64986 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 

1Sec. 9901, Public Law 117–2, 135 Stat. 223. 

2Throughout this SUPPLEMENTARY INFORMATION, 

Treasury uses ‘‘state, local, and Tribal 

governments’’ or ‘‘recipients’’ to refer generally to 

governments receiving SLFRF funds; this includes 

states, territories, Tribal governments, counties, 

metropolitan cities, and nonentitlement units of 

local government. 

3The ARPA added section 602 of the Social 

Security Act, which created the State Fiscal 

Recovery Fund, and section 603 of the Social 

Security Act, which created the Local Fiscal 

Recovery Fund (together, SLFRF). Sections 602 and 

603 contain substantially similar eligible uses; the 

primary difference between the two sections is that 

section 602 established a fund for states, territories, 

and Tribal governments and section 603 established 

a fund for metropolitan cities, nonentitlement units 

of local government, and counties. 

4See 86 FR 26786 (May 17, 2021). 5See 87 FR 4338 (Jan. 27, 2022). 

DEPARTMENT OF THE TREASURY 

31 CFR Part 35 

RIN 1505–AC81 

Coronavirus State and Local Fiscal 

Recovery Funds 

AGENCY: Department of the Treasury. 

ACTION: Interim final rule. 

SUMMARY: The Secretary of the Treasury 

is issuing an interim final rule to 

implement the amendments made by 

the Consolidated Appropriations Act, 

2023 with respect to the Coronavirus 

State Fiscal Recovery Fund and the 

Coronavirus Local Fiscal Recovery Fund 

established under the American Rescue 

Plan Act. 

DATES: 

Effective date: The provisions in this 

interim final rule are effective 

September 20, 2023. 

Comment date: Comments must be 

received on or before November 20, 

2023. 

ADDRESSES: Please submit comments 

electronically through the Federal 

eRulemaking Portal: https://

www.regulations.gov. Comments can be 

mailed to the Office of Recovery 

Programs, Department of the Treasury, 

1500 Pennsylvania Avenue NW, 

Washington, DC 20220. Because postal 

mail may be subject to processing delay, 

it is recommended that comments be 

submitted electronically. All comments 

should be captioned with ‘‘Coronavirus 

State and Local Fiscal Recovery Funds 

2023 Interim Final Rule Comments.’’ 

Please include your name, organization 

affiliation, address, email address and 

telephone number in your comment. 

Where appropriate, a comment should 

include a short executive summary. In 

general, comments received will be 

posted on https://www.regulations.gov 

without change, including any business 

or personal information provided. 

Comments received, including 

attachments and other supporting 

materials, will be part of the public 

record and subject to public disclosure. 

Do not enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

FOR FURTHER INFORMATION CONTACT: 

Jessica Milano, Acting Chief Recovery 

Officer, Office of Recovery Programs, 

Department of the Treasury, (844) 529– 

9527. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

Overview 

Since the first case of coronavirus 

disease 2019 (COVID–19) was 

discovered in the United States in 

January 2020, the pandemic has caused 

severe, intertwined public health and 

economic crises. In March 2021, as 

these crises continued, the American 

Rescue Plan Act of 2021 (ARPA) 1

established the Coronavirus State and 

Local Fiscal Recovery Funds (SLFRF) to 

provide state, local, and Tribal 

governments 2 with the resources 

needed to respond to the pandemic and 

its economic effects and to build a 

stronger, more equitable economy 

during the recovery. Upon enactment, 

the ARPA provided that SLFRF funds 3

may be used: 

(a) To respond to the public health 

emergency or its negative economic 

impacts, including assistance to 

households, small businesses, and 

nonprofits, or aid to impacted industries 

such as tourism, travel, and hospitality; 

(b) To respond to workers performing 

essential work during the COVID–19 

public health emergency by providing 

premium pay to eligible workers; 

(c) For the provision of government 

services to the extent of the reduction in 

revenue due to the COVID–19 public 

health emergency relative to revenues 

collected in the most recent full fiscal 

year prior to the emergency; and 

(d) To make necessary investments in 

water, sewer, or broadband 

infrastructure. 

The U.S. Department of the Treasury 

(Treasury) issued an interim final rule 

implementing the SLFRF program on 

May 10, 2021 (the 2021 interim final 

rule).4 Treasury received over 1,500 

public comments on the 2021 interim 

final rule. 

Executive Summary of the 2022 Final 

Rule 

On January 6, 2022, Treasury issued 

a final rule which responded to public 

comments and made several 

clarifications and changes to the 

provisions of the 2021 interim final rule 

to provide broader flexibility and greater 

simplicity in the SLFRF program.5 The 

2022 final rule provided for the 

following: 

• Public Health and Negative 

Economic Impacts: Recipients may use 

SLFRF funds for a non-exhaustive list of 

programs, services, and capital 

expenditures that support an eligible 

COVID–19 public health or economic 

response. Recipients must serve 

‘‘impacted’’ and ‘‘disproportionately 

impacted’’ classes of beneficiaries: 

impacted classes experienced the 

general, broad-based impacts of the 

pandemic, while disproportionately 

impacted classes faced more severe 

impacts, often due to preexisting 

disparities. 

Public health eligible uses include 

COVID–19 mitigation and prevention, 

medical expenses, behavioral 

healthcare, and preventing and 

responding to violence. Negative 

economic impact eligible uses include 

assistance to households such as job 

training, rent, mortgage, or utility aid, 

affordable housing development, 

childcare; assistance to small businesses 

or nonprofits such as through loans or 

grants to mitigate financial hardship; 

assistance to impacted industries like 

travel, tourism, and hospitality that 

faced substantial pandemic impacts; or 

assistance to address impacts to the 

public sector, for example by hiring 

public sector workers to pre-pandemic 

levels. 

• Premium Pay: Recipients may 

provide premium pay to a broad set of 

essential workers. 

• Revenue Loss: Recipients may 

determine revenue loss due to the 

COVID–19 public health emergency by 

claiming the standard allowance of up 

to $10 million or completing the full 

revenue loss calculation. Recipients 

may use funds under revenue loss for 

government services. 

• Water, Sewer, and Broadband 

Infrastructure: Recipients may use 

SLFRF funds for eligible broadband 

infrastructure investments to improve 

access, affordability, and reliability; and 

for eligible water and sewer 

infrastructure investments, including a 

broad range of lead remediation and 

stormwater management projects. 

Impact of SLFRF 

Since the launch of the SLFRF 

program, Treasury has disbursed 

99.99% of SLFRF funds to 

approximately 30,000 state, local, and 


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6U.S. Department of the Treasury, April 2023 

Quarterly and Annual Reporting Analysis, https:// 

home.treasury.gov/system/files/136/April-2023- 

Reporting-Blog-Post.pdf. 

7The figures included in this interim final rule 

include Project and Expenditure reporting data 

covering the period ending March 31, 2023 from the 

all SLFRF recipients. It includes quarterly data 

reported by states, territories, and metropolitan 

cities and counties with a population over 250,000 

or an allocation over $10 million, non-entitlement 

units of local government allocated more than $10 

million, and Tribal governments allocated over $30 

million from January 1, 2023–March 31, 2023 and 

annual data reported by metropolitan cities and 

counties with populations less than 250,000 and an 

allocation less than $10 million, Tribal governments 

with an allocation less than $30 million, and nonentitlement units of local government allocated less 

than $10 million from April 1, 2022 to March 31, 

2023. 

8Press Release, U.S. Department of the Treasury, 

Remarks by Secretary of the Treasury Janet L. 

Yellen at National Association of Counties 2023 

Legislative Conference (Feb. 14, 2023). 9Public Law 117–328 (Dec. 29, 2022). 

Tribal governments, and these 

recipients have moved swiftly to deploy 

this funding in their communities. 

According to data reported to Treasury 

through March 31, 2023,6 states and the 

largest local governments have budgeted 

nearly 80% of their total available 

SLFRF funds. Recipients are using 

SLFRF funds across a wide variety of 

eligible uses to meet the unique needs 

of their communities.7 Recipients have 

been using SLFRF funds to shore up 

state and local finances, helping to 

avoid a repeat of the Great Recession 

when state and local government 

budgets were a drag on the overall 

economy for 14 quarters of the 

recovery.8 Recipients reported that they 

budgeted nearly $100 billion for over 

53,000 revenue replacement projects to 

provide fiscal stability through the 

provision of government services. 

Recipients have also budgeted over $12 

billion across over 5,800 projects to 

respond to the public health needs of 

the COVID–19 pandemic including by 

providing testing, vaccinations, staffing, 

and outreach to underserved 

communities; budgeted $17 billion in 

projects to meet housing needs 

including through rental assistance, 

development and preservation of 

affordable housing, and permanent 

supportive housing services; budgeted 

over $11 billion to support workers 

through job training for populations 

impacted by the pandemic, to provide 

premium pay, and to invest in public 

sector capacity building; and budgeted 

over $26 billion for water, sewer, and 

broadband infrastructure projects. 

Overall, the impact of the SLFRF 

program is already proving to be 

transformative for communities across 

the country as recipients use SLFRF 

funds to build a more equitable 

economic recovery and help the country 

be better prepared for future crises. 

Overview of the Consolidated 

Appropriations Act, 2023 

On December 29, 2022, the 

Consolidated Appropriations Act, 2023 

(the 2023 CAA) was signed into law by 

the President,9 amending sections 602 

and 603 of the Social Security Act to 

give state, local, and Tribal governments 

more flexibility to use SLFRF funds to 

provide emergency relief from natural 

disasters, build critical infrastructure, 

and support community development. 

Generally, the 2023 CAA does not 

alter the existing eligible use categories 

originally provided by the ARPA. All 

eligible uses described in the 2022 final 

rule remain available to recipients. The 

2023 CAA codifies the option for 

recipients to use up to $10 million, 

which Treasury termed the ‘‘standard 

allowance,’’ to replace lost revenue and 

use that funding to provide government 

services in lieu of calculating revenue 

loss according to the formula set forth 

in the 2022 final rule. Otherwise, the 

2023 CAA provides for new eligible 

uses. 

The 2023 CAA provides that state, 

local, and Tribal governments may use 

SLFRF funds to provide emergency 

relief from natural disasters or the 

negative economic impacts of natural 

disasters, including temporary 

emergency housing, food assistance, 

financial assistance for lost wages, or 

other immediate needs. As described 

later in this interim final rule, the 

emergency relief from natural disasters 

eligible use category is subject to the 

same program administration 

requirements as the four existing 

eligible uses in the SLFRF program, 

including the obligation deadline of 

December 31, 2024, and expenditure 

deadline of December 31, 2026. 

The 2023 CAA also grants the 

authority for recipients to use SLFRF 

funds for additional infrastructure 

projects, including projects eligible 

under certain Department of 

Transportation programs (Surface 

Transportation projects) and projects 

eligible under Title I of the Housing and 

Community Development Act of 1974 

(Title I projects). The 2023 CAA also 

provides additional requirements that 

apply to SLFRF funds used for Surface 

Transportation and Title I projects. 

These additional requirements provided 

for in the 2023 CAA are outlined below: 

• The total amount of SLFRF funds a 

recipient may direct toward Surface 

Transportation and Title I projects is 

capped at the greater of $10 million and 

30% of a recipient’s total SLFRF award. 

• Except as otherwise determined by 

the Secretary, the use of SLFRF funds 

for Surface Transportation and Title I 

projects is also subject to certain other 

laws, including the requirements of 

titles 23, 40, and 49 of the U.S. Code, 

title I of the Housing and Community 

Development Act of 1974, and the 

National Environmental Policy Act of 

1969. 

• SLFRF funds used for Surface 

Transportation and Title I projects must 

supplement, not supplant, other 

Federal, state, territorial, Tribal, and 

local government funds (as applicable) 

that are otherwise available for these 

projects. This provision does not apply 

to funds used under the emergency 

relief from natural disasters eligible use 

category. 

• Recipients must obligate funds used 

for Surface Transportation projects and 

Title I projects by December 31, 2024 

(the same obligation deadline that 

applies to the other eligible uses) and 

must expend funds by September 30, 

2026. This expenditure deadline is three 

months earlier than the expenditure 

deadline for all other eligible uses. 

• Treasury may delegate oversight 

and administration of the requirements 

associated with funds used for Surface 

Transportation projects and Title I 

projects to the appropriate Federal 

agency. This interim final rule discusses 

how the Department of Transportation 

will oversee funds expended for certain 

Surface Transportation projects. 

