a normal cost catastrophe.
Baseline means tax revenue of the component related to current employees Essential work means work that:
recipient for its fiscal year ending in or a component addressing the (1) Is not performed while
2019, adjusted for inflation in each amortization of unfunded liabilities teleworking from a residence; and
reporting year using the Bureau of calculated by reference to the (2) Involves:
Economic Analysis’s Implicit Price employer’s payroll costs. (i) Regular in-person interactions with
Deflator for the gross domestic product Disaster loss means a loss suffered as patients, the public, or coworkers of the
of the United States. a result of a major disaster or emergency individual that is performing the work;
Capital expenditures has the same declared under section 401 of the Robert or
meaning given in 2 CFR 200.1. T. Stafford Disaster Relief and (ii) Regular physical handling of items
County means a county, parish, or Emergency Assistance Act (42 U.S.C. that were handled by, or are to be
other equivalent county division (as 5170). handled by patients, the public, or
defined by the Census Bureau). Eligible employer means an employer coworkers of the individual that is
Covered benefits include, but are not of an eligible worker who performs performing the work.
limited to, the costs of all types of leave essential work. Funds means, with respect to a
(vacation, family-related, sick, military, Eligible workers means workers recipient, amounts provided to the
bereavement, sabbatical, jury duty), needed to maintain continuity of recipient pursuant to a payment made
employee insurance (health, life, dental, operations of essential critical under section 602(b) or 603(b) of the
vision), retirement (pensions, 401(k)), infrastructure sectors, including health Social Security Act or transferred to the
unemployment benefit plans (Federal care; emergency response; sanitation, recipient pursuant to section 603(c)(4)
and State), workers’ compensation disinfection, and cleaning work; of the Social Security Act.
insurance, and Federal Insurance maintenance work; grocery stores, General revenue means money that is
Contributions Act taxes (which includes restaurants, food production, and food received from tax revenue, current
Social Security and Medicare taxes). delivery; pharmacy; biomedical charges, and miscellaneous general
Covered change means a change in research; behavioral health work; revenue, excluding refunds and other
law, regulation, or administrative medical testing and diagnostics; home- correcting transactions and proceeds
interpretation that reduces any tax (by and community-based health care or from issuance of debt or the sale of
providing for a reduction in a rate, a assistance with activities of daily living; investments, agency or private trust
rebate, a deduction, a credit, or family or childcare; social services transactions, and intergovernmental
otherwise) or delays the imposition of work; public health work; vital services transfers from the Federal Government,
any tax or tax increase. A change in law to Tribes; any work performed by an including transfers made pursuant to
includes any final legislative or employee of a State, local, or Tribal section 9901 of the American Rescue
regulatory action, a new or changed government; educational work, school Plan Act. General revenue also includes
administrative interpretation, and the nutrition work, and other work required revenue from liquor stores that are
phase-in or taking effect of any statute to operate a school facility; laundry owned and operated by state and local
or rule if the phase-in or taking effect work; elections work; solid waste or governments. General revenue does not
was not prescribed prior to the start of hazardous materials management, include revenues from utilities, except
the covered period. response, and cleanup work; work recipients may choose to include
Covered period means, with respect to requiring physical interaction with revenue from utilities that are part of
a state or territory, the period that: patients; dental care work; their own government as general
(1) Begins on March 3, 2021; and transportation and warehousing; work at revenue provided the recipient does so
(2) Ends on the last day of the fiscal hotel and commercial lodging facilities consistently over the remainder of the
year of such State or territory in which that are used for COVID–19 mitigation period of performance. Revenue from
all funds received by the State or and containment; work in a mortuary; Tribal business enterprises must be
territory from a payment made under and work in critical clinical research, included in general revenue.
section 602 or 603 of the Social Security development, and testing necessary for Infrastructure Investment and Jobs
Act have been expended or returned to, COVID–19 response. Act means the Infrastructure Investment
or recovered by, the Secretary. (1) With respect to a recipient that is and Jobs Act, Public Law 117–58, 135
COVID–19 means the Coronavirus a metropolitan city, nonentitlement unit Stat. 429 (Nov. 15, 2021).
Disease 2019. of local government, or county, workers Intergovernmental transfers means
COVID–19 public health emergency in any additional non-public sectors as money received from other
means the period beginning on January each chief executive officer of such governments, including grants and
27, 2020, and lasting until the recipient may designate as critical to shared taxes.
termination of the national emergency protect the health and well-being of the Low-income household means a
concerning the COVID–19 outbreak residents of their metropolitan city, household with:
declared pursuant to the National nonentitlement unit of local (1) Income at or below 185 percent of
Emergencies Act (50 U.S.C. 1601 et government, or county; or the Federal Poverty Guidelines for the
seq.). (2) With respect to a State, territory, size of its household based on the
Delivery sequence means the order in or Tribal government, workers in any poverty guidelines published most
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which disaster relief agencies and additional non-public sectors as each recently by the Department of Health
organizations provide assistance Governor of a State or territory, or each and Human Services; or
pursuant to 44 CFR 206.191. Tribal government, may designate as (2) Income at or below 40 percent of
Deposit means an extraordinary critical to protect the health and well- the Area Median Income for its county
payment of an accrued, unfunded being of the residents of their State, and size of household based on data
liability. The term deposit does not refer territory, or Tribal government. published most recently by the
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65028 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
Department of Housing and Urban contracts, subawards, and similar State or territory during the covered
Development. transactions that require payment. period.
Micro-business means a small Operating expenses means costs Secretary means the Secretary of the
business that has five or fewer necessary to operate and manage a Treasury.
employees, one or more of whom owns public transportation system, including State means each of the 50 States and
the small business. driver salaries, fuel, and items having a the District of Columbia.
Moderate-income household means a useful life of less than one year. Small business means a business
household with: Operating expenses do not include concern or other organization that:
(1) Income at or below 300 percent of preventive maintenance activities. (1) Has no more than 500 employees
the Federal Poverty Guidelines for the Pension fund means a defined benefit or, if applicable, the size standard in
size of its household based on poverty plan and does not include a defined number of employees established by the
guidelines published most recently by contribution plan. Administrator of the Small Business
the Department of Health and Human Period of performance means the time Administration for the industry in
Services; or period described in § 35.5 during which which the business concern or
(2) Income at or below 65 percent of a recipient may obligate and expend organization operates, and
the Area Median Income for its county funds in accordance with sections (2) Is a small business concern as
and size of household based on data 602(c)(1), 602(c)(5)(E), 603(c)(1), and defined in section 3 of the Small
published most recently by the 603(c)(6)(D) of the Social Security Act Business Act (15 U.S.C. 632).
Department of Housing and Urban and this subpart. Surface Transportation project means
Premium pay means an amount of up any of the following:
Development.
to $13 per hour that is paid to an (1) A project eligible under 23 U.S.C.
Metropolitan city has the meaning
eligible worker, in addition to wages or 117;
given that term in section 102(a)(4) of
remuneration the eligible worker (2) A project eligible under 23 U.S.C.
the Housing and Community
otherwise receives, for all work 119;
Development Act of 1974 (42 U.S.C.
performed by the eligible worker during (3) A project eligible under 23 U.S.C.