Sections 602 and 603 of the Social 

Security Act specify two restrictions on 

uses of funds: for recipients other than 

Tribal governments, funds may not be 

used for deposits into any pension fund 

and, in the case of states and territories 

only, funds may not be used to directly 

or indirectly offset a reduction in net tax 

revenue resulting from a change in law, 

regulation, or administrative 

interpretation during the covered 

period. The 2023 CAA did not amend 

these restrictions. 

Thus, sections 602(c)(1) and 603(c)(1) 

of the Social Security Act, as amended 

by the 2023 CAA, provide that SLFRF 

funds may be used: 

(a) To respond to the public health 

emergency or its negative economic 

impacts, including assistance to 

households, small businesses, and 

nonprofits, or aid to impacted industries 

such as tourism, travel, and hospitality; 

(b) To respond to workers performing 

essential work during the COVID–19 

public health emergency by providing 

premium pay to eligible workers; 


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10See section 40909 of Public Law 117–58, 135 

Stat. 429, 1126 (Nov. 15, 2021). 

(c) For the provision of government 

services up to an amount equal to the 

greater of— 

(i) The amount of the reduction in 

revenue due to the COVID–19 public 

health emergency relative to revenue 

collected in the most recent full fiscal 

year prior to the emergency; or 

(ii) $10,000,000 

(d) To make necessary investments in 

water, sewer, or broadband 

infrastructure; or 

(e) To provide emergency relief from 

natural disasters or the negative 

economic impacts of natural disasters, 

including temporary emergency 

housing, food assistance, financial 

assistance for lost wages, or other 

immediate needs. 

Sections 602(c)(4) and 603(c)(5) of the 

Social Security Act, as amended by the 

Infrastructure Investment and Jobs Act, 

provide that SLFRF funds may be used 

for an authorized Bureau of Reclamation 

project for purposes of satisfying any 

non-Federal matching requirement 

required for the project.10

Sections 602(c)(5) and 603(c)(6) of the 

Social Security Act, as added by the 

2023 CAA, provide that SLFRF funds 

may be used for Surface Transportation 

projects and Title I projects, including 

in some cases to satisfy a non-Federal 

share requirement applicable to certain 

projects or to repay a loan provided 

under one of the Surface Transportation 

programs. 

Structure of the Supplementary 

Information 

Following this Introduction, this 

SUPPLEMENTARY INFORMATION is 

organized into four sections: (1) Eligible 

Uses, (2) Discussion of Revenue Loss 

and Program Administration Provisions, 

(3) Comments and Effective Date, and 

(4) Regulatory Analyses. Recipients 

seeking information regarding the 

original four eligible uses in the SLFRF 

program generally may reference the 

2022 final rule and other SLFRF 

program guidance. 

The Eligible Uses section describes 

the standards for determining eligible 

uses of funds in each of the eligible use 

categories provided in the 2023 CAA: 

(1) Emergency Relief from Natural 

Disasters 

(2) Surface Transportation Projects and 

Title I Projects 

a. Surface Transportation Projects 

b. Title I Projects 

As with the 2022 final rule, each 

eligible use category has separate and 

distinct standards for assessing whether 

a use of funds is eligible. Standards, 

restrictions, or other provisions in one 

eligible use category do not apply to 

other categories. Therefore, recipients 

should first determine which eligible 

use category a potential use of funds fits 

within, then assess whether the 

potential use of funds meets the 

eligibility standard or criteria for that 

category. Recipients using funds for 

Surface Transportation projects 

receiving funding from the Department 

of Transportation must consult with the 

Department of Transportation before 

using SLFRF funds for these projects. 

In the Emergency Relief from Natural 

Disasters section of this interim final 

rule, Treasury identifies a nonexhaustive list of specific uses of funds 

that are eligible, called ‘‘enumerated 

eligible uses,’’ that provide emergency 

relief from the physical or negative 

economic impacts of natural disasters. 

The sections discussing Surface 

Transportation projects and Title I 

projects specifically describe the eligible 

projects articulated by the statute. 

The Discussion of Revenue Loss and 

Program Administration Provisions 

section provides additional information, 

where relevant, to clarify the availability 

of the standard allowance, discuss 

program requirements applicable to the 

new eligible uses, and describe relevant 

distinctions between the requirements 

of the 2022 final rule and this interim 

final rule. This section includes: 

(1) Revenue Loss 

(2) Timeline for Use of SLFRF Funds 

(3) Use of Funds for Match or CostShare Requirements 

(4) Reporting 

(5) Uniform Guidance 

Next, the Comments and Effective 

Date section discusses the effective date 

and comment period for this interim 

final rule. Finally, the Regulatory 

Analyses section provides Treasury’s 

analysis of the impacts of this 

rulemaking, as required by several laws, 

regulations, and Executive Orders. This 

section discusses the impact of the 

amendments in the 2023 CAA, where 

relevant. Please reference the 2022 final 

rule for the regulatory analyses of the 

impacts of the 2022 final rule. 

Throughout this SUPPLEMENTARY

INFORMATION, statements using the terms 

‘‘should’’ or ‘‘must’’ refer to 

requirements. Statements using the term 

‘‘encourage’’ or ‘‘advise’’ refer to 

recommendations, not requirements. 

This SUPPLEMENTARY INFORMATION

references three rule-making 

documents. Statements referencing ‘‘the 

2021 interim final rule’’ refer to the rule 

released May 10, 2021, and published 

May 17, 2021. Statements referencing 

‘‘the 2022 final rule’’ refer to the rule 

released January 6, 2022 and published 

January 27, 2022. Statements 

referencing ‘‘this interim final rule’’ 

reference this rule, released August 4, 

2023, and published September 20, 

2023. 

Uses of Funds Not Specifically 

Identified as Eligible in This Interim 

Final Rule 

Even if a use of funds is not 

specifically identified as eligible in this 

interim final rule, recipients may still be 

able to direct SLFRF funds toward that 

purpose as described further below. 

First, the eligible uses described in 

the 2022 final rule remain available to 

recipients, and recipients may continue 

to pursue eligible projects under the 

2022 final rule. For example, under the 

revenue loss eligible use category, 

recipients have broad latitude to use 

funds for government services up to 

their amount of revenue loss due to the 

pandemic, provided that other 

restrictions on use do not apply. A 

potential use of funds that does not fit 

within the other eligible use categories 

in this interim final rule or in the 2022 

final rule may be permissible as a 

government service. Please reference the 

2022 final rule for further information. 

Second, the eligible use category for 

providing emergency relief from natural 

disasters provides a non-exhaustive list 

of enumerated eligible uses, which 

means that the listed eligible uses 

include some, but not all, of the uses of 

funds that could be eligible under this 

eligible use category. This interim final 

rule outlines a standard for determining 

other eligible forms of emergency relief, 

beyond those specifically enumerated. If 

a recipient would like to pursue a use 

of funds to provide emergency relief 

that is not specifically enumerated, the 

recipient should use the standards and 

associated guidance to assess whether 

the use of funds is eligible. 

Third, as described further below, 

many of the uses in the Title I projects 

eligible use category are also eligible in 

the public health and negative economic 

impacts eligible use category, discussed 

in the 2022 final rule, where there is no 

cap on the amount of SLFRF funds that 

may be directed toward an eligible use. 

Furthermore, the public health and 

negative economic impacts eligible use 

category also offers a standard for 

determining if other uses of funds, 

beyond those specifically enumerated, 

are eligible. Recipients seeking to use 

SLFRF funds for Title I projects may 

consider the relevant eligible uses and 

available funding levels to determine 

which eligible use category best 

supports their community’s needs. As 

noted above, this interim final rule did 


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11Billion-dollar disaster events account for the 

majority (>80%) of the damage from all recorded 

U.S. weather and climate events per NCEI and 

Munich Re. NOAA National Centers for 

Environmental Information (NCEI), U.S. BillionDollar Weather and Climate Disasters (2023), 

https://www.ncei.noaa.gov/access/billions/, DOI: 

10.25921/stkw-7w73. 

12See id. 

13U.S. Department of the Interior, US Geological 

Survey, Climate FAQ: How can climate change 

affect natural disasters? (2023), https://

www.usgs.gov/faqs/how-can-climate-change-affectnatural-disasters#:∼:text=With%20increasing

%20global%20surface%20temperatures,more

%20powerful%20storms%20to%20develop. 

14NOAA NCEI, U.S. Billion-Dollar Weather and 

Climate Disasters (2023), https://www.ncei.

noaa.gov/access/billions/, DOI: 10.25921/stkw7w73. 

15 In recent years, a larger percentage of 

precipitation has come in the form of intense singleday events. Environmental Protection Agency, 

‘‘Climate Change Indicators: Heavy Precipitation,’’ 

Figure 1: Extreme One-Day Precipitation Events in 

the Contiguous 48 states, 1910–2020 (Aug. 1, 2022). 

https://www.epa.gov/climate-indicators/climatechange-indicators-heavy-precipitation. 

16NOAA NCEI, U.S. Billion-Dollar Weather and 

Climate Disasters (2023), https://

www.ncei.noaa.gov/access/billions/, DOI: 10.25921/ 

stkw-7w73. 

17See id. 

18See id. 

19U.S. Census Bureau. Household Pulse Survey: 

Displaced in Last Year by Natural Disaster (2023). 

https://www.census.gov/data-tools/demo/hhp/#/

?measures=DISPLACED. 

20Harvard University’s Joint Center for Housing 

Studies estimates that disaster-related home repairs 

and improvements cost $300 million in annual 

spending for every $10 billion in disaster losses 

incurred in the three years prior. Kermit. Baker & 

Alexander Hermann, Joint Center for Housing 

Studies of Harvard University. Rebuilding from 

2017’s Natural Disasters: When, For What, and How 

Much?, https://www.jchs.harvard.edu/blog/

rebuilding-from-2017s-natural-disasters-when-forwhat-and-how-much. 

21Centers for Disease Control and Prevention, 

Natural Disaster and Severe Weather, Food and 

Water Needs: Preparing for a Disaster or Emergency 

(Jan. 29, 2019). 

22 Jeffrey A. Groen, et al, Census Bureau, Center 

for Economic Studies. Storms and Jobs: The Effect 

of Hurricanes on Individuals’ Employment and 

Earnings over the Long Term, https://

www2.census.gov/ces/wp/2015/CES-WP-15-21.pdf. 

23Linda Luther, Congressional Research Service, 

R44941, Disaster Debris Management: 

Requirements, Challenges, and Federal Agency 

Roles (2017). 

24Federal Emergency Management Agency 

(FEMA), 2022–2026 FEMA Strategic Plan (2023). 

25Substance Abuse and Mental Health Services 

Administration, Disaster Technical Assistance 

Center Supplemental Research Bulleting, Greater 

Impacts: How Disasters Affect People of Low 

Socioeconomic Status (2017). 

26 Kevin M. Fitzpatrick, et al., Food Insecurity in 

the Post-Hurricane Harvey Setting: Risks and 

Resources in the Midst of Uncertainty, 17(22), Int. 

J. Environ. Res.Public Health 8424, (2020). 

27Caroline Ratcliffe, et al., Urban Institute, Insult 

to Injury Natural Disasters and Residents’ Financial 

Health 7 (2019). 

28FEMA, 2022–2026 FEMA Strategic Plan (2023). 

29National Congress of American Indians, Indian 

Country FY 2022 Budget Request (2023), 47–54. 

https://www.ncai.org/resources/ncai-publications/ 

NCAI_IndianCountry_FY2022_BudgetRequest.pdf. 

not alter the public health and negative 

economic impacts eligible use category. 

Please see the 2022 final rule for more 

information. 

Request for Comments 

Treasury seeks comment on sections 

addressing the new eligible uses, 

Emergency Relief from Natural 

Disasters, Surface Transportation 

projects, and Title I projects. To better 

facilitate public comment, Treasury has 

included specific questions in the 

relevant sections of this SUPPLEMENTARY

INFORMATION. Treasury encourages state, 

local, and Tribal governments in 

particular to provide feedback and to 

engage with Treasury regarding issues 

that may arise regarding the new eligible 

uses. 

II. Eligible Uses 

A. Emergency Relief From Natural 

Disasters 

Background 

The 2023 CAA amended sections 602 

and 603 of the Social Security Act to 

permit recipients to use SLFRF funds to 

‘‘provide emergency relief from natural 

disasters or the negative economic 

impacts of natural disasters, including 

temporary emergency housing, food 

assistance, financial assistance for lost 

wages, or other immediate needs.’’ As 

state, local, and Tribal governments 

spend billions of dollars a year to 

respond to the impacts of natural 

disasters that are growing in size, scale, 

and frequency, often as a result of 

climate change,11 this new eligible use 

supports recipients in responding to the 

varied and evolving needs of their 

communities with SLFRF funds already 

on hand. 

Since 1980, there have been 341 

natural disasters in the United States 

that reached or exceeded damages 

valued at $1 billion, causing 15,821 

deaths and resulting in nearly $2.5 

trillion in damages.12 In recent years, 

costly U.S. natural disasters have 

become even more frequent, in part due 

to the impacts of climate change, which 

are known to create more frequent and 

intense droughts and storms,13 lengthen 

wildfire seasons in the Western States,14

and increase heavy rainfall events in the 

contiguous 48 states.15 In 2020, 2021, 

and 2022, there were an average of 20 

weather and climate disasters each year 

that reached or exceeded damages 

valued at $1 billion, compared to an 

average of 12.8 weather and climate 

disasters annually from 2010 to 2019.16

From 2020 to 2022 alone, these billiondollar natural disasters caused 1,460 

deaths and resulted in damages valued 

at $434.6 billion.17

The impacts of natural disasters range 

from loss of life and other consequences 

for health and safety to destruction of 

property and infrastructure and 

disruption of economic activity. The 

increasing prevalence of natural 

disasters and corresponding increased 

costs of responding to and recovering 

from natural disasters places additional 

burden on state, local, and Tribal 

governments.18 This burden is 

experienced throughout communities, 

including through strains placed on 

public infrastructure and on 

households, ranging from impacts to 

housing, food, water, wages, and other 

needs. 

The U.S. Census Bureau found that 

approximately 3.3 million people were 

displaced from their homes by natural 

disasters in 2022.19 Even when 

individuals and families in an impacted 

area are not displaced after a natural 

disaster, they may face significant costs 

to repair homes to become livable 

again.20 Natural disasters also can 

disrupt regular access to food and water, 

causing food insecurity and reliance on 

support from disaster relief 

organizations.21 Furthermore, the 

damage caused by natural disasters can 

cause short-term earnings losses, as it 

may physically prevent individuals 

from working, whether due to housing 

displacement, physical barriers in 

accessing their place of employment or 

business, sustained damage to their 

place of employment or business, or 

injuries sustained as a result of the 

natural disaster.22 Natural disasters also 

can generate a significant volume of 

debris 23 and damage buildings and 

infrastructure that provide critical or 

essential services to the general public, 

such as educational, utility, emergency, 

medical, and other services, creating 

strains on local governments and other 

responders. 

While the impacts of a natural 

disaster can be widespread, 

communities that are historically 

underserved often experience 

heightened impacts as a result of 

underlying disparities and ability to 

prepare for disasters,24 resiliency of 

homes to natural disasters,25 risk of food 

insecurity,26 ability to recover 

financially after a natural disaster,27 and 

ultimately their ability to quickly return 

to social and economic life after a 

natural disaster.28 Tribal governments, 

for example, are the first and sometimes 

the only responders to natural disasters 

that impact their communities.29

Despite this responsibility, Tribal 

emergency management capacity has 

been underfunded over the years, 


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30See Id. 

31See 42 U.S.C. 5195a(a)(2). 

32FEMA, Stafford Act, as Amended, P–592 vol. 

1 (2021). 

33See 42 U.S.C. 5122(1) (‘‘’Emergency’ means any 

occasion or instance for which, in the 

determination of the President, Federal assistance is 

needed to supplement State and local efforts and 

capabilities to save lives and to protect property 

and public health and safety, or to lessen or avert 

the threat of a catastrophe in any part of the United 

States.’’) 

limiting Tribal governments’ access to 

disaster resources before, during, or 

after the disaster strikes.30

This interim final rule provides 

significant flexibility for recipients to 

use SLFRF funds to provide emergency 

relief from the widespread physical and 

negative economic impacts of natural 

disasters. Recognizing that communities 

that have been historically underserved 

often experience deeper impacts of 

natural disasters due in part to 

differences that exist prior to the 

occurrence of a natural disaster, 

Treasury encourages recipients to 

consider how the emergency relief they 

provide supports all communities in 

resuming their lives after a natural 

disaster and building resiliency to 

future natural disasters. 

In the section that follows, this 

interim final rule discusses how 

recipients may use SLFRF funds to 

provide emergency relief from the 

physical or negative economic impacts 

of natural disasters, including the 

standards for identifying a natural 

disaster and responsive emergency 

relief. 

1. Standards for Providing Emergency 

Relief From Natural Disasters 

This section of the interim final rule 

discusses the standards for providing 

emergency relief from the physical or 

negative economic impacts of natural 

disasters. Generally, a recipient should 

undertake the following two-step 

process: 

1. Identify a natural disaster that has 

occurred or is expected to occur 

imminently, or a natural disaster that is 

threatened to occur in the future. 

2. Identify emergency relief that 

responds to the physical or negative 

economic impacts, or potential physical 

or negative economic impacts, of the 

identified natural disaster. The 

emergency relief must be related and 

reasonably proportional to the impact 

identified. 

This interim final rule implements the 

framework described above by defining 

natural disaster, defining emergency 

relief, and providing a non-exhaustive 

list of examples of emergency relief that 

may be provided. In addition to this 

non-exhaustive list, recipients may use 

the two-step framework above to 

identify and provide additional types of 

emergency relief in response to the 

physical or negative economic impacts, 

or the potential for such impacts, of an 

identified natural disaster. 

The eligible uses set forth in this 

interim final rule provide flexibility to 

recipients to respond to the widespread 

physical and economic impacts of 

natural disasters in their communities. 

Treasury encourages recipients to 

consider how the provision of 

emergency relief can support 

communities that have been historically 

underserved and are more at risk of the 

impacts of natural disasters. 

2. Identifying Natural Disasters 

This interim final rule explains that 

for the purposes of the SLFRF program, 

a natural disaster is defined as a 

hurricane, tornado, storm, flood, high 

water, wind-driven water, tidal wave, 

tsunami, earthquake, volcanic eruption, 

landslide, mudslide, snowstorm, 

drought, or fire, in each case attributable 

to natural causes, that causes or may 

cause substantial damage, injury, or 

imminent threat to civilian property or 

persons. A natural disaster may also 

include another type of natural 

catastrophe, attributable to natural 

causes, that causes, or may cause 

substantial damage, injury, or imminent 

threat to civilian property or persons. 

This definition provides recipients the 

flexibility to determine an event to be a 

natural disaster even if it is not of a type 

specifically listed in the definition. This 

definition is based on the definition of 

natural disaster under the Robert T. 

Stafford Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5121 et seq.) 

(the Stafford Act), which provides the 

statutory authority for most Federal 

disaster response activities, including as 

they pertain to Federal Emergency 

Management Agency (FEMA) assistance 

and programs.31 The Stafford Act 

provides the framework for an orderly 

means of assistance by the Federal 

government to state, local, and Tribal 

governments in carrying out their 

responsibilities to alleviate the suffering 

and damage that result from such 

disasters.32

3. Identifying Emergency Relief 

This interim final rule defines 

emergency relief as assistance that is 

needed to save lives and to protect 

property and public health and safety, 

or to lessen or avert the threat of 

catastrophe. This definition of 

emergency relief is based on the Stafford 

Act’s definition of ‘‘emergency.’’ 33

Emergency relief must be related and 

reasonably proportional to the physical 

or negative economic impacts of a 

natural disaster that has occurred or is 

expected to occur imminently, or to the 

potential physical or negative economic 

impacts of a natural disaster that is 

threatened to occur in the future. 

Emergency relief that bears no relation 

or is grossly disproportionate to the type 

or extent of the impacts of the natural 

disaster would not be an eligible use. 

In the case of a response to a natural 

disaster that has occurred or is expected 

to occur imminently, communities, 

individuals, or areas that did not or are 

not expected to experience the natural 

disaster or its negative economic 

impacts would not be eligible to receive 

emergency relief in response to the 

natural disaster. In evaluating whether a 

use is reasonably proportional, 

recipients should consider relevant 

factors about the natural disaster’s 

actual or imminent physical or negative 

economic impacts and the emergency 

relief to be provided, including the 

availability of other assistance such as 

insurance or other Federal assistance. 

For more information, recipients should 

reference the section titled Duplication 

of Benefits below. Recipients should 

also consider the efficacy, cost, cost 

effectiveness, and time to delivery of the 

response. 

When providing emergency relief 

from a natural disaster that is threatened 

to occur in the future, mitigation 

activities to address the potential 

physical or economic impacts of the 

natural disaster in a community where 

the natural disaster is unlikely to occur 

would not be considered a related and 

reasonably proportional response 

because there would not be an 

established need to provide emergency 

relief from that natural disaster, for 

example. 

Available emergency relief based on 

the immediacy of the natural disaster. 

This section discusses how recipients 

may distinguish between a natural 

disaster that has already occurred or is 

expected to occur imminently, and the 

threat of a future occurrence of a natural 

disaster. As discussed, recipients may 

provide emergency relief from natural 

disasters in the form of assistance that 

is needed to save lives and to protect 

property and public health and safety or 

to lessen or avert the threat of 

catastrophe. 

To provide emergency relief before, 

during, or after a natural disaster that 

has already occurred or is expected to 

occur imminently, the recipient should 

first identify how the disaster meets the 

definition of natural disaster as 

described above. The natural disaster 


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34See FEMA’s National Risk Index available at 

https://hazards.fema.gov/nri/hurricane. 35Memorandum from the White House Office of 

Science and Technology Policy & the White House 

Council on Environmental Quality on Indigenous 

Traditional Ecological Knowledge and Federal 

Decision Making (Nov. 15, 2021). For example, a 

Tribe may be able to rely on Indigenous Traditional 

Ecological Knowledge in considering the threat of 

wildfires on Tribal lands. 

36See, e.g., 2 CFR 200.1 Definitions (defining 

‘‘improper payment’’ to include ‘‘duplicate 

payments’’); 2 CFR 200.403 Factors affecting 

allowability of costs (providing that ‘‘in order to be 

allowable under Federal awards’’ costs must ‘‘[b]e 

necessary and reasonable for the performance of the 

Federal award and be allocable thereto under these 

principles’’ and ‘‘[n]ot be included as a cost . . . of 

any other federally-financed program in either the 

current or a prior period’’). 

37 2 CFR 200.101(b)(2) (‘‘The terms and 

conditions of Federal awards (including this part [2 

CFR part 200, the Uniform Guidance]) flow down 

to subawards to subrecipients unless a particular 

section of this part or the terms and conditions of 

the Federal award specifically indicate 

otherwise.’’). 

38See 5 U.S.C. 5155(a). 

that has occurred or is imminent must 

be, or have been, the subject of an 

emergency declaration or designation 

applicable to the recipient’s geography 

and jurisdiction in the form of (1) an 

emergency declaration pursuant to the 

Stafford Act; (2) an emergency 

declaration by the Governor of a state 

pursuant to state law; or (3) an 

emergency declaration made by a Tribal 

government. If one of the declarations 

listed in (1)–(3) is not available, 

recipients may satisfy this requirement 

through the designation of an event as 

a natural disaster by the chief executive 

(or equivalent) of the recipient 

government, provided that the chief 

executive documents that the event 

meets the definition of natural disaster 

provided above. Recipients should 

maintain documentation consistent with 

the terms and conditions of the award 

agreement. Note that if the governor of 

a state declares an emergency for the 

entire state, the local governments 

within that state are not also required to 

declare an emergency in order to use 

SLFRF funds to provide emergency 

relief. A recipient government does not 

need to submit to Treasury for approval 

of the designation of a natural disaster; 

Treasury will defer to the reasonable 

determination of the recipient’s chief 

executive (or equivalent) in making 

such a designation. For information 

about duplication of benefits 

requirements when responding to 

natural disasters with Stafford Act 

declarations, please reference the 

section titled Duplication of Benefits 

below. 

As discussed above, Treasury’s 

definition of emergency relief includes 

assistance to lessen or avert the threat of 

a future natural disaster, based on the 

Stafford Act definition of ‘‘emergency,’’ 

which enables recipients to provide 

mitigation activities. By providing 

mitigation activities that would reduce 

the threat of a future natural disaster’s 

potential impacts, the recipient will 

have reduced the severity of threats to 

life, risks of loss of economic activity, 

and costs to private and public entities 

to respond and recover, because less 

damage will be incurred. 