5302(a)(4)) and includes cities that
the COVID–19 public health emergency. 124, as added by the Infrastructure
relinquish or defer their status as a
Such amount may not exceed $25,000 in Investment and Jobs Act;
metropolitan city for purposes of
total over the period of performance (4) A project eligible under 23 U.S.C.
receiving allocations under section 106
with respect to any single eligible 133;
of such Act (42 U.S.C. 5306) for fiscal
worker. Premium pay may be awarded (5) An activity to carry out 23 U.S.C.
year 2021.
to non-hourly and part-time eligible 134;
Natural disaster means any hurricane,
workers performing essential work. (6) A project eligible under 23 U.S.C.
tornado, storm, flood, high water, wind-
Premium pay will be considered to be 148;
driven water, tidal wave, tsunami, (7) A project eligible under 23 U.S.C.
in addition to wages or remuneration
earthquake, volcanic eruption, 149;
the eligible worker otherwise receives if,
landslide, mudslide, snowstorm, (8) A project eligible under 23 U.S.C.
as measured on an hourly rate, the
drought, or fire, in each case attributable 151(f), as added by the Infrastructure
premium pay is:
to natural causes, that causes or may (1) With regard to work that the Investment and Jobs Act;
cause substantial damage, injury, or eligible worker previously performed, (9) A project eligible under 23 U.S.C.
imminent threat to civilian property or pay and remuneration equal to the sum 165;
persons. ‘‘Natural disaster’’ may also of all wages and remuneration (10) A project eligible under 23 U.S.C.
include another type of natural previously received plus up to $13 per 167;
catastrophe, attributable to natural hour with no reduction, substitution, (11) A project eligible under 23 U.S.C.
causes, that causes or may cause offset, or other diminishment of the 173, as added by the Infrastructure
substantial damage, injury, or imminent eligible worker’s previous, current, or Investment and Jobs Act;
threat to civilian property or persons. prospective wages or remuneration; or (12) A project eligible under 23 U.S.C.
Net reduction in total spending is (2) With regard to work that the 175, as added by the Infrastructure
measured as the State or territory’s total eligible worker continues to perform, Investment and Jobs Act;
spending for a given reporting year pay of up to $13 per hour that is in (13) A project eligible under 23 U.S.C.
excluding its spending of funds, addition to the eligible worker’s regular 176, as added by the Infrastructure
subtracted from its total spending for its rate of wages or remuneration, with no Investment and Jobs Act;
fiscal year ending in 2019, adjusted for reduction, substitution, offset, or other (14) A project eligible under 23 U.S.C.
inflation using the Bureau of Economic diminishment of the worker’s current 202;
Analysis’s Implicit Price Deflator for the and prospective wages or remuneration. (15) A project eligible under 23 U.S.C.
gross domestic product of the United Qualified census tract has the same 203;
States for that reporting year. meaning given in 26 U.S.C. (16) A project eligible under 23 U.S.C.
Nonentitlement unit of local 42(d)(5)(B)(ii)(I). 204;
government means a ‘‘city,’’ as that term Recipient means a State, territory, (17) A project eligible under the
is defined in section 102(a)(5) of the Tribal government, metropolitan city, program for national infrastructure
Housing and Community Development nonentitlement unit of local investments commonly known as the
Act of 1974 (42 U.S.C. 5302(a)(5)), that government, county, or unit of general ‘‘Rebuilding American Infrastructure
is not a metropolitan city. local government that receives a with Sustainability and Equity’’ grant
Nonprofit means a nonprofit payment made under section 602(b) or program;
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organization that is exempt from Federal 603(b) of the Social Security Act or (18) A project eligible for credit
income taxation and that is described in transfer pursuant to section 603(c)(4) of assistance under the Transportation
section 501(c)(3) or 501(c)(19) of the the Social Security Act. Infrastructure Finance and Innovation
Internal Revenue Code. Reporting year means a single year or Act program under 23 U.S.C. chapter 6;
Obligation means an order placed for partial year within the covered period, (19) A project that furthers the
property and services and entering into aligned to the current fiscal year of the completion of a designated route of the
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65029
Appalachian Development Highway owners are either United States citizens the requirements of this subpart. False
System under 40 U.S.C. 14501; or small business concerns, as these statements or claims made to the
(20) A project eligible under 49 U.S.C. terms are used and consistent with the Secretary may result in criminal, civil,
5307; definitions in 15 U.S.C. 657a(b)(2)(D). or administrative sanctions, including
(21) A project eligible under 49 U.S.C. Tribal government means the fines, imprisonment, civil damages and
5309; recognized governing body of any penalties, debarment from participating
(22) A project eligible under 49 U.S.C. Indian or Alaska Native Tribe, band, in Federal awards or contracts, and/or
5311; nation, pueblo, village, community, any other remedy available by law.
(23) A project eligible under 49 U.S.C. component band, or component
5337; reservation, individually identified § 35.5 Use of funds.
(24) A project eligible under 49 U.S.C. (including parenthetically) in the list (a) In general. A recipient may only
5339; published on January 29, 2021, pursuant use funds for the purposes enumerated
(25) A project eligible under 49 U.S.C. to section 104 of the Federally in § 35.6 (b) through (f) to cover costs
6703, as added by the Infrastructure Recognized Indian Tribe List Act of incurred during the period beginning
Investment and Jobs Act; 1994 (25 U.S.C. 5131). March 3, 2021, and ending December
(26) A project eligible under the Unemployment rate means the U–3 31, 2024, subject to the restrictions set
bridge replacement, rehabilitation, unemployment rate provided by the forth in sections 602(c)(2) and 603(c)(2)
preservation, protection, and Bureau of Labor Statistics as part of the of the Social Security Act, as applicable.
construction program under paragraph Local Area Unemployment Statistics A recipient may only use funds for the
(1) under the heading ‘HIGHWAY program, measured as total purposes enumerated in § 35.6 (g)
INFRASTRUCTURE PROGRAM’ under unemployment as a percentage of the through (h) to cover costs incurred
the heading ‘FEDERAL HIGHWAY civilian labor force. during the period beginning December
ADMINISTRATION’ under the heading Unemployment trust fund means an 29, 2022, and ending December 31,
‘DEPARTMENT OF unemployment trust fund established 2024, subject to the restrictions set forth
TRANSPORTATION’ under title VIII of under section 904 of the Social Security in sections 602(c)(2), 602(c)(5)(C),
division J of the Infrastructure Act (42 U.S.C. 1104). 603(c)(2), and 603(c)(6)(B) of the Social
Investment and Jobs Act; and Unit of general local government has Security Act, as applicable.
(27) A project eligible under 49 U.S.C. the meaning given to that term in (b) Costs incurred. A cost shall be
6701 for the purpose set forth in section 102(a)(1) of the Housing and considered to have been incurred for
§ 35.6(h)(1)(i)(C). Community Development Act of 1974 purposes of paragraph (a) of this section
Tax revenue means revenue received (42 U.S.C. 5302(a)(1)). if the recipient has incurred an
from a compulsory contribution that is obligation with respect to such cost by
exacted by a government for public § 35.4 Reservation of authority, reporting. December 31, 2024.
purposes excluding refunds and (a) Reservation of authority. Nothing (c) Return of funds. A recipient must
corrections and, for purposes of § 35.8, in this part shall limit the authority of return any funds not obligated by
intergovernmental transfers. Tax the Secretary to take action to enforce December 31, 2024. A recipient must
revenue does not include payments for conditions or violations of law, return funds obligated for a use
a special privilege granted or service including actions necessary to prevent identified in § 35.6 (b) through (g) by
rendered, employee or employer evasions of this subpart. December 31, 2024, but not expended
assessments and contributions to (b) Extensions or accelerations of by December 31, 2026. A recipient must
finance retirement and social insurance timing. The Secretary may extend or return funds obligated for a use
trust systems, or special assessments to accelerate any deadline or compliance identified in § 35.6 (h) by December 31,
pay for capital improvements. date of this part, including reporting 2024, but not expended by September
Territory means the Commonwealth requirements that implement this 30, 2026.
of Puerto Rico, the United States Virgin subpart, if the Secretary determines that
Islands, Guam, the Commonwealth of such extension or acceleration is § 35.6 Eligible uses.
the Northern Mariana Islands, or appropriate. In determining whether an (a) In general. Subject to §§ 35.7 and
American Samoa. extension or acceleration is appropriate, 35.8, a recipient may use funds for one
Title I eligible schools means schools the Secretary will consider the period of or more of the purposes described in
eligible to receive services under section time that would be extended or paragraphs (b) through (h) of this
1113 of Title I, Part A of the Elementary accelerated and how the modified section.
and Secondary Education Act of 1965, timeline would facilitate compliance (b) Responding to the public health
as amended (20 U.S.C. 6313), including with this subpart. emergency or its negative economic
schools served under section (c) Reporting and requests for other impacts. A recipient may use funds to
1113(b)(1)(C) of that Act. information. During the period of respond to the public health emergency
Title I project means an activity performance, recipients shall provide to or its negative economic impacts if the
eligible under section 105(a) of the the Secretary or her delegate, as use meets the criteria provided in
Housing and Community Development applicable, periodic reports providing paragraph (b)(1) of this section or is
Act of 1974 (42 U.S.C. 5305(a)). detailed accounting of the uses of funds, enumerated in paragraph (b)(3) of this
Tribal enterprise means a business modifications to a State or Territory’s section; provided that, in the case of a
concern: tax revenue sources, and such other use of funds for a capital expenditure
(1) That is wholly owned by one or information as the Secretary or her under paragraph (b)(1) or (b)(3) of this
more Tribal governments, or by a delegate, as applicable, may require for section, the use of funds must also meet
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corporation that is wholly owned by one the administration of this section. In the criteria provided in paragraph (b)(4)
or more Tribal governments; or addition to regular reporting of this section. Treasury may also
(2) That is owned in part by one or requirements, the Secretary may request articulate additional eligible programs,
more Tribal governments, or by a other additional information as may be services, or capital expenditures from
corporation that is wholly owned by one necessary or appropriate, including as time to time that satisfy the eligibility
or more Tribal governments, if all other may be necessary to prevent evasions of criteria of this paragraph (b), which
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65030 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
shall be eligible under this paragraph (iii) The following households, prevention practices in congregate
(b). communities, small businesses, and settings; acquisition and distribution of
(1) Identifying eligible responses to nonprofit organizations are presumed to medical equipment for prevention and
the public health emergency or its be disproportionately impacted by the treatment of COVID–19, including
negative economic impacts. public health emergency or its negative personal protective equipment; COVID–
(i) A program, service, or capital economic impacts: 19 prevention and treatment expenses
expenditure is eligible under this (A) Households and populations for public hospitals or health care
paragraph (b)(1) if a recipient identifies residing in a qualified census tract; facilities, including temporary medical
a harm or impact to a beneficiary or households and populations receiving facilities; establishing or enhancing
class of beneficiaries caused or services provided by Tribal public health data systems; installation
exacerbated by the public health governments; households and and improvement of ventilation systems
emergency or its negative economic populations residing in the territories; in congregate settings, health facilities,
impacts and the program, service, or households and populations receiving or other public facilities; and assistance
capital expenditure responds to such services provided by territorial to small businesses, nonprofits, or
harm. governments; low-income households impacted industries to implement
(ii) A program, service, or capital and populations; households that mitigation measures;
expenditure responds to a harm or qualify for Temporary Assistance for (B) Medical expenses related to
impact experienced by an identified Needy Families (42 U.S.C. 601 et seq.), testing and treating COVID–19 that are
beneficiary or class of beneficiaries if it the Supplemental Nutrition Assistance provided in a manner consistent with
is reasonably designed to benefit the Program (7 U.S.C. 2011 et seq.), Free recommendations and guidance from
beneficiary or class of beneficiaries that and Reduced Price School Lunch and/ the Centers for Disease Control and
experienced the harm or impact and is or Breakfast programs (42 U.S.C. 1751 et Prevention, including emergency
related and reasonably proportional to seq. and 42 U.S.C. 1773), Medicare Part medical response expenses, treatment of
the extent and type of harm or impact D Low-income Subsidies (42 U.S.C. long-term symptoms or effects of
experienced. 1395w-114), Supplemental Security COVID–19, and costs to medical
Income (42 U.S.C. 1381 et seq.), Head providers or to individuals for testing or
(2) Identified harms: presumptions of
Start (42 U.S.C. 9831 et seq.), Early Head treating COVID–19;
impacted and disproportionately
Start (42 U.S.C. 9831 et seq.), the (C) Behavioral health care, including
impacted beneficiaries. A recipient may
Special Supplemental Nutrition prevention, treatment, emergency or
rely on the following presumptions to
Program for Women, Infants, and first-responder programs, harm
identify beneficiaries presumptively
Children (42 U.S.C. 1786), Section 8 reduction, supports for long-term
impacted or disproportionately
Vouchers (42 U.S.C. 1437f), the Low- recovery, and behavioral health
impacted by the public health
Income Home Energy Assistance facilities and equipment; and
emergency or its negative economic
Program (42 U.S.C. 8621 et seq.), Pell (D) Preventing and responding to
impacts for the purpose of providing a
Grants (20 U.S.C. 1070a), and, if SLFRF increased violence resulting from the
response under paragraph (b)(1) or (b)(3)
funds are to be used for services to public health emergency, including
of this section:
address educational disparities, Title I community violence intervention
(i) Households or populations that eligible schools;
experienced unemployment; programs, or responding to increased
(B) Small businesses operating in a gun violence resulting from the public
experienced increased food or housing qualified census tract, operated by
insecurity; qualify for the Children’s health emergency, including payroll and
Tribal governments or on Tribal lands, covered benefits associated with
Health Insurance Program (42 U.S.C. or operating in the territories; and
1397aa et seq.), Childcare Subsidies community policing strategies;
(C) Nonprofit organizations operating enforcement efforts to reduce gun
through the Child Care and in a qualified census tract, operated by
Development Fund Program (42 U.S.C. violence; and investing in technology
Tribal governments or on Tribal lands, and equipment;
9857 et seq. and 42 U.S.C. 618), or or operating in the territories. (ii) Responding to the negative
Medicaid (42 U.S.C. 1396 et seq.); if (3) Enumerated eligible uses: economic impacts of the public health
funds are to be used for affordable responses presumed reasonably emergency for purposes including:
housing programs, qualify for the proportional. A recipient may use funds (A) Assistance to households and
National Housing Trust Fund (12 U.S.C. to respond to the public health individuals, including:
4568) or the Home Investment emergency or its negative economic (1) Assistance for food; emergency
Partnerships Program (42 U.S.C. 12721 impacts on a beneficiary or class of housing needs; burials, home repairs, or
et seq.); if funds are to be used to beneficiaries for one or more of the weatherization; internet access or digital