To provide emergency relief in the 

form of mitigation activities, to lessen or 

avert the threat of a future natural 

disaster, a recipient should document 

evidence of historical patterns or 

predictions of natural disasters (as 

defined above) that would reasonably 

demonstrate the likelihood of the future 

occurrence of a natural disaster in its 

community. A recipient should use this 

evidence to support its determination 

that mitigation activities would be 

related and reasonably proportional to 

the threat of a natural disaster that it is 

addressing. For example, a recipient 

could utilize FEMA’s National Risk 

Index 34 to represent the community’s 

relative risk for hurricanes to establish 

the likelihood of a future hurricane, or 

a Tribal government could cite 

Indigenous Traditional Ecological 

Knowledge to determine future risks.35

4. Eligible Types of Emergency Relief 

Sections 602 and 603 of the Social 

Security Act, as amended by the 2023 

CAA, provide a non-exhaustive list of 

four types of emergency relief from 

natural disasters or their negative 

economic impacts that may be provided 

using SLFRF funds: temporary 

emergency housing, food assistance, 

financial assistance from lost wages, and 

other immediate needs. This interim 

final rule discusses and expands on this 

list, to enable recipients both to 

complement existing disaster relief 

funding and to address gaps in 

assistance. 

To facilitate implementation, this 

interim final rule identifies a nonexhaustive list of eligible emergency 

relief, which means that the listed 

eligible uses include some, but not all, 

of the uses of funds that could be 

eligible. This non-exhaustive list of 

eligible emergency relief does not 

distinguish between emergency relief 

from the physical impacts of natural 

disasters and emergency relief from the 

negative economic impacts of natural 

disasters. However, the list does 

distinguish between emergency relief 

provided from a declared or designated 

natural disaster that has occurred or is 

expected to occur imminently, and 

emergency relief provided from the 

threat of a future natural disaster. To 

assess whether additional types of 

emergency relief would be eligible 

under this category beyond the nonexhaustive list provided below, 

recipients should first identify a natural 

disaster and then identify emergency 

relief that responds to the natural 

disaster’s physical or negative economic 

impacts according to the standards 

discussed in the prior section. 

Treasury has included references to 

programs currently administered by 

FEMA in the discussion of the eligible 

uses below. These references do not 

impose any of the associated 

requirements of these FEMAadministered programs. Furthermore, 

recipients are not required to receive 

pre-approval from FEMA or Treasury to 

use SLFRF funds for these eligible uses. 

Duplication of Benefits. As a general 

matter, recipients may not claim use of 

Federal financial assistance to cover a 

cost that the recipient is covering with 

another Federal award, by insurance, or 

from another source,36 and 

subrecipients are bound by the same 

requirements as recipients.37 Specific 

requirements apply when recipients use 

Federal funds to provide assistance with 

respect to losses suffered as a result of 

a major disaster or emergency declared 

under the Stafford Act (disaster losses). 

Under the emergency relief from natural 

disasters eligible use category, certain 

duplication of benefits requirements 

under the Stafford Act, in addition to all 

relevant Uniform Guidance cost 

principles requirements, would apply to 

recipients using funds for events that 

both a) satisfy this interim final rule’s 

definition of natural disaster and b) 

form the basis for a Stafford Act 

declaration of an emergency or major 

disaster. Accordingly, if a recipient uses 

SLFRF funds to cover disaster losses 

under the emergency relief from natural 

disasters eligible use category, it must 

abide by the Stafford Act’s prohibition 

on duplication of benefits: Recipients 

may not provide financial assistance to 

a person, business concern, or other 

entity with respect to disaster losses for 

which such beneficiary will receive 

financial assistance under any other 

program or from insurance or any other 

source.38 A recipient may provide 

assistance with respect to disaster losses 

to a person, business concern, or other 

entity that is or may be entitled to 

receive assistance for those losses from 

another source, if such person, business 

concern, or other entity has not received 

the other benefits by the time of 

application for SLFRF funds and the 

person, business concern, or other entity 

agrees to repay any duplicative 


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39See 5 U.S.C. 5155(b)(1). 

40See 5 U.S.C. 5155(b)(3). 

41 44 CFR 206.191(d). 

42As provided in FEMA’s guidance, ‘‘If following 

the delivery sequence concept would adversely 

affect the timely receipt of essential assistance by 

a disaster victim, an agency may offer assistance 

which is the primary responsibility of another 

agency.’’ 44 CFR 206.191(d)(4). 

43For more information on Treasury’s Economic 

Impact Payments provided in response to the 

COVID–19 public health emergency, see https://

home.treasury.gov/policy-issues/coronavirus/ 

assistance-for-american-families-and-workers/ 

economic-impact-payments. 

assistance to the SLFRF recipient.39

Recipients may also use SLFRF funds to 

provide assistance for any portion of 

disaster losses not covered by other 

benefits.40

To ensure compliance with the 

Stafford Act’s prohibition on 

duplication of benefits, SLFRF 

recipients are advised to review FEMA’s 

guidance codified at 44 CFR 206.191. 

FEMA’s guidance sets forth a 

‘‘delivery sequence’’ for assistance with 

disaster losses, providing that sources of 

assistance later in the sequence are 

considered ‘‘duplicative’’ if paid despite 

the availability of other sources of 

assistance earlier in the sequence.41

That is, if two sources provide 

assistance for the same disaster losses, 

the assistance provided later in the 

delivery sequence is considered 

duplicative and must not be paid or if 

paid must be repaid when the 

duplication of benefits occurs. While 

not listed in section 206.191’s delivery 

sequence, recipients should treat SLFRF 

funds as last in the delivery sequence, 

unless the recipient, in consultation 

with the appropriate FEMA Regional 

Administrator or state disasterassistance administrator, determines 

that another sequence is appropriate.42

For example, assistance with disaster 

losses would generally be duplicative of 

insurance covering those same losses 

because insurance comes first in the 

delivery sequence. In that case, SLFRF 

funds should not be used to cover any 

portion of the disaster losses for which 

insurance benefits are received. The 

recipient is responsible for preventing 

and rectifying duplication of benefits 

with respect to disaster losses and 

should coordinate with the relevant 

FEMA Regional Administrator and state 

disaster assistance administrator, or 

other relevant agencies providing 

disaster assistance, as described in 

FEMA’s guidance. 

To facilitate compliance with the 

Stafford Act’s prohibition on 

duplication of benefits, Treasury 

intends to require recipients to report 

their use of SLFRF funds to provide 

assistance with respect to disaster 

losses. Recipients are further required to 

notify subrecipients and contractors 

that, when providing assistance in 

response to a Stafford Act Declaration, 

they are responsible for ensuring that 

beneficiaries disclose any other 

assistance received for the same disaster 

losses prior to receiving assistance with 

SLFRF funds. Treasury further intends 

to make the reported information 

available to FEMA, the relevant FEMA 

Regional Administrator, and other 

agencies providing assistance with 

respect to disaster losses, as appropriate. 

Non-Federal Matching Requirements. 

The emergency relief enumerated 

eligible uses do not add any new 

authority for recipients to use SLFRF 

funds to satisfy non-Federal matching 

requirements of other Federal programs. 

Instead, as described in the 2022 final 

rule, recipients may use SLFRF funds 

under the revenue loss eligible use 

category to satisfy non-Federal matching 

requirements. The newly eligible 

Surface Transportation projects and 

Title I projects, discussed later in this 

interim final rule, also provide 

recipients the ability to use funds to 

satisfy non-Federal cost share 

requirements in certain instances. 

Recipients seeking to use SLFRF funds 

for non-Federal matching requirements 

should reference the section titled Use 

of Funds for Match or Cost-Share 

Requirements in this interim final rule 

and the 2022 final rule for additional 

information. 

a. Declared or Designated Natural 

Disasters 

Below, Treasury is providing a nonexhaustive list of eligible uses that 

recipients may provide as emergency 

relief from the physical or negative 

economic impacts of a natural disaster 

that has a declaration or designation, as 

described above. 

Temporary emergency housing. 

Recipients may provide emergency 

relief from the physical or negative 

economic impacts of a natural disaster 

in the form of temporary emergency 

housing to individuals and households 

including by providing funds for 

temporary housing for households who 

are unable to live in their home 

following a natural disaster. Examples 

of temporary emergency housing could 

include rental assistance or 

reimbursement for hotel costs; 

providing a temporary housing unit 

when individuals are facing challenges 

finding permanent housing due to 

shortages caused by a natural disaster; 

establishing other temporary emergency 

housing, including congregate and noncongregate shelter (i.e., sheltering 

individuals in motels, hotels, dorms, 

etc.) before, during, or after a natural 

disaster; or providing shelter following 

an evacuation due to a natural disaster. 

Given the varying potential impacts of 

a natural disaster, recipients have 

flexibility to determine the length of 

time to provide temporary emergency 

housing based on the impact of the 

natural disaster and the housing 

conditions in their jurisdiction. 

Food assistance. Recipients may 

provide emergency relief from the 

physical or negative economic impacts 

of a natural disaster in the form of food 

assistance. As is the case across the 

SLFRF program, recipients may 

administer programs through a range of 

other entities, including nonprofit and 

for-profit entities, to carry out eligible 

uses on behalf of the recipient 

government, including to provide 

emergency relief in the form of food 

assistance. 

Financial assistance for lost wages. 

Recipients may provide emergency 

relief from the physical or negative 

economic impacts of a natural disaster 

in the form of financial assistance for 

lost wages. As with all forms of 

emergency relief under this eligible use 

category, financial assistance for lost 

wages must be related and reasonably 

proportional to the impact identified. In 

making this determination, recipients 

should consider all sources of available 

relief and other resources available to 

the potential beneficiaries of financial 

assistance. 

Generally, Federal financial assistance 

programs directed toward individuals 

are designed to target individuals with 

a specific set of circumstances or to 

provide those who earn up to a specific 

income threshold with a specified 

amount of assistance. For example, the 

Coronavirus Aid, Relief, and Economic 

Security Act (CARES Act), Public Law 

116–136, 134 Stat. 281 (March 27, 2020) 

provided an eligible individual a 

refundable tax credit of up to $1,200 

($2,400 for eligible individuals filing a 

joint tax return), plus $500 per 

qualifying child of the eligible 

individual. The credit was reduced for 

taxpayers with adjusted gross income 

that exceeded a threshold. The 

threshold was $150,000 in the case of a 

joint return, $112,500 in the case of a 

head of household, and $75,000 

otherwise. An advance refund of this 

credit, referred to by the IRS as an 

Economic Impact Payment, was made 

during 2020.43

Recipients may provide financial 

assistance for lost wages by providing 

supplemental benefits to individuals 

who are participating in state 

unemployment insurance programs or 


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44Memorandum from President Trump on 

Authorizing the Other Needs Assistance Program 

for Major Disaster Declarations Related to 

Coronavirus Disease 2019 (Aug. 8, 2020). 

45FEMA, FP 104–009–02, Public Assistance 

Program and Policy Guide Version 4 (2020). 46See id. 47See id. 

the Department of Labor’s Disaster 

Unemployment Assistance (DUA) 

program at the time the natural disaster 

occurred or following the natural 

disaster. Supplemental benefits can be 

provided to any person who is impacted 

by the natural disaster and receiving 

state unemployment insurance program 

benefits or DUA program benefits. 

The amount of financial assistance for 

lost wages paid as a supplemental 

benefit to participants in the programs 

discussed above must not exceed $400 

a week for the duration of the need for 

emergency relief. This limit was 

determined to be reasonably 

proportional through the review of other 

assistance for lost wages, such as the 

FEMA COVID–19 Assistance Program 

for Lost Wages,44 which offered 

participants the option to provide 

claimants a lost wages supplement of up 

to $400, providing additional financial 

assistance for individuals who were 

participants in other Federal financial 

assistance programs during the height of 

the COVID–19 emergency. To provide 

other types of direct financial assistance 

to individuals impacted by natural 

disasters, please refer to the section 

titled Cash Assistance below. 

Other immediate needs. As discussed 

above, natural disasters cause varied 

damage to persons, property, and 

infrastructure. Recipients may provide 

emergency relief from the physical or 

negative economic impacts of natural 

disasters for other immediate needs not 

discussed above. Below, this interim 

final rule discusses examples of eligible 

uses available to state, local, and Tribal 

governments using SLFRF funds to 

address other immediate needs. 

Emergency Protective Measures. 

Recipients may use SLFRF funds to 

provide emergency protective measures, 

such as those described in Category B of 

FEMA’s Public Assistance program to 

respond before, during, or after a natural 

disaster.45 By referencing Category B 

eligible uses as an illustrative list of the 

types of emergency protective measure 

recipients may pursue with SLFRF 

funds, Treasury is seeking to simplify 

the administrability of this eligible use 

through a framework that may already 

be familiar to recipients. As noted 

above, recipients are not required to 

comply with the requirements 

associated with FEMA’s Public 

Assistance program and are not required 

to receive pre-approval from FEMA or 

Treasury to use SLFRF funds for this 

purpose. Category B of FEMA’s Public 

Assistance program includes assistance 

like emergency access, medical care and 

transport, emergency operations center 

related costs and other activities 

traditionally undertaken as part of 

emergency response. In considering 

what ‘‘other activities’’ are eligible 

under this category, recipients are 

encouraged to refer to Chapter 7 Section 

II of FEMA’s Public Assistance Program 

and Policy Guide, which discusses 

Category B Emergency Protection 

Measures.46 For Category B Emergency 

Protection Measures that are only 

eligible under FEMA’s Public 

Assistance program as direct Federal 

assistance, recipients may use SLFRF 

funds to provide these services directly, 

such as emergency communications or 

public transportation. 