address impacts of lost instructional following purposes unless such use is literacy; cash assistance; and assistance
time for students in kindergarten grossly disproportionate to the harm accessing public benefits;
through twelfth grade, any student who caused or exacerbated by the public (2) Paid sick, medical, or family leave
did not have access to in-person health emergency or its negative programs, or assistance to expand access
instruction for a significant period of economic impacts: to health insurance;
time; and low- and moderate-income (i) Responding to the public health (3) Childcare, early learning services,
households and populations are impacts of the public health emergency home visiting, or assistance for child
presumed to be impacted by the public for purposes including: welfare-involved families or foster
health emergency or its negative (A) COVID–19 mitigation and youth;
economic impacts; prevention in a manner that is (4) Programs to address the impacts of
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(ii) The general public is presumed to consistent with recommendations and lost instructional time for students in
be impacted by the public health guidance from the Centers for Disease kindergarten through twelfth grade;
emergency for the purposes of providing Control and Prevention, including (5) Development, repair, and
the uses set forth in paragraphs vaccination programs and incentives; operation of affordable housing and
(b)(3)(i)(A) and (b)(3)(i)(C) of this testing programs; contact tracing; services or programs to increase long-
section; and isolation and quarantine; mitigation and term housing security;
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65031
(6) Financial services that facilitate impacted household, population, or (1) Payroll and covered benefit
the delivery of Federal, State, or local community; expenses for public safety, public
benefits for unbanked and underbanked (ii) Housing vouchers and relocation health, health care, human services, and
individuals; assistance; similar employees to the extent that the
(7) Benefits for the surviving family (iii) Investments in communities to employee’s time is spent mitigating or
members of individuals who have died promote improved health outcomes and responding to the COVID–19 public
from COVID–19, including cash public safety such as parks, recreation health emergency;
assistance to surviving spouses or facilities, and programs that increase (2) Payroll, covered benefit, and other
dependents of individuals who died of access to healthy foods; costs associated with programs or
COVID–19; (iv) Capital expenditures and other services to support the public sector
(8) Assistance for individuals who services to address vacant or abandoned workforce and with the recipient:
want and are available for work, properties;
(i) Hiring or rehiring staff to fill
including those who are unemployed, (v) Services to address educational
budgeted full-time equivalent positions
have looked for work sometime in the disparities; and
(vi) Facilities and equipment related that existed on January 27, 2020, but
past 12 months, who are employed part
to the provision of these services to the that were unfilled or eliminated as of
time but who want and are available for
disproportionately impacted household, March 3, 2021; or
full-time work, or who are employed but
seeking a position with greater population, or community. (ii) Increasing the number of its
opportunities for economic (B) Assistance to small businesses, budgeted full-time equivalent
advancement; including: employees by up to the difference
(9) Facilities and equipment related to (1) Programs, services, or capital between the number of its budgeted full-
the provision of services to households expenditures that respond to the time equivalent employees on January
provided in paragraphs (b)(3)(ii)(A)(1) negative economic impacts of the 27, 2020, multiplied by 1.075, and the
through(8) of this section; COVID–19 public health emergency, number of its budgeted full-time
(10) The following expenses related to including loans or grants to mitigate equivalent employees on March 3, 2021,
Unemployment Trust Funds: financial hardship such as declines in provided that funds shall only be used
(i) Contributions to a recipient revenues or impacts of periods of for additional budgeted full-time
Unemployment Trust Fund and business closure, or providing technical equivalent employees above the
repayment of principal amounts due on assistance; and recipient’s number of budgeted full-time
advances received under Title XII of the (2) A program, service, capital equivalent employees as of March 3,
Social Security Act (42 U.S.C. 1321) up expenditure, or other assistance that 2021;
to an amount equal to (a) the difference responds to disproportionately (3) Costs to improve the design and
between the balance in the recipient’s impacted small businesses, including execution of programs responding to the
Unemployment Trust Fund as of rehabilitation of commercial properties; COVID–19 pandemic and to administer
January 27, 2020, and the balance of storefront and façade improvements; or improve the efficacy of programs
such account as of May 17, 2021, plus technical assistance, business addressing the public health emergency
(b) the principal amount outstanding as incubators, and grants for start-ups or or its negative economic impacts; and
of May 17, 2021, on any advances expansion costs for small businesses; (4) Costs associated with addressing
received under Title XII of the Social and programs or services to support administrative needs of recipient
Security Act between January 27, 2020, micro-businesses; governments that were caused or
and May 17, 2021; provided that if a (C) Assistance to nonprofit exacerbated by the pandemic.
recipient repays principal on Title XII organizations including programs, (4) Capital expenditures. A recipient,
advances or makes a contribution to an services, or capital expenditures, other than a Tribal government, must
Unemployment Trust Fund after April including loans or grants to mitigate prepare a written justification for certain
1, 2022, such recipient shall not reduce financial hardship such as declines in capital expenditures according to Table
average weekly benefit amounts or revenues or increased costs, or technical 1 of paragraph (b) of this section. Such
maximum benefit entitlements prior to assistance; written justification must include the
December 31, 2024; and (D) Assistance to tourism, travel,
following elements:
(ii) Any interest due on such advances hospitality, and other impacted
industries for programs, services, or (i) Describe the harm or need to be
received under Title XII of the Social
capital expenditures, including support addressed;
Security Act (42 U.S.C. 1321); and
(11) A program, service, capital for payroll costs and covered benefits (ii) Explain why a capital expenditure
expenditure, or other assistance that is for employees, compensating returning is appropriate; and
provided to a disproportionately employees, support for operations and (iii) Compare the proposed capital
impacted household, population, or maintenance of existing equipment and expenditure to at least two alternative
community, including: facilities, and technical assistance; and capital expenditures and demonstrate
(i) Services to address health (E) Expenses to support public sector why the proposed capital expenditure is
disparities of the disproportionately capacity and workforce, including: 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
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Less than $1 million ........................ No Written Justification required ............................... No Written Justification required.
Greater than or equal to $1 million, Written Justification required but recipients are not Written Justification required and recipients must
but less than $10 million. required to submit as part of regular reporting to submit as part of regular reporting to Treasury.
Treasury.
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65032 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
TABLE 1 TO PARAGRAPH (b)—Continued
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
$10 million or more ......................... Written Justification required and recipients must
submit as part of regular reporting to Treasury.
(c) Providing premium pay to eligible (A) December 31, 2020, December 31, increase in a rate, the reduction of a
workers. A recipient may use funds to 2021, December 31, 2022, and December rebate, a deduction, or a credit, or
provide premium pay to eligible 31, 2023; or otherwise) or accelerates the imposition
workers of the recipient who perform (B) The last day of each of the of any tax or tax increase and that the
essential work or to provide grants to recipient’s fiscal years ending in 2020, recipient assesses has had the effect of
eligible employers that have eligible 2021, 2022, and 2023. increasing the amount of tax revenue
workers who perform essential work, (ii) A reduction in a recipient’s collected during the 12-month period
provided that any premium pay or general revenue for each date identified ending on the calculation date relative
grants provided under this paragraph (c) in paragraph (d)(2)(i) equals: to the amount of tax revenue that would
must respond to eligible workers Max {[Base Year Revenue* (1 + Growth have been collected in the absence of
performing essential work during the Adjustment)∧(nt/12)]¥Actual such change, the recipient must subtract
COVID–19 public health emergency. A General Revenue; 0} from actual general revenue the amount
recipient uses premium pay or grants of such increase in tax revenue; and
Where: (3) If the recipient makes a one-time
provided under this paragraph (c) to
respond to eligible workers performing (A) Base Year Revenue is the election to adjust general revenue to
essential work during the COVID–19 recipient’s general revenue for the most reflect tax changes made during the
public health emergency if: recent full fiscal year prior to the period beginning on January 27, 2020
COVID–19 public health emergency; and ending on January 6, 2022, for
(1) The eligible worker’s total wages (B) Growth Adjustment is equal to the purposes of each calculation date
and remuneration, including the greater of 5.2 percent (or 0.052) and the identified in paragraph (d)(2)(i) of this
premium pay, is less than or equal to recipient’s average annual revenue section:
150 percent of the greater of such growth over the three full fiscal years (i) In the case of any change made
eligible worker’s residing State’s or prior to the COVID–19 public health during such prior period to any law,
county’s average annual wage for all emergency; regulation, or administrative
occupations as defined by the Bureau of (C) n equals the number of months interpretation that reduces any tax (by
Labor Statistics’ Occupational elapsed from the end of the base year to providing for a reduction in a rate, a
Employment and Wage Statistics; the calculation date; rebate, a deduction, a credit, or
(2) The eligible worker is not exempt (D) Subscript t denotes the specific otherwise) or delays the imposition of
from the Fair Labor Standards Act calculation date; and any tax or tax increase and that the
overtime provisions (29 U.S.C. 207); or (E) Actual General Revenue is a recipient assesses has had the effect of
(3) The recipient has submitted to the recipient’s actual general revenue decreasing the amount of tax revenue
Secretary a written justification that collected during the 12-month period collected during the 12-month period
explains how providing premium pay to ending on each calculation date ending on the calculation date relative
the eligible worker is responsive to the identified in paragraph (d)(2)(i) of this to the amount of tax revenue that would
eligible worker performing essential section, except: have been collected in the absence of
work during the COVID–19 public (1) For purposes of all calculation such change, the recipient must add to
health emergency (such as a description dates on or after April 1, 2022, in the actual general revenue the amount of
of the eligible workers’ duties, health, or case of any change made after January such decrease in tax revenue; and
financial risks faced due to COVID–19, 6, 2022, to any law, regulation, or (ii) In the case of any change made
and why the recipient determined that administrative interpretation that during such prior period to any law,
the premium pay was responsive reduces any tax (by providing for a regulation, or administrative
despite the worker’s higher income). reduction in a rate, a rebate, a interpretation that increases any tax (by
(d) Providing government services. A deduction, a credit, or otherwise) or providing for an increase in a rate, the
recipient may use funds for the delays the imposition of any tax or tax reduction of a rebate, a deduction, or a
provision of government services up to increase and that the recipient assesses credit, or otherwise) or accelerates the
an amount equal to the greater of: has had the effect of decreasing the imposition of any tax or tax increase
amount of tax revenue collected during and that the recipient assesses has had
(1) $10,000,000; or the 12-month period ending on the the effect of increasing the amount of
(2) the amount of the reduction in the calculation date relative to the amount tax revenue collected during the 12-
recipient’s general revenue due to the of tax revenue that would have been month period ending on the calculation
COVID–19 public health emergency, collected in the absence of such change, date relative to the amount of tax
which equals the sum of the reduction the recipient must add to actual general revenue that would have been collected
in revenue, calculated as of each date revenue the amount of such decrease in in the absence of such change, the
identified in paragraph (d)(2)(i) of this tax revenue; recipient must subtract from actual
lotter on DSK11XQN23PROD with RULES2
section and according to the formula in (2) For purposes of any calculation general revenue the amount of such
paragraph (d)(2)(ii) of this section: date on or after April 1, 2022, in the increase in tax revenue; and
(i) A recipient must make a one-time case of any change made after January (4) With respect to any calculation
election to calculate the reduction in its 6, 2022, to any law, regulation, or date during the period beginning on
general revenue using information as of administrative interpretation that January 6, 2022, and ending on March
either: increases any tax (by providing for an 31, 2022, if the recipient makes the
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65033
election in paragraph (d)(3) of this (B) In the case of projects within the (vii) Private wells. Rehabilitation of
section, the recipient must also make scope of the program the EPA is private wells, testing initiatives to
the adjustments referenced in paragraph authorized to establish under section identify contaminants in private wells,
(d)(3) of this section with respect to any 1459B(b)(1) of the Safe Drinking Water and treatment activities and remediation
such changes in law, regulation, or Act, the recipient may determine the projects that address contamination in
administrative interpretation during the income eligibility of homeowners private wells, if the project meets the
period beginning on January 6, 2022, served by lead service line replacement requirements of 40 CFR 35.3520 other
and ending on such calculation date. projects in its discretion. than the limitation to certain eligible
(e) Making necessary investments in (v) Drinking water projects to support systems under paragraph (a) of 40 CFR
water, sewer, and broadband increased population. Projects of the 35.3520.
infrastructure. A recipient may use type that meet the eligibility (2) Broadband investments—(i)
funds to make the following requirements of 40 CFR 35.3520 other General. Broadband infrastructure if the
investments in water, sewer, and than the requirement of 40 CFR following conditions are met:
broadband infrastructure. 35.3520(b)(1) to address present or (A) The broadband infrastructure is
(1) Water and sewer investments—(i) prevent future violations of health-based designed to provide service to
Clean Water State Revolving Fund drinking water standards, if the households and businesses with an
projects. Projects or activities of the type following conditions are met: identified need, as determined by the
that meet the eligibility requirements of (A) The project is needed to support recipient, for such infrastructure;
section 603(c) of the Federal Water increased population, with need (B) The broadband infrastructure is
Pollution Control Act (33 U.S.C. assessed as of the time the project is designed to, upon completion:
1383(c)); undertaken; (1) Reliably meet or exceed
(ii) Additional stormwater projects. (B) The project is designed to support symmetrical 100 Mbps download speed
Projects to manage, reduce, treat, or no more than a reasonable level of and upload speeds; or
projected increased need, whether due (2) In cases where it is not practicable,
recapture stormwater or subsurface
to population growth or otherwise; because of the excessive cost of the
drainage water regardless of whether
project or geography or topography of
such projects would improve water (C) The project is a cost-effective
the area to be served by the project, to
quality if such projects would otherwise means for achieving the desired level of
provide service reliably meeting or
meet the eligibility requirements of service; and
exceeding symmetrical 100 Mbps
section 603(c)(5) of the Federal Water (D) The project is projected to
download speed and upload speeds:
Pollution Control Act (33 U.S.C. continue to provide an adequate level of (i) Reliably meet or exceed 100 Mbps
1383(c)(5)); drinking water over its estimated useful download speed and between at least 20
(iii) Drinking Water State Revolving life. Mbps and 100 Mbps upload speed; and
Fund projects. Projects or activities of (vi) Dams and reservoirs. (ii) Be scalable to a minimum of 100
the type that meet the eligibility Rehabilitation of dams and reservoirs if Mbps download speed and 100 Mbps
requirements of section 1452 of the Safe the following conditions are met: upload speed; and
Drinking Water Act (42 U.S.C. 300j–12) (A) The project meets the (C) The service provider for a
as implemented by the regulations requirements of 40 CFR 35.3520 other completed broadband infrastructure
adopted by the Environmental than the following requirements: investment project that provides service
Protection Agency (EPA) under 40 CFR (1) The prohibition on the to households is required, for as long as
35.3520, provided that: rehabilitation of dams and reservoirs in the SLFRF-funded broadband
(A) The recipient is not required to paragraphs (e)(1) and (e)(3) of 40 CFR infrastructure is in use, by the recipient
comply with the limitation under 40 35.3520; and to:
CFR 35.3520(c)(2) to acquisitions of (2) The requirement in paragraph (1) Participate in the Federal
land from willing sellers or the (b)(1) of 40 CFR 35.3520 that the project Communications Commission’s
prohibition under 40 CFR 35.3520(e)(6) is needed to address present or prevent Affordable Connectivity Program (ACP)
on uses of funds for certain Tribal future violations of health-based through the lifetime of the ACP; or (2)
projects; and drinking water standards, provided that Otherwise provide access to a broad-
(B) In the case of lead service line if the dam or reservoir project does not based affordability program to low-
replacement projects, the recipient must meet this requirement, the project must income consumers in the proposed
replace the full length of the service line be needed to support increased service area of the broadband
and may not replace only a partial population, with need assessed as of the infrastructure that provides benefits to
portion of the service line. time the project is undertaken, and the households commensurate with those
(iv) Additional lead remediation and project must be projected to continue to provided under the ACP through the
household water quality testing. Projects provide an adequate level of drinking lifetime of the ACP.