Other examples of emergency 

protective measures include: 

transporting and pre-positioning 

equipment and resources; flood fighting; 

firefighting; purchasing and distributing 

supplies and commodities; provision of 

medical care and transport; evacuation 

and sheltering; provision of childcare; 

demolition of structures; search and 

rescue to locate survivors, household 

pets, and service animals requiring 

assistance; use or lease of temporary 

generators for facilities that provide 

essential community services; 

dissemination of information to the 

public to provide warnings and 

guidance about health and safety 

hazards; searching to locate and recover 

human remains; storage and interment 

of unidentified human remains; mass 

mortuary services; construction of 

emergency berms or temporary levees to 

provide protection from floodwaters or 

landslides; emergency repairs necessary 

to prevent further damage, such as 

covering a damaged roof to prevent 

infiltration of rainwater; buttressing, 

shoring, or bracing facilities to stabilize 

them or prevent collapse; emergency 

slope stabilization; mold remediation; 

extracting water and clearing mud, silt, 

or other accumulated debris from 

eligible facilities; taking actions to save 

the lives of animals; and snow removal. 

Debris Removal. Recipients may use 

SLFRF funds for debris removal 

activities. Generally, this includes the 

clearance, removal, and disposal of 

vegetative debris (including tree limbs, 

branches, stumps, or trees), construction 

and demolition debris, sand, mud, silt, 

gravel, rocks, boulders, white goods, 

and vehicle and vessel wreckage. These 

eligible uses are described further in 

Category A of FEMA’s Public Assistance 

program.47 As noted above, recipients 

are not required to receive pre-approval 

from FEMA or Treasury to use SLFRF 

funds for these eligible uses. Recipients 

are also not required to comply with the 

requirements associated with FEMA’s 

Public Assistance program. 

Public Infrastructure Repair. 

Recipients may use SLFRF funds to 

restore public infrastructure damaged by 

a natural disaster, including roads, 

bridges, and utilities. Recipients may 

restore public infrastructure to its predisaster size, capacity, and function in 

accordance with applicable laws, codes, 

and standards. As part of restoring 

public infrastructure damaged by a 

natural disaster, recipients also may 

undertake activities that make this 

restored infrastructure more resilient to 

future natural disasters, helping to 

mitigate the impacts of future natural 

disasters. For more information on how 

to incorporate mitigation activities into 

a public infrastructure project, please 

see the section titled Threat of Future 

Natural Disaster: Mitigation Activities 

below. 

Increased operational and payroll 

costs. When providing emergency relief 

from the physical or negative economic 

impacts of natural disasters, recipients 

may need to increase government 

services due to suddenly lacking or 

limited resources or may need to 

leverage existing government services or 

government facilities to be responsive as 

quickly and effectively as possible. 

Recipients may use SLFRF funds for 

increased operating costs, including 

payroll costs and costs for government 

facilities and government services used 

before, during, or after a natural 

disaster. This may include social 

services that are directly responsive to 

an impact from the disaster, 

representing an increased cost of 

providing those services due to the 

disaster. 

Cash Assistance. Recipients may use 

SLFRF funds to provide cash assistance 

for uninsured or underinsured expenses 

caused by the disaster such as repair or 

replacement of personal property and 

vehicles, or funds for moving and 

storage, medical, dental, childcare, 

funeral expenses, behavioral health 

services, and other miscellaneous items. 

The eligible uses are generally modeled 

on FEMA’s Individuals and Households 

program, which provides money and 

services to individuals who have 

experienced a disaster whose property 

has been damaged or destroyed and 

whose losses are not covered by 


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48FEMA, A guide to the Disaster Declaration 

process and Federal Disaster Assistance, https://

www.fema.gov/pdf/rrr/dec_proc.pdf. 

49Caroline Ratcliffe et al., Urban Institute, Insult 

to Injury Natural Disasters and Residents’ Financial 

Health 7 (2019). 

50FEMA, A Guide to the Disaster Declaration 

Process and Federal Disaster Assistance, https://

www.fema.gov/pdf/rrr/dec_proc.pdf. 

51FEMA, Hazard Mitigation Assistance Guide 

Hazard Mitigation Grant Program, Pre-Disaster 

Mitigation Program, and Flood Mitigation 

Assistance Program (2015), https://www.fema.gov/ 

sites/default/files/2020-07/fy15_HMA_

Guidance.pdf. 

insurance.48 Consistent with the 

provision of emergency relief discussed 

throughout this section, recipients are 

not required to comply with the 

requirements associated with FEMA’s 

Individuals and Households program to 

use SLFRF funds for these eligible uses. 

Furthermore, recipients are not required 

to receive pre-approval from FEMA or 

Treasury to use SLFRF funds for these 

eligible uses. 

Recognizing that low-income 

households often experience deeper 

challenges recovering financially from a 

natural disaster,49 recipients may also 

design cash assistance programs that 

serve low-income households that have 

been impacted by a natural disaster. 

Consistent with Treasury’s definition of 

low-income household in the public 

health and negative economic impacts 

eligible use category in the 2022 final 

rule, for this purpose a low-income 

household is one with (i) income at or 

below 185 percent of the Federal 

Poverty Guidelines for the size of its 

household based on the most recently 

published poverty guidelines by the 

Department of Health and Human 

Services or (ii) income at or below 40 

percent of area median income for its 

county and size of household based on 

the most recently published data by the 

Department of Housing and Urban 

Development. Treasury will presume 

that cash assistance provided to lowincome households impacted by a 

natural disaster is related and 

reasonably proportional emergency 

relief to address the negative economic 

impacts of natural disasters. 

In designing a cash assistance 

program targeted to low-income 

households impacted by a natural 

disaster, recipients are not required to 

apply a specific dollar threshold for 

permissible payments and instead, 

recipients have flexibility in 

determining the appropriate level of 

cash assistance. This approach enables 

recipients to respond to the 

particularized natural disaster impacts 

for their low-income community 

members. 

Home Repairs for Uninhabitable 

Primary Residences. Recipients may use 

SLFRF funds to rebuild homes or 

provide home repairs not covered by 

insurance to make residences that meet 

the criteria below habitable again. The 

residence must be a primary residence 

and be uninhabitable as a result of a 

natural disaster. As part of making home 

repairs, recipients may undertake 

activities that make restored homes 

more resilient to future natural 

disasters, helping to mitigate the 

impacts of future natural disasters. For 

more information on how to incorporate 

mitigation activities into home repair 

projects, please see the section titled 

Threat of Future Natural Disaster: 

Mitigation Activities below. This 

eligible use is generally modeled off of 

FEMA’s Individuals and Households 

program, which provides money and 

services to individuals who have 

experienced a disaster whose property 

has been damaged or destroyed and 

whose losses are not covered by 

insurance.50 Uses of funds that are 

eligible under FEMA’s Individuals and 

Households program are eligible under 

the SLFRF, but recipients are not 

required to comply with the 

requirements associated with FEMA’s 

Individuals and Households program 

and are not required to receive preapproval from FEMA or Treasury to use 

SLFRF funds for these eligible uses. 

b. Threat of Future Natural Disaster: 

Mitigation Activities 

In addition to the emergency relief 

described above, recipients also may 

provide emergency relief to lessen or 

avert the threat of a natural disaster and 

its potential physical or negative 

economic impacts through mitigation 

activities. Some examples of eligible 

mitigation activities include the eligible 

project types described in FEMA’s 

Hazard Mitigation Assistance Guidance, 

such as structure elevation, mitigation 

reconstruction, dry flood proofing, 

structural retrofitting, non-structure 

retrofitting, wind retrofit, and 

infrastructure retrofit.51 Recipients are 

not required to receive pre-approval 

from FEMA or Treasury to use SLFRF 

funds for these eligible uses. Recipients 

are also not required to comply with the 

other requirements associated with 

FEMA’s Hazard Mitigation Assistance 

programs. 

Mitigation activities may be standalone projects that reduce or eliminate 

the potential impacts of the threat of a 

natural disaster or may be incorporated 

into repair or reconstruction projects 

that address the impacts of a natural 

disaster. For example, if a recipient is 

repairing the roof of a home damaged by 

a wildfire, the roof can be strengthened 

or fireproofed to make it more resilient 

to future wildfires as well. Similarly, 

recipients repairing roads damaged by 

flooding can incorporate drainage or 

pervious pavement that would result in 

a reduced or eliminated impact of 

flooding in the future, thereby 

decreasing future costs of repair and 

impact to the community. As discussed 

above, when identifying the threat of a 

natural disaster, a recipient must have 

documented evidence that historical 

patterns or predictions that reasonably 

demonstrate the likelihood of future 

occurrence of a natural disaster in the 

community. 

Mitigation Activities with Capital 

Expenditures Exceeding $1 Million. In 

the case of mitigation activities with 

total expected capital expenditures of $1 

million or greater, recipients other than 

Tribal governments must complete and 

meet the substantive requirements of a 

Written Justification for the capital 

expenditures in their project. Recipients 

will submit this Written Justification to 

Treasury as part of the Project & 

Expenditure report. Treasury will 

amend the Compliance and Reporting 

Guidance to describe how recipients 

will submit this information. 

As discussed in Timeline for Use of 

SLFRF Funds section, SLFRF funds for 

this eligible use must be obligated by 

December 31, 2024, and expended by 

December 31, 2026. Capital 

expenditures may involve long leadtimes, and the Written Justification may 

support recipients in analyzing 

proposed capital expenditures to 

confirm that they conform to the 

obligation and expenditure timing 

requirements. Further, such large 

projects may be less likely to be 

reasonably proportional to the potential 

impacts identified. Treasury is adopting 

the Written Justification requirement in 

recognition of this and the need for 

consistent documentation and reporting 

to support monitoring and compliance 

with the ARPA and this interim final 

rule. For projects with capital 

expenditures that only repair or restore 

infrastructure to pre-disaster conditions 

and do not include mitigation activities, 

recipients are not required to complete 

a Written Justification. 

As noted above, Tribal governments 

are not required to complete the Written 

Justification for mitigation activities 

with total capital expenditures of $1 

million or greater. Tribal governments 

generally have limited administrative 

capacity due to their small size and 

corresponding limited ability to 

supplement staffing for short-term 

programs. In addition, Tribal 

governments are already subject to 


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unique considerations that require 

additional administrative processes and 

administrative burden for Tribal 

government decision making, including 

capital expenditures. Tribal 

governments generally are subject to a 

jurisdictionally complex set of rules and 

regulations in the case of improvements 

to land for which the title is held in 

trust by the United States for a Tribe 

(Tribal Trust Lands). This includes the 

requirement in certain circumstances to 

seek the input or approval of one or 

more Federal agencies such as the 

Department of the Interior, which holds 

fee title of Tribal Trust Lands. 

As a result of their limited 

administrative capacity and the unique 

and complex rules and regulations 

applicable to Tribal governments 

operating on Tribal Trust Lands, Tribal 

governments would experience 

significant and redundant 

administrative burden by also being 

required to complete a Written 

Justification for applicable capital 

expenditures. While Tribal governments 

are not required to complete the Written 

Justification, associated substantive 

requirements continue to apply, 

including the requirement that a capital 

expenditure must be related and 

reasonably proportional to the extent 

and type of the threat or impact being 

addressed. Note that, as a general 

matter, Treasury may also request 

further information on SLFRF 

expenditures and projects, including 

capital expenditures, as part of the 

regular SLFRF reporting and 

compliance process, including to assess 

their eligibility under this interim final 

rule. 

Written Justification Requirements for 

Mitigation Capital Expenditures. For 

non-Tribal government recipients 

pursuing mitigation activities where a 

Written Justification is required, the 

Written Justification must (1) describe 

the emergency relief provided by the 

mitigation activity; (2) explain why a 

capital expenditure is appropriate to 

address the need for emergency relief; 

and (3) compare the proposed 

mitigation activity capital expenditure 

against alternative capital expenditures 

that could be made. The information 

required by the Written Justification 

reflects the framework applicable to all 

uses under the emergency relief from 

natural disasters eligible use category, 

providing justification for the 

relatedness and reasonable 

proportionality of the capital 

expenditure in response to the potential 

impact identified. 