or activities to address lead in drinking water over its estimated useful life; (ii) Cybersecurity infrastructure
water or provide household water (B) The primary purpose of the dam investments. Cybersecurity
quality testing that are within the scope or reservoir is for drinking water supply; infrastructure investments that are
of the programs the EPA is authorized (C) The project is needed for the designed to improve the reliability and
to establish under sections 1459A(b)(2), provision of drinking water supply, resiliency of new and existing
1459B(b)(1), 1464(d)(2), and 1465 of the with need assessed as of the time the broadband infrastructure. Such
Safe Drinking Water Act (42 U.S.C. project is initiated; investments may include the addition or
300j–19a(b)(2), 300j–19b(b)(1), 300j– (D) The project is designed to support modernization of network security
lotter on DSK11XQN23PROD with RULES2
24(d)(2), and 300j–25), provided that: no more than a reasonable level of hardware and software tools designed to
(A) In the case of lead service line projected increased need, whether due strengthen cybersecurity for the end-
replacement projects, the recipient must to population growth or otherwise; and users of these networks.
replace the full length of the service line (E) The project is a cost-effective (f) Meeting the non-Federal matching
and may not replace only a partial means for achieving the desired level of requirements for Bureau of Reclamation
portion of the service line; and service. projects. A recipient may use funds to
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65034 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
meet the non-Federal matching emergency relief is related and person, business concern, or other entity
requirements of any authorized Bureau reasonably proportional to the physical with respect to disaster losses for which
of Reclamation project. or negative economic impacts of the such beneficiary will receive financial
(g) Natural Disaster Emergency Relief. natural disaster identified: assistance under any other program or
Subject to paragraph (g)(3) of this (A) Temporary emergency housing, from insurance or any other source.
section, a recipient may use funds to food assistance, and financial assistance (B) A recipient may provide
provide emergency relief from the for lost wages; assistance with respect to disaster losses
physical impacts or negative economic (B) Emergency protective measures, to a person, business concern, or other
impacts of a natural disaster, including including assistance for emergency entity that is or may be entitled to
the forms of emergency relief identified access, medical care and transport, receive assistance for those losses from
in paragraph (g)(2) of this section, if the emergency operations center related another source, if such person, business
use meets the criteria provided in costs, and other activities traditionally concern, or other entity has not received
paragraph (g)(1) of this section. undertaken as part of emergency the other benefits by the time of
(1) Identifying emergency relief from response; application for assistance and the
the physical or negative economic (C) Debris removal activities, person, business concern, or other entity
impacts of a natural disaster. A including the clearance, removal, and agrees to repay any duplicative
recipient provides emergency relief disposal of vegetative debris, assistance to the recipient. A recipient
from the physical impacts or negative construction and demolition debris, providing assistance with respect to
economic impacts of a natural disaster sand, mud, silt, gravel, rocks, boulders, disaster losses shall coordinate with the
when the recipient: white goods, and vehicle and vessel relevant Regional Administrator of the
(i) Identifies either: wreckage; Federal Emergency Management Agency
(A) a natural disaster that has (D) Restoration of public and state disaster-assistance
occurred or is expected to occur infrastructure damaged by a natural administrator. Recipients shall notify
imminently and that has been the disaster, including roads, bridges, and subrecipients and contractors that,
subject of an emergency declaration or utilities; when providing assistance with respect
designation applicable to the recipient’s (E) Increased operational costs, to disaster losses, those entities are
geography and jurisdiction in the form including payroll costs and costs for responsible for ensuring that
of: government facilities and government beneficiaries disclose any other
(1) an emergency declaration pursuant services; assistance received for the same disaster
to the Stafford Act; (F) Cash assistance for uninsured or losses prior to receiving assistance
(2) an emergency declaration by the underinsured expenses, and cash under this paragraph (g).
Governor of a state pursuant to state assistance serving low-income (C) Funds shall be used last in the
law; households; or delivery sequence unless the recipient,
(3) an emergency declaration made by (G) Home repairs for uninhabitable in consultation with the appropriate
a Tribal government; or primary residences; or Regional Administrator of the Federal
(4) a designation as a natural disaster (ii) the potential physical or negative Emergency Management Agency or state
by the chief executive (or equivalent) of economic impacts of natural disasters disaster-assistance administrator,
the recipient, provided that the chief identified under paragraph (g)(1)(i)(B) of determines that another sequence is
executive (or equivalent) documents this section by using funds for appropriate.
that the event meets the definition of mitigation activities, provided that the (h) Certain infrastructure projects. A
natural disaster; or emergency relief is related and recipient may use funds for Surface
(B) a natural disaster that is reasonably proportional to the potential Transportation projects as set forth in
threatened to occur in the future, physical or negative economic impacts paragraph (h)(1) of this section and for
provided that the recipient documents of the natural disaster identified, and Title I projects as set forth in paragraph
evidence of historical patterns or provided further that if funds are used (h)(2) of this section, subject to the
predictions of natural disasters that for capital expenditures under this requirements set forth in paragraph
would reasonably demonstrate the paragraph, a recipient, other than a (h)(3) of this section.
likelihood of the future occurrence of a Tribal government, must prepare a (1) Surface Transportation projects. A
natural disaster in the recipient’s written justification for activities under recipient may use funds for Surface
jurisdiction; and this paragraph (g)(2)(ii) with total Transportation projects in the manner
(ii) Provides emergency relief that capital expenditures of $1 million or set forth in paragraph (h)(1)(i) of this
responds to and is related and greater. Such written justification must section, subject to the requirements and
reasonably proportional to: include the following elements: limitations set forth in paragraph
(A) the physical or negative economic (A) Describe the emergency relief (h)(1)(ii) of this section.
impacts of the natural disaster identified provided by the mitigation activity and (i)(A) A recipient may use funds to
in paragraph (g)(1)(i)(A) of this section, why it is needed to lessen or avert the expand the scope of, to cover additional
or potential impacts of the natural disaster costs associated with, or to otherwise
(B) the potential physical or negative that is threatened to occur in the future; supplement funding for a project
economic impacts of the natural disaster (B) Explain why the capital receiving funding from the Department
identified in paragraph (g)(1)(i)(B) of expenditure is appropriate to address of Transportation at the time that the
this section. the need for emergency relief; and funds are obligated and expended for
(2) Enumerated eligible uses. A (C) Compare the proposed capital the project.
recipient may use funds to provide expenditure to at least two alternative (B) A recipient may use funds for a
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emergency relief from capital expenditures and demonstrate Surface Transportation project that is
(i) the physical or negative economic why the proposed capital expenditure is not funded by the Department of
impacts of natural disasters identified superior. Transportation at the time the funds are
under paragraph (g)(1)(i)(A) of this (3) Duplication of benefits. (A) A obligated and expended.
section by engaging in one of the recipient may not provide financial (C) A recipient may use funds to
following activities, provided that the assistance under this paragraph (g) to a satisfy non-Federal share requirements
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65035
for a project eligible under the paragraph (h)(1)(ii)(B)(2)(i) through (iii) the Tribal government that these
provisions identified in paragraphs (1), of this section; beneficiaries are receiving or are eligible
(18), (21), and (27) of the definition of (5) Project design, planning, to receive services administered by the
‘‘Surface Transportation project’’ in construction, operation, maintenance, Tribal government on the basis of an
§ 35.3 or to repay a loan provided under vehicle weight limit, and toll individual’s income.
the Transportation Infrastructure requirements, provided that the (B) In the case of recipients that are
Finance and Innovation Act program requirement to include Surface not Tribal governments, funds used for
under 23 U.S.C. chapter 6. Transportation projects in a state projects must satisfy at least one of the
(ii) The following limitations and transportation improvement program or national objectives as set forth in 24
requirements apply to funds used for transportation improvement program CFR 570.208.
Surface Transportation projects under shall not apply to Surface (C) Not more than 15 percent of funds
paragraphs (h)(1)(i)(A) and (h)(1)(i)(B) of Transportation projects undertaken used for such projects, in the aggregate,
this section. pursuant to paragraph (h)(1)(i)(B) of this may be used for public services
(A) Funds used for Surface section except in circumstances when activities and projects eligible under 42
Transportation projects eligible under the project is regionally significant and U.S.C. 5305(a)(8).
the provisions set forth in paragraphs requires action by an office of the (D) Not more than 20 percent of funds
(20) through (24) of the definition of Department of Transportation pursuant used for such projects, in the aggregate,
‘‘Surface Transportation projects’’ in to 23 CFR 450.218. may be used for planning and
§ 35.3 shall not be used for operating (C) Except as otherwise determined by administrative costs, as described at 24
expenses of such a project. the Secretary or the head of the Federal CFR 570.200(g), 570.205, and 570.206
(B) Except as otherwise determined by agency to which the Secretary has with respect to recipients that are not
the Secretary or the head of the Federal delegated authority, the requirements of Tribal governments, and as described at
agency to which the Secretary has the National Environmental Policy Act 24 CFR 1003.205 and 1003.206 with
delegated authority, the requirements of of 1969 (42 U.S.C. 4321 et seq.), and the respect to recipients that are Tribal
titles 23, 40, and 49 of the U.S. Code, associated implementing regulations, governments.
and the associated implementing apply to Surface Transportation (E) In the case of recipients that are
regulations, apply to Surface projects. not Tribal governments, funds used for
Transportation projects, including but (D) When a State uses funds for a
such projects must satisfy the
not limited to the following: Surface Transportation project eligible
requirements set forth at 42 U.S.C. 5310
(1) Project eligibility requirements; under title 23 of the U.S. Code or that
and 24 CFR 570.603.
(2) Project approval requirements, otherwise would be subject to the
(F) Prior to commencing a Title I
provided that such requirements shall requirements of title 23, the project
project, a recipient must comply with
not apply to Surface Transportation must either:
(1) Demonstrate progress in achieving the environmental protection measures
projects undertaken pursuant to
a state of good repair as required by the set forth at 42 U.S.C. 5304(g) and the
paragraph (h)(1)(i)(B) of this section that
State’s asset management plan under 23 implementing regulations set forth at 24
meet the following criteria:
(i) The project qualifies as an ‘‘eligible U.S.C. 119(e), or CFR 570.604, 24 CFR 1003.605, and 24
project’’ under the program described in (2) Support the achievement of one or CFR part 58, provided that the
paragraph (17) of the definition of more performance targets of the State certification contemplated by 42 U.S.C.
Surface Transportation project set forth established under 23 U.S.C. 150. 5304(g) shall be submitted to the
in § 35.3; (2) Title I projects. A recipient may Secretary and not the Secretary of the
(ii) The recipient does not use more use funds for Title I projects, subject to Department of Housing and Urban
than $10 million in funds for the the following limitations and Development.
project; and requirements: (ii) To the extent a Title I project
(iii) The entire project scope, (i) Except as otherwise determined by relates to broadband infrastructure, the
including for avoidance of doubt any the Secretary or the head of the Federal requirements of section 60102 of the
portion of the project funded through agency to which the Secretary has Infrastructure Investment and Jobs Act
other sources, is limited to the actions delegated authority, the requirements of shall apply.
or activities listed under 23 CFR Title I of the Housing and Community (3) Requirements applicable to
771.116(c)(1) through(22), 23 CFR Development Act of 1974 (42 U.S.C. Surface Transportation projects and
771.117(c)(1) through(30), and 23 CFR 5301 et seq.), and the associated Title I projects. (i) The total amount of
771.118(c)(1) through(16), provided that implementing regulations, apply to Title funds that a recipient may use for costs
the actions or activities do not involve I projects, including: incurred for projects set forth in
unusual circumstances, as described in (A) At least 70 percent of funds used paragraphs (h)(1) and (h)(2) of this
23 CFR 771.116(b), 23 CFR 771.117(b), for such projects, in the aggregate, must section, taken together, shall not exceed
and 23 CFR 771.118(b). be used for projects that principally the greater of $10,000,000 and 30
(3) Wage and employee protection benefit low- and moderate-income percent of the recipient’s total award
requirements, including the persons, in accordance with the received pursuant to payment or
requirements set forth at 23 U.S.C. 113 definitions and requirements set forth at transfer of funds made under section
and 49 U.S.C. 5333(a) and (b); 24 CFR 570.3, 24 CFR 570.200(a)(3), and 602 or 603 of the Social Security Act.
(4) Domestic preference procurement 24 CFR 570.208(a) for recipients that are (ii) Funds used for the projects set
requirements, including the not Tribal governments, and at 24 CFR forth in paragraph (h) of this section
requirements set forth at 23 U.S.C. 313, 1003.4 and 1003.208 for Tribal must supplement, and not supplant,
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49 U.S.C. 5323(j), 49 CFR part 661, and government recipients; provided, other Federal, State, territorial, Tribal,
23 CFR 635.410, provided that such however, that Tribal governments may and local government funds (as
requirements shall not apply to Surface demonstrate that beneficiaries of Title I applicable) that
Transportation projects undertaken assistance are ‘‘low and moderate (A) in the case of non-Federal funds,
pursuant to paragraph (h)(1)(i)(B) of this income beneficiaries,’’ as defined at 24 have been obligated for activities or
section that meet the criteria set forth in CFR 1003.4, based on an attestation by projects that are eligible as part of any
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65036 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations
Surface Transportation project or Title I covered change, the State or Territory (i) The amount set forth in § 35.8(c);
project, as applicable, or assesses has had or predicts to have the and,
(B) in the case of Federal funds, a effect of increasing tax revenue; and (ii) The amount of funds received by
Federal agency has committed to a (ii) Reductions in spending, up to the such recipient.
particular project pursuant to an award amount of the State’s or Territory’s net (c) Initial notice. If the Secretary
agreement or otherwise. reduction in total spending, that are in: calculates an amount subject to
(A) Departments, agencies, or recoupment under paragraph (b) of this
§ 35.7 Pensions. authorities in which the State or section, Treasury will provide the
A recipient (other than a Tribal Territory is not using funds; and recipient an initial written notice of the
government) may not use funds for (B) Departments, agencies, or amount subject to recoupment along
deposit into any pension fund. authorities in which the State or with an explanation of such amounts.
Territory is using funds, in an amount (d) Request for reconsideration.