1. Description of emergency relief to 

be provided and potential impact to be 

addressed: Recipients should provide a 

description of the specific mitigation 

activities that provide emergency relief 

and explain why emergency relief is 

needed to lessen or avert the potential 

impacts of the natural disaster that is 

threatened to occur in the future. When 

appropriate, recipients may provide 

quantitative information on the extent 

and type of assistance needed to provide 

emergency relief, such as the number of 

individuals or entities that may be 

affected. As discussed above, when 

recipients identify a natural disaster that 

is threatened to occur in the future, 

recipients must document evidence of 

historical patterns or predictions of 

natural disasters that would reasonably 

demonstrate the likelihood of future 

occurrence of a natural disaster in their 

communities. In the Written 

Justification, recipients should use this 

evidence, along with considerations of 

efficacy, cost, cost effectiveness, and 

time to delivery, to support their 

determinations that mitigation activities 

would be related and reasonably 

proportional. 

2. Explanation of why a mitigation 

capital expenditure is appropriate: 

Recipients should provide an 

assessment demonstrating why a 

mitigation activity capital expenditure 

is appropriate to address the specified 

potential impact identified. This should 

include an explanation of why existing 

capital equipment, property, or facilities 

would be inadequate to addressing the 

potential impact of the threat of a 

natural disaster and why policy changes 

or additional funding to pertinent 

programs or services would be 

insufficient without the corresponding 

capital expenditures. Recipients are not 

required to demonstrate that the 

potential impacts would be irremediable 

but for the additional capital 

expenditure; rather, they may show that 

other interventions would be inefficient, 

costly, or otherwise not reasonably 

designed to remedy the need for 

emergency relief without additional 

capital expenditure. 

3. Comparison of the proposed capital 

expenditure against alternative capital 

expenditures: Recipients should provide 

an objective comparison of the proposed 

mitigation capital expenditure against at 

least two alternative capital 

expenditures and demonstrate why their 

proposed capital expenditure is superior 

to alternative capital expenditures that 

could be made. Specifically, recipients 

should assess the proposed capital 

expenditure against at least two 

alternative types or sizes of capital 

expenditures that are potentially 

effective and reasonably feasible. Where 

relevant, recipients should compare the 

proposal against the alternative of 

improving existing capital assets already 

owned or leasing other capital assets. 

Recipients should use quantitative data 

when available, although they are 

encouraged to supplement with 

qualitative information and narrative 

description. Recipients that complete 

analyses with minimal or no 

quantitative data should provide an 

explanation for doing so. 

In determining whether their 

proposed mitigation activity capital 

expenditure is superior to alternative 

capital expenditures, recipients should 

consider the following factors against 

each selected alternative. 

a. A comparison of the effectiveness 

of the capital expenditures in 

addressing the need for mitigation 

identified. Recipients should generally 

consider the effectiveness of the 

mitigation capital expenditures in 

addressing the potential impacts of the 

threatened natural disasters over the 

useful life of the capital asset and may 

consider metrics such as the number of 

individuals or entities served, when 

such individuals or entities are 

estimated to be served, the relative time 

horizons of the project, and 

consideration of any uncertainties or 

risks involved with the capital 

expenditure. 

b. A comparison of the expected total 

cost of the capital expenditures. 

Recipients should consider the expected 

total cost of the mitigation capital 

expenditure required to construct, 

purchase, install, or improve the capital 

assets intended to address the need for 

emergency relief from the threat of the 

natural disaster identified. Recipients 

should include pre-development costs 

in their calculation and may choose to 

include information on ongoing 

operational costs, although this 

information is not required. Recipients 

should balance the effectiveness and 

costs of the proposed capital 

expenditure against alternatives and 

demonstrate that their proposed capital 

expenditure is superior. Further, 

recipients should choose the most costeffective option unless it substantively 

reduces the effectiveness of the capital 

investment in addressing the need for 

emergency relief from the threat of the 

natural disaster identified. 

Because, in all cases, uses of SLFRF 

funds to provide emergency relief from 

natural disasters must be related and 

reasonably proportional to actual or 

potential physical or negative economic 

impacts of a natural disaster, some 

capital expenditures may not be eligible. 

In selecting the $1 million threshold, 

Treasury recognized that mitigation 

activity capital expenditures vary 

widely in size and therefore would 


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52See 42 U.S.C. 802(c)(5) and 803(c)(6). 

benefit from tiered treatment to 

implement eligibility standards while 

minimizing administrative burden. The 

$1 million threshold for whether a 

recipient needs to complete a Written 

Justification will allow recipients a 

simplified pathway to complete smaller 

projects. 

Expenditures from closely related 

activities directed toward a common 

purpose are considered part of the scope 

of one project. These expenditures can 

include capital expenditures, as well as 

expenditures on related programs, 

services, or other interventions. A 

project includes expenditures that are 

interdependent (e.g., acquisition of land, 

construction of the facility on the land, 

and purchase of equipment), or are of 

the same or similar type and would be 

utilized for a common purpose (e.g., 

acquisition of barricades that would be 

used to provide emergency relief from 

natural disasters). Recipients must not 

segment a larger project into smaller 

projects in order to evade review. A 

recipient undertaking a set of identical 

or similar projects may complete one 

Written Justification comprehensively 

addressing the entire set of projects. 

Treasury employs a risk-based 

approach to overall program 

management and monitoring, which 

may result in heightened scrutiny on 

larger projects. Accordingly, recipients 

pursuing projects with larger mitigation 

capital expenditures should complete 

more detailed analyses for their Written 

Justification, commensurate with the 

scale of the project. 

Strong Labor Standards in 

Construction. As discussed in the 2022 

final rule, Treasury continues to 

encourage recipients to carry out public 

infrastructure and mitigation activities 

in ways that produce high-quality work, 

avert disruptive and costly delays, and 

promote efficiency. Treasury encourages 

recipients to use strong labor standards, 

including project labor agreements and 

community benefits agreements that 

offer wages at or above the prevailing 

rate and include local hire provisions. 

Treasury also recommends that 

recipients prioritize in their 

procurement decisions employers that 

can demonstrate that their workforce 

meets high safety and training standards 

(e.g., professional certification, 

licensure, and/or robust in-house 

training), that hire local workers and/or 

workers from historically underserved 

communities, and that directly employ 

their workforce or have policies and 

practices in place to ensure contractors 

and subcontractors meet high labor 

standards. Treasury further encourages 

recipients to prioritize employers 

(including contractors and 

subcontractors) without recent 

violations of Federal and state labor and 

employment laws. 

Treasury believes that such practices 

will promote effective and efficient 

delivery of high-quality projects and 

support the economic recovery through 

strong employment opportunities for 

workers. Such practices will reduce 

likelihood of potential project 

challenges like work stoppages or safety 

accidents, while ensuring a reliable 

supply of skilled labor and minimizing 

disruptions, such as those associated 

with labor disputes or workplace 

injuries. That will, in turn, promote ontime and on-budget delivery. 

Furthermore, among other 

requirements contained in 2 CFR part 

200, Appendix II, all contracts made by 

a recipient or subrecipient in excess of 

$100,000 with respect to projects that 

involve employment of mechanics or 

laborers must include a provision for 

compliance with certain provisions of 

the Contract Work Hours and Safety 

Standards Act, 40 U.S.C. 3702 and 3704, 

as supplemented by Department of 

Labor regulations (29 CFR part 5). 

Treasury will continue to seek 

information from recipients on their 

workforce plans and public 

infrastructure and mitigation activities 

undertaken with SLFRF funds. 

5. Administration 

As discussed above, generally, the 

emergency relief from natural disasters 

eligible use category is subject to the 

same program administration 

requirements as the existing eligible 

uses in the SLFRF program, as 

discussed in the 2022 final rule, 

including the obligation deadline of 

December 31, 2024 and expenditure 

deadline of December 31, 2026. As 

discussed in this interim final rule, 

recipients may use SLFRF funds under 

this eligible use category for costs 

incurred beginning December 29, 2022, 

regardless of the date of the declared 

disaster. As with all other eligible uses 

in the SLFRF program, the general 

restrictions on use outlined in the 2022 

final rule apply to funds expended 

under the emergency relief from natural 

disasters eligible use category. 

Additionally, recipients may reference 

the section titled Distinguishing 

Subrecipients versus Beneficiaries of the 

2022 final rule for clarification of the 

distinction between subrecipients and 

beneficiaries. 

Recipients are not required to obtain 

project pre-approval from Treasury or 

any other Federal agency when using 

SLFRF funds for natural disaster 

projects unless otherwise required by 

Federal law. While reference to FEMA, 

the Department of Labor, or other 

Federal emergency assistance programs 

is provided to assist recipients in 

understanding the types of emergency 

relief projects eligible to be funded with 

SLFRF funds, recipients do not need to 

apply for funding from the applicable 

state programs or through any Federal 

programs. Similarly, this interim final 

rule generally does not incorporate 

program requirements or guidance that 

attach to other Federal emergency 

programs. However, as noted above, 

recipients should be aware of other 

Federal or state laws or regulations that 

may apply to projects, independent of 

SLFRF funding conditions, that may 

require approval from another Federal 

or state agency. 

Question 1: Are there other types of 

services or costs that Treasury should 

consider as enumerated eligible uses to 

provide emergency relief from the 

physical or negative economic impacts 

of natural disasters? Describe how these 

provide emergency relief from natural 

disasters. 

Question 2: What, if any, additional 

criteria should Treasury consider to 

ensure that emergency relief responds to 

the physical or negative economic 

impacts of natural disasters? 

Question 3: What additional clarity or 

guidance would benefit recipients in 

identifying eligible mitigation activities? 

B. Using Funds for Surface 

Transportation and Title I Projects 

To support SLFRF recipients in 

meeting the infrastructure needs of their 

communities, the 2023 CAA also 

provided the authority for recipients to 

use SLFRF funds for certain 

infrastructure projects, including 

projects eligible under certain programs 

administered by the Department of 

Transportation (Surface Transportation 

projects) and projects eligible under 

Title I of the Housing and Community 

Development Act of 1974 (Title I 

projects).52 The 2023 CAA imposes 

requirements on SLFRF funds used for 

Surface Transportation projects and 

Title I projects beyond those 

requirements that apply to all other 

SLFRF eligible use categories. In the 

sections separately discussing Surface 

Transportation projects and Title I 

projects below, this interim final rule 

summarizes the types of eligible projects 

within each category, provides 

references to relevant guidance for the 

projects, and discusses how the 

requirements imposed by the 2023 CAA 

apply to each category. 

The 2023 CAA provides that the total 

amount of SLFRF funds that a recipient 


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53The application of these approval and 

certification requirements to SLFRF for these 

projects is indicated by the statute’s specific 

reference to NEPA. NEPA only applies to federal 

actions such as a federal agency approval. Without 

application of the approval requirements of the 

cross-referenced statutes, there would be no 

generally applicable federal action associated with 

the use of SLFRF funds for Surface Transportation 

projects and Title I projects. 

may use for Surface Transportation 

projects and Title I projects together 

shall not exceed the greater of $10 

million and 30% of a recipient’s SLFRF 

allocation. This limitation does not 

apply to SLFRF funds used for the other 

eligible uses in the SLFRF program, 

including funds used for the provision 

of government services under the 

revenue loss eligible use category. 

This limitation applies to the total 

amount of SLFRF funds that a recipient 

may use for Surface Transportation 

projects and Title I projects taken 

together. For example, an SLFRF 

recipient with an allocation of $20 

million would have $10 million (as $10 

million is greater than 30% of the 

recipient’s allocation—$6 million) to 

direct to Surface Transportation projects 

and Title I projects. This recipient could 

direct, for example, $5 million toward 

Surface Transportation projects and $5 

million toward Title I projects, or $3 

million toward Surface Transportation 

projects and $7 million toward Title I 

projects. This same recipient may 

choose to spend additional funding over 

and above this $10 million on projects 

that might otherwise be eligible as 

Surface Transportation or Title I 

projects under a different eligible use 

category, such as the revenue loss 

eligible use category, under which 

recipients may use SLFRF funds for the 

provision of government services. 