§ 35.8 Tax. Unless the Secretary extends or
equal to the value of the spending cuts
(a) Restriction. A State or Territory in those departments, agencies, or accelerates the time period, within 60
shall not use funds to either directly or authorities, minus funds used. calendar days of receipt of an initial
indirectly offset a reduction in the net (c) Amount and revenue reduction notice of recoupment provided under
tax revenue of the State or Territory cap. If a State or Territory is considered paragraph (c) of this section, a recipient
resulting from a covered change during to be in violation pursuant to paragraph may submit a written request to the
the covered period. (b) of this section, the amount used in Secretary requesting reconsideration of
(b) Violation. Treasury will consider a violation of paragraph (a) of this section any amounts subject to recoupment
State or Territory to have used funds to is equal to the lesser of: under paragraph (b) of this section. To
offset a reduction in net tax revenue if, (1) The reduction in net tax revenue request reconsideration of any amounts
during a reporting year: of the State or Territory for the reporting subject to recoupment, a recipient must
(1) Covered change. The State or year, measured as the difference submit to the Secretary a written request
Territory has made a covered change between the State’s or Territory’s that includes:
that, either based on a reasonable baseline and its actual tax revenue, each (1) An explanation of why the
statistical methodology to isolate the measured as of the end of the reporting recipient believes all or some of the
impact of the covered change in actual year; and, amount should not be subject to
revenue or based on projections that use (2) The aggregate amount of the recoupment; and
reasonable assumptions and do not reductions in tax revenues caused by (2) A discussion of supporting
incorporate the effects of covered changes identified in paragraph reasons, along with any additional
macroeconomic growth to reduce or (b)(1) of this section, minus the sum of information.
increase the projected impact of the the amounts in identified in paragraphs (e) Final amount subject to
covered change, the State or Territory (b)(4)(i) and (ii) of this section. recoupment. Unless the Secretary
assesses has had or predicts to have the extends or accelerates the time period,
effect of reducing tax revenue relative to § 35.9 Compliance with applicable laws. within 60 calendar days of receipt of the
current law; A recipient must comply with all recipient’s request for reconsideration
(2) Exceeds the de minimis threshold. other applicable Federal statutes, provided pursuant to paragraph (d) of
The aggregate amount of the measured regulations, and executive orders, and a this section or the expiration of the
or predicted reductions in tax revenue recipient shall provide for compliance period for requesting reconsideration
caused by covered changes identified with the American Rescue Plan Act, this provided under paragraph (d) of this
under paragraph (b)(1) of this section, in subpart, and any interpretive guidance section, the recipient will be notified of
the aggregate, exceeds 1 percent of the by other parties in any agreements it the Secretary’s decision to affirm,
State’s or Territory’s baseline; enters into with other parties relating to withdraw, or modify the notice of
(3) Reduction in net tax revenue. The these funds. recoupment. Such notification will
State or Territory reports a reduction in include an explanation of the decision,
net tax revenue, measured as the § 35.10 Recoupment. including responses to the recipient’s
difference between actual tax revenue (a) Identification of violations—(1) In supporting reasons and consideration of
and the State’s or Territory’s baseline, general. Any amount used in violation additional information provided. A
each measured as of the end of the of §§ 35.5, 35.6, or 35.7 may be recipient must invoke and exhaust the
reporting year; and identified at any time prior to December procedures available under this subpart
(4) Consideration of other changes. 31, 2026. prior to seeking judicial review of a
The aggregate amount of measured or (2) Annual reporting of amounts of decision under § 35.10.
predicted reductions in tax revenue violations. On an annual basis, a (f) Repayment of funds. Unless the
caused by covered changes is greater recipient that is a State or territory must Secretary extends or accelerates the time
than the sum of the following, in each calculate and report any amounts used period, a recipient shall repay to the
case, as calculated for the reporting in violation of § 35.8. Secretary any amounts subject to
year: (b) Calculation of amounts subject to recoupment in accordance with
(i) The aggregate amount of the recoupment—(1) In general. Except as instructions provided by the Secretary:
expected increases in tax revenue provided in paragraph (b)(2) of this (1) Within 120 calendar days of
caused by one or more covered changes section, the Secretary will calculate any receipt of the notice of recoupment
that, either based on a reasonable amounts subject to recoupment provided under paragraph (c) of this
statistical methodology to isolate the resulting from a violation of §§ 35.5, section, in the case of a recipient that
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impact of the covered change in actual 35.6 or 35.7 as the amounts used in does not submit a request for
revenue or based on projections that use violation of such restrictions. reconsideration in accordance with the
reasonable assumptions and do not (2) Violations of § 35.8. The Secretary requirements of paragraph (d) of this
incorporate the effects of will calculate any amounts subject to section; or
macroeconomic growth to reduce or recoupment resulting from a violation of (2) Within 120 calendar days of
increase the projected impact of the § 35.8, equal to the lesser of: receipt of the Secretary’s decision under
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Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 65037
paragraph (e) of this section, in the case section 602(c) of the Social Security Act January 27, 2020. A State or Territory
of a recipient that submits a request for and will use the payment in compliance shall permit a nonentitlement unit of
reconsideration in accordance with the with section 602(c) of the Social local government without a formal
requirements of paragraph (d) of this Security Act; and budget as of January 27, 2020, to
section. (2) Any reports required to be filed by provide a certification from an
(g) Other remedial actions. Prior to that date pursuant to this part that have authorized officer of the nonentitlement
seeking recoupment or taking other not yet been filed. unit of local government of its most
appropriate action pursuant to recent annual expenditures as of
§ 35.12 Distributions to nonentitlement
paragraphs (c), (d), (e), or (f) of this units of local government and units of January 27, 2020, and a State or
section, the Secretary may notify the general local government. Territory may rely on such certification
recipient of potential violations and (a) Nonentitlement units of local for purposes of complying with this
provide the recipient an opportunity for government. Each State or Territory that section 35.12.
informal consultation and remediation. receives a payment from the Secretary (c) Units of general local government.
pursuant to section 603(b)(2)(B) of the Each State or Territory that receives a
§ 35.11 Payments to States.
Social Security Act shall distribute the payment from the Secretary pursuant to
(a) In general. With respect to any amount of the payment to section 603(b)(3)(B)(ii) of the Social
State or Territory that has an nonentitlement units of local Security Act, in the case of an amount
unemployment rate as of the date that government in such State or Territory in to be paid to a county that is not a unit
it submits an initial certification for accordance with the requirements set of general local government, shall
payment of funds pursuant to section forth in section 603(b)(2)(C) of the distribute the amount of the payment to
602(d)(1) of the Social Security Act that Social Security Act and without units of general local government within
is less than two percentage points above offsetting any debt owed by such such county in accordance with the
its unemployment rate in February nonentitlement units of local requirements set forth in section
2020, the Secretary will withhold 50 governments against such payments. 603(b)(3)(B)(ii) of the Social Security
percent of the amount of funds allocated (b) Budget cap. A State or Territory Act and without offsetting any debt
under section 602(b) of the Social may not make a payment to a owed by such units of general local
Security Act to such State or territory nonentitlement unit of local government government against such payments.
until at least May 10, 2022 and not more pursuant to section 603(b)(2)(C) of the (d) Additional conditions. A State or
than twelve months from the date such Social Security Act and paragraph (a) of Territory may not place additional
initial certification is provided to the this section in excess of the amount conditions or requirements on
Secretary. equal to 75 percent of the most recent distributions to nonentitlement units of
(b) Payment of withheld amount. In budget for the nonentitlement unit of local government or units of general
order to receive the amount withheld local government as of January 27, 2020. local government beyond those required
under paragraph (a) of this section, the For purposes of this section 35.12, a by section 603 of the Social Security Act
State or Territory must submit to the nonentitlement unit of local or this subpart A.
Secretary the following information: government’s most recent budget shall
(1) A certification, in the form mean the nonentitlement unit of local Kayla Arslanian,
provided by the Secretary, that such government’s total annual budget, Executive Secretary.
State or Territory requires the payment including both operating and capital [FR Doc. 2023–17446 Filed 9–19–23; 8:45 am]
to carry out the activities specified in expenditure budgets, in effect as of BILLING CODE P
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