The 2023 CAA provides that, except 

as otherwise determined by the 

Secretary or the head of a Federal 

agency to whom oversight and 

administration of the requirements have 

been delegated, the requirements of 

other laws, including titles 23, 40, and 

49 of the U.S. Code, title I of the 

Housing and Community Development 

Act of 1974 (HCDA), and the National 

Environmental Policy Act of 1969 

(NEPA), apply to recipients’ use of 

SLFRF funds for Surface Transportation 

projects and Title I projects. These 

requirements include the project 

approval and certification requirements 

of titles 23, 40, and 49 of the U.S. Code 

and title I of the HCDA and the 

regulations adopted thereunder.53 The 

application of the Surface 

Transportation project approval 

requirements to the SLFRF program 

means that recipients must obtain the 

approval of the Secretary or the head of 

the Federal agency to whom authority 

has been delegated by the Secretary 

prior to obligating and expending funds 

on Surface Transportation projects. Title 

I of the HCDA provides for project-level 

approval only in the case of project 

environmental review. The application 

of this requirement to the SLFRF 

program means that recipients must 

comply with the environmental review 

requirements set forth in the HUD 

statute and regulations, submit a 

certification to Treasury, and receive 

approval prior to obligating and 

expending funds on Title I projects, as 

discussed below. 

The provisions of the 2023 CAA 

reflect an intent that the usual 

requirements that apply to Surface 

Transportation projects funded by DOT 

should generally also apply to such 

projects as funded by Treasury under 

the SLFRF program but also a 

recognition that the DOT regulatory 

requirements would need to be 

harmonized with the particular 

structure of the SLFRF program. 

Treasury interprets the ‘‘except as 

otherwise determined’’ clause 

referenced above to permit Treasury to 

determine not to apply certain 

requirements of the cross-referenced 

statutes when such requirements would 

conflict with the existing SLFRF 

framework or otherwise would be likely 

to preclude recipients from exercising 

the additional authorities provided by 

the 2023 CAA. 

As a general matter, DOT must 

approve recipients’ use of funds for 

projects funded by DOT. However, 

under the existing SLFRF framework, 

Treasury provided funds to recipients 

either in full or in two tranches rather 

than disbursing funds to recipients after 

approving the use of funds for particular 

projects, and recipients must obligate 

and expend such funds by set deadlines. 

If the SLFRF program did not have 

obligation and expenditure deadlines, 

recipients might have time to go through 

a process of receiving Treasury approval 

under Pathway Two prior to using the 

funds that they had already received on 

Surface Transportation projects. But it is 

possible that recipients will seek to use 

funds under Pathway Two for hundreds 

of Surface Transportation projects in 

total, and application of the statutory 

and regulatory approval requirements to 

such a large volume of projects likely 

would preclude recipients from carrying 

out such projects while meeting the 

statutory deadlines for obligation and 

expenditure of funds. To ensure that 

recipients are able to exercise the 

additional authorities provided by the 

2023 CAA prior to the December 31, 

2024 obligation deadline, Treasury has 

determined not to require recipients to 

obtain the approval of the Secretary 

prior to obligating and expending funds 

on Surface Transportation projects that 

present less risk, as described under the 

streamlined framework of Pathway Two 

in the section that follows. Treasury 

expects far fewer recipients to seek to 

use SLFRF funds for higher-risk projects 

involving greater complexity. By not 

applying the approval requirements to 

the more numerous but less risky types 

of projects, Treasury will avoid the 

likelihood that most recipients would 

effectively be unable to engage in any 

Surface Transportation projects other 

than those qualifying for Pathway One. 

The approval requirements will apply 

to Surface Transportation projects that 

do not meet the streamlined framework 

criteria, and as discussed further below, 

Treasury will design a process, based in 

part on the comments to this interim 

final rule, for recipients seeking to fund 

these larger, more complex projects. 

Similarly, as discussed further below, 

project-level certification requirements 

related to environmental review 

contemplated by title I of the HCDA will 

apply to the use of SLFRF funds for the 

Title I projects eligible use category. 

Treasury provides more information 

regarding approval and certification 

requirements applicable to Surface 

Transportation projects and Title I 

projects, respectively, in the sections 

titled Pathway Two: Surface 

Transportation Projects Not Receiving 

Funding from DOT and Applicable 

Requirements for Title I Projects below. 

Recipients using funds for Surface 

Transportation projects that are subject 

to approval requirements must satisfy 

NEPA environmental review 

requirements. Recipients using funds for 

Surface Transportation projects that are 

not subject to approval requirements 

(pursuant to the streamlined approach 

described under Pathway Two in the 

section that follows) are not required to 

conduct NEPA environmental reviews. 

Recipients using funds for Title I 

projects must satisfy NEPA 

environmental review requirements 

based on the procedures set forth in title 

I of the HCDA, the associated 

regulations, and as implemented by 

Treasury. For more information about 

how the requirements of NEPA apply to 

Surface Transportation projects and 

Title I projects, respectively, refer to the 

sections titled Pathway Two: Applicable 

Requirements and Applicable 

Requirements for Title I Projects below. 

As discussed in Treasury’s guidance to 

date, NEPA does not apply to the other 

eligible uses in the SLFRF program as 

described in the 2022 final rule, though 

recipients that blend SLFRF funds with 


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54For additional information about blending and 

braiding SLFRF funds with other funding sources, 

refer to SLFRF Final Rule FAQ 4.8, available at 

https://home.treasury.gov/system/files/136/SLFRFFinal-Rule-FAQ.pdf. 

55Applicable federal civil rights and nondiscrimination laws include Title VI of the Civil 

Rights Act of 1964, 42 U.S.C. 2000d; Title VIII of 

the Civil Rights Act of 1968 (the Fair Housing Act), 

as amended by the Fair Housing Amendments Act 

of 1988, 42 U.S.C. 3602, et seq; Section 504 of the 

Rehabilitation Act of 1973, 29 U.S.C. 794; Title IX 

of the Education Amendments Act of 1972, 20 

U.S.C. 1681; and the Age Discrimination Act of 

1975, 42 U.S.C. 6101 et. seq. 

56As described in SLFRF Final Rule FAQ 12.1, 

award terms and conditions for Treasury’s 

pandemic recovery programs, including SLFRF, do 

not impose antidiscrimination requirements on 

Tribal governments beyond what would otherwise 

apply under Federal law. 

other Federal funds may be subject to 

additional requirements associated with 

the other Federal funds.54

As is the case with all projects using 

SLFRF funds, projects must comply 

with applicable Federal statutes, 

regulations, and executive orders, 

including environmental laws and 

Federal civil rights and 

nondiscrimination requirements,55

which include prohibitions on 

discrimination on the basis of race, 

color, national origin, sex (including 

sexual orientation and gender identity), 

religion, disability, age, or familial 

status (having children under the age of 

18).56 State, Tribal, and local 

procurement, contracting, and conflictsof-interest laws and regulations, 

including, for example, required 

procurement processes for contractor 

selection or competitive price setting, 

also may apply to recipients’ use of 

SLFRF funds. 

The 2023 CAA provides that SLFRF 

funds used for Surface Transportation 

projects and Title I projects must 

supplement, not supplant other Federal, 

state, territorial, Tribal, and local 

government funds (as applicable) that 

are otherwise available for these 

projects. This interim final rule 

discusses below how the supplement, 

not supplant provision applies to uses 

of funds for Surface Transportation 

projects and Title I projects. The nonsupplant requirement does not apply to 

the other SLFRF eligible use categories, 

including the emergency relief from 

natural disasters eligible use category. 

The 2023 CAA provides that funds 

used for Surface Transportation projects 

and Title I projects must be obligated by 

December 31, 2024 and expended by 

September 30, 2026. The expenditure 

deadline for these eligible uses provided 

by the 2023 CAA is earlier than the 

December 31, 2026 expenditure 

deadline associated with the other 

eligible uses in the program, including 

emergency relief from natural disasters. 

The 2023 CAA provides that Treasury 

may delegate to the appropriate Federal 

agency oversight and administration of 

the requirements associated with the 

use of funds for Surface Transportation 

projects and Title I projects. As 

discussed below, Treasury is delegating 

oversight and administration of Surface 

Transportation projects under Pathway 

One (described below) to the 

Department of Transportation (DOT). 

Recipients that direct SLFRF funds 

toward Surface Transportation projects 

under Pathway One will be required to 

complete the existing DOT reporting 

requirements that already apply to 

projects funded by DOT and to report 

certain information to Treasury. See the 

sections titled Pathway One: Delegation 

of Authority and Discussion of Revenue 

Loss and Program Administration 

Provisions for further information. 

Below, this interim final rule 

discusses how recipients may use 

SLFRF funds for Surface Transportation 

projects and Title I projects, 

respectively. 

1. Surface Transportation Projects 

Background 

As added by the 2023 CAA, sections 

602(c)(5) and 603(c)(6) of the Social 

Security Act provide that state, local, 

and Tribal governments may use SLFRF 

funds, subject to limitations, for surface 

transportation infrastructure projects 

(Surface Transportation projects) 

eligible under certain programs 

administered by DOT. As described 

above, recipients may only use the 

greater of 30% of their SLFRF award 

and $10 million, not to exceed a 

recipient’s allocation, for all Surface 

Transportation projects (described in 

this section) and Title I projects 

(described in the section that follows) 

taken together. 

Under the Surface Transportation 

projects eligible use category, SLFRF 

funds may be used for a project eligible 

under any of sections 117, 119, 124, 

133, 148, 149, 151(f), 165, 167, 173, 175, 

176, 202, 203, and 204 of title 23 of the 

U.S. Code; an activity to carry out 

section 134 of title 23 of the U.S. Code; 

a project eligible under the Rebuilding 

American Infrastructure with 

Sustainability and Equity (RAISE) grant 

program; a project eligible for credit 

assistance under the Transportation 

Infrastructure Finance and Innovation 

Act (TIFIA) program under chapter 6 of 

title 23 of the U.S. Code; a project that 

furthers the completion of a designated 

route of the Appalachian Development 

Highway System under section 14501 of 

title 40 of the U.S. Code; a project 

eligible under any of sections 5307, 

5309, 5311, 5337, 5339, and 6703 of title 

49 of the U.S. Code; or a project eligible 

under the bridge replacement, 

rehabilitation, preservation, protection, 

and construction program under 

paragraph (1) under the heading 

‘‘HIGHWAY INFRASTRUCTURE 

PROGRAM’’ under the heading 

‘‘FEDERAL HIGHWAY 

ADMINISTRATION’’ under the heading 

‘‘DEPARTMENT OF 

TRANSPORTATION’’ under title VIII of 

division J of the Infrastructure 

Investment and Jobs Act. 

The statute also provides that, to the 

extent consistent with guidance or rules 

issued by the Secretary or the head of 

a Federal agency to which the Secretary 

has delegated authority, recipients may 

use SLFRF funds to satisfy a nonFederal share requirement applicable to 

a project eligible under section 117 of 

title 23, sections 5309 or 6701 of title 49, 

or a project eligible for credit assistance 

under the TIFIA program under chapter 

6 of title 23. Additionally, in the case of 

a project eligible for credit assistance 

under the TIFIA program, recipients 

may use SLFRF funds to repay a loan 

provided under such program. 

The 2023 CAA provides that the 

requirements of the relevant titles of the 

U.S. Code and the National 

Environmental Policy Act of 1969 apply 

to the use of the SLFRF for Surface 

Transportation projects, except as 

otherwise determined by the Secretary 

or the head of a Federal agency to whom 

oversight and administration of the 

requirements have been delegated. 

Additionally, SLFRF funds may only be 

used to supplement, and not supplant, 

other Federal, state, territorial, Tribal, 

and local government funds (as 

applicable) that are otherwise available 

for the eligible project. 

Overview 

There are different ways in which 

recipients may use SLFRF funds for 

Surface Transportation projects under 

the new authority provided by the 2023 

CAA. In this interim final rule, Treasury 

has organized discussion of the Surface 

Transportation projects eligible use 

category in terms of three ‘‘pathways.’’ 

First, recipients may use SLFRF funds 

(i) in the case of existing eligible 

projects that receive funding from DOT, 

to expand the project or to cover 

additional unexpected costs associated 

with the project and (ii) in the case of 

eligible projects that have not yet 

received but will receive funding from 

DOT prior to December 31, 2024, the 

obligation deadline for the SLFRF 

program, to contribute SLFRF funds to 

expand the scope of the project, to cover 

additional unexpected costs, or in other 


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57See Final Rule FAQ 13.17 for additional 

information about obligations. This approach 

applies a concrete standard that is known to SLFRF 

recipients and administrable by Treasury. 

ways that supplement DOT funding, as 

described in the section titled 

Prohibition on Supplanting Other 

Funds. In each case, the Surface 

Transportation project must be subject 

to DOT’s oversight during the period 

that SLFRF funds are used for the 

project. Recipients pursuing Surface 

Transportation projects that are 

receiving or will receive funding from 

DOT should be prepared to work with 

DOT to determine whether the use of 

SLFRF funds for a particular project 

meets the relevant requirements. In 

addition, the project must meet the 

requirements and restrictions that apply 

to Surface Transportation projects 

funded through the SLFRF program 

described further below. Furthermore, 

in the case of projects funded under 

certain DOT programs like INFRA and 

RAISE, the addition of Federal funds— 

including SLFRF funds—to an existing 

project is subject to approval from DOT. 

Throughout this interim final rule, 

Treasury refers to this eligible use as 

‘‘Pathway One.’’ 

Second, this interim final rule lays 

out a pathway for all SLFRF recipients, 

including those that may not typically 

or currently be a direct recipient of DOT 

funding, to use SLFRF funds to finance 

Surface Transportation projects that will 

be overseen and administered by 

Treasury. Within this pathway, Treasury 

is articulating a streamlined framework 

for recipients to use up to $10 million 

in SLFRF funds per project on Surface 

Transportation projects that do not 

include DOT funding but meet certain 

parameters. Though these projects do 

not include DOT funding, recipients 

may choose to blend SLFRF funds with 

other sources of funds to carry out the 

projects. Recipients using SLFRF funds 

for these projects are not required to 

consult with DOT and instead these 

projects will be administered and 

overseen by Treasury. Throughout this 

interim final rule, Treasury refers to this 

eligible use as ‘‘Pathway Two.’’ For 

additional information, refer to the 

section titled Pathway Two: Surface 

Transportation Projects not Receiving 

Funding from DOT. 

Recipients interested in financing 

Surface Transportation projects outside 

of the parameters of the streamlined 

framework in Pathway Two may submit 

a notice of intent to Treasury, as 

described further below in the section 

titled Pathway Two: Surface 

Transportation Projects not Receiving 

Funding from DOT. Based on these 

notices of intent and comments to this 

interim final rule, Treasury will provide 

instructions as to how recipients may 

apply for approval to carry out their 

proposed projects and guidance as to 

any additional requirements associated 

with such projects. 

Third, recipients may use SLFRF 

funds to repay a TIFIA loan or to satisfy 

a non-Federal share requirement for 

projects under four Surface 

Transportation programs: INFRA Grants, 

Fixed Guideway Capital Investment 

Grants, Mega Grants, and projects 

eligible for credit assistance under the 

TIFIA program. Recipients should 

consult with DOT before pursuing 

projects under this third pathway. 

Throughout this interim final rule, 

Treasury refers to this eligible use as 

‘‘Pathway Three.’’ For more 

information, refer to the section titled 

Pathway Three: Non-Federal Share 

Requirements for Certain Surface 

Transportation Requirements. 

In the following sections, this interim 

final rule discusses the specific types of 

Surface Transportation projects that are 

eligible uses of SLFRF funds and the 

applicable requirements and limitations. 

Prohibition on Supplanting Other Funds 

For all three pathways for Surface 

Transportation projects, recipients must 

comply with the requirement provided 

in the 2023 CAA that funds used for 

Surface Transportation projects shall 

‘‘supplement, and not supplant, other 

Federal, State, territorial, Tribal, and 

local government funds (as applicable) 

otherwise available for such uses.’’ The 

phrase ‘‘other . . . funds available for 

such uses’’ refers to (i) in the case of 

non-Federal funds, non-SLFRF funds 

that have been obligated for specific 

uses that are eligible under the Surface 

Transportation projects eligible use 

category or (ii) in the case of Federal 

funds, funds that a Federal agency has 

committed to a particular project 

pursuant to an award agreement or 

otherwise, including funds identified in 

an awarded DOT grant agreement for 

use on Surface Transportation projects. 

Under prong (i), for the purpose of 

identifying non-Federal funds that have 

been obligated for specific uses, the 

definition of ‘‘obligation’’ used in the 

2022 final rule applies, which is ‘‘an 

order placed for property and services 

and entering into contracts, subawards, 

and similar transactions that require 

payment.’’ 57 As such, a recipient may 

not de-obligate funds that were 

obligated for specific uses that are 

eligible under this section (e.g., by 

cancelling, amending, renegotiating, or 

otherwise revising or abrogating a 

contract, subaward, or similar 

transaction that requires payment) and 

replace those previously obligated funds 

with SLFRF funds under this eligible 

use category. 

The restriction in prong (ii) on 

replacing funds that a Federal agency 

has committed to a particular project 

pursuant to an award agreement or 

otherwise applies to all funding sources 

covered by the commitment. For 

example, for DOT-funded projects 

subject to a grant agreement, the 

restriction extends to DOT funds, other 

Federal funds, and any other funds 

identified by the recipient for the 

purpose of satisfying cost-share 

requirements of the project. 

Thus, a recipient may not de-obligate 

funds and replace those previously 

obligated funds with SLFRF funds 

under this eligible use category. Nor 

may a recipient use SLFRF to replace 

Federal or non-Federal funds identified 

in a Federal commitment, such as an 

award agreement. However, a recipient 

may use SLFRF funds under this 

eligible use category: 

(1) to provide additional funding to a 

project without reducing the amount of 

other funds obligated to such project, 

thereby funding additional activities or 

expanding the scope of projects; or 

(2) to undertake a project for which 

funds have not been previously 

obligated or identified in a Federal 

commitment, such as an award 

agreement. 

For example, consider a municipal 

road project. The recipient has not yet 

entered into an award agreement with 

DOT but is expecting that Federal funds 

from DOT will make up a certain 

amount of the project funds and is 

planning on using local funds to satisfy 

cost-share requirements. Because the 

recipient has not yet entered into an 

award agreement with DOT, even if the 

project is included in the transportation 

improvement program (TIP) or a 

statewide transportation improvement 

program (STIP), the recipient may 

choose to alter the funding mixture to 

include SLFRF funding, after consulting 

with DOT. However, if in that same 

scenario, the recipient had entered into 

an award agreement with DOT that 

included a certain amount of DOT 

funding and a remaining amount of 

funds from local sources, then the funds 

for the project may not be replaced with 

SLFRF funds. The recipient could not 

supplant Federal or non-Federal funds 

identified to DOT as part of the grant 

award or terminate or renegotiate an 

existing contract for the construction of 

the project and use SLFRF funds to 

replace the funds previously identified 

or obligated for that purpose. In this 

scenario, recipients would be able to use 


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58See 23 U.S.C. 117. 

59See the U.S. Department of Transportation’s 

INFRA Grants Program website at https://

www.transportation.gov/grants/infra-grantsprogram. 

60See 23 U.S.C. 119. 

61U.S. Department of Transportation, Federal 

Highway Administration, Implementation Guidance 

for the National Highway Performance Program 

(NHPP) as Revised by the Bipartisan Infrastructure 

Law (Jun. 1, 2022), https://www.fhwa.dot.gov/ 

specialfunding/nhpp/bil_nhpp_implementation_

guidance-05_25_22.pdf. 

62See 23 U.S.C. 124. 

63U.S. Department of Transportation, Federal 

Highway Administration, Bridge Investment 

Program (BIP) Questions and Answers (Q&As) (Aug. 

18, 2022), https://www.fhwa.dot.gov/bridge/bip/ 

qa.cfm. 

SLFRF funds to expand the scope of a 

project or cover unexpected costs, after 

consulting with DOT. 

In the case of projects previously 

included within a TIP or STIP that have 

received funding from DOT, recipients 

should reflect increased overall project 

funding resulting from the addition of 

SLFRF funds within the STIP or TIP, 

even when the sources of project 

funding may have changed prior to 

identification in the DOT grant award or 

obligation. 

a. Pathway One: Surface Transportation 

Projects Receiving Funding From DOT 

This section of the interim final rule 

describes how recipients may use 

SLFRF funds under Pathway One (i) in 

the case of existing eligible projects that 

are receiving funding from DOT to 

expand the project or to cover 

additional unexpected costs associated 

with the project and (ii) in the case of 

eligible projects that have not yet but 

will receive funding from DOT prior to 

December 31, 2024, the obligation 

deadline for the SLFRF program, to 

contribute SLFRF funds to the project, 

to expand the project, to cover 

additional unexpected costs, or in other 

ways that supplement DOT funding. In 

each case, the Surface Transportation 

project must be subject to DOT’s 

oversight during the period that SLFRF 

funds are used for the project. 

Recipients seeking to use SLFRF funds 

for Surface Transportation projects 

under Pathway One should consult with 

DOT and refer to the requirements 

discussed in the following subsection. 

Generally, and as discussed further 

below, when using SLFRF funds under 

Pathway One, the statutory 

requirements that normally apply when 

carrying out Surface Transportation 

projects funded by DOT continue to 

apply. In the case of some DOT-funded 

programs like INFRA and RAISE, the 

addition of other Federal funds— 

including SLFRF funds—to an existing 

project is subject to approval from DOT. 

This interim final rule describes how 

recipients may use SLFRF funds under 

Pathway One, summarizes the programs 

under which recipients may direct 

SLFRF funds toward eligible projects, 

and outlines the requirements 

associated with this pathway. 

Recipients using SLFRF funds under 

Pathway One must comply with the 

requirement that SLFRF funds 

supplement and not supplant other 

funds, described above. 

In the case of existing projects 

currently receiving funding from DOT, 

recipients may use SLFRF funds to 

expand the project and to cover 

additional unexpected costs associated 

with the project. Using SLFRF funds for 

these purposes is a way for recipients to 

supplement but not supplant funds in 

existing projects receiving funding from 

DOT. In each case, the project must 

meet the requirements and restrictions 

that apply to Surface Transportation 

projects funded through the SLFRF 

program. 

For eligible projects that have not yet 

but will receive funding from DOT prior 

to the SLFRF program’s December 31, 

2024, obligation deadline, recipients 

also may contribute SLFRF funds to the 

project, as long as the project meets the 

requirements and restrictions that apply 

to Surface Transportation projects 

funded through the SLFRF program, 

including the non-supplant 

requirements. For these projects that 

have not yet been funded, recipients 

may have more flexibility to contribute 

SLFRF funds for purposes beyond 

expanding the scope of the project and 

covering additional unexpected costs, 

because there may be more ways to 

supplement DOT funding without 

supplanting other funds. For example, 

in addition to using SLFRF funds to 

expand project scope or to cover 

additional unexpected costs that may 

arise, recipients may also be able to 

commit SLFRF funds in the initial 

planning phase of the project as part of 

the recipient’s cost-share obligation, to 

the extent that DOT rules permit Federal 

funds to constitute a portion of the 

project’s cost sharing or matching 

requirement. Recipients should note 

that planned contributions of SLFRF 

funds to a project that has not yet 

received funding from DOT will affect 

the determination of total Federal funds 

that would support the project and may 

affect calculations of the non-Federal 

funds cost-share contribution required 

in order to be in compliance with DOT 

requirements. 

Under Pathway One, recipients may 

use SLFRF funds for projects eligible 

under the programs described below. 

This interim final rule briefly 

summarizes each program and 

references existing implementation 

guidance, where available. Recipients 

should refer to the relevant program 

guidance for DOT programs of interest 

for further information and detail about 

the types of projects eligible under those 

programs. 

• INFRA Grants 58—602(c)(5)(B)(i) of 

the Social Security Act—Also known as 

Nationally Significant Multimodal 

Freight & Highway Projects, INFRA 

awards are competitive grants for 

multimodal freight and highway 

projects of national or regional 

significance to improve the safety, 

efficiency, and reliability of the 

movement of freight and people in and 

across rural and urban areas. For 

additional information about INFRA 

Grants, see USDOT INFRA Grant 

Program.59

• National Highway Performance 

Program (NHPP) 60—602(c)(5)(B)(ii) of 

the Social Security Act—The NHPP 

provides formula funding with the 

purposes of providing support for the 

condition and performance of the 

National Highway System (NHS) or for 

the construction of new facilities on the 

NHS; ensuring that investments of 

Federal-aid funds in highway 

construction are directed to support 

progress toward the achievement of 

performance targets established in an 

asset management plan of a state for the 

NHS; and providing support for 

activities to increase the resiliency of 

the NHS to mitigate the cost of damages 

from sea level rise, extreme weather 

events, flooding, wildfires, or other 

natural disasters. For additional 

information about NHPP, see 

Implementation Guidance for the 

National Highway Performance Program 

(NHPP) as Revised by the Bipartisan 

Infrastructure Law.61

• Bridge Investment Program 

(BIP) 62—602(c)(5)(B)(iii) of the Social 

Security Act—The BIP awards 

competitive discretionary grants to 

improve the safety, efficiency, and 

reliability of the movement of people 

and freight by funding projects to 

replace, rehabilitate, preserve, or protect 

bridges in the National Bridge 

Inventory, including projects to replace 

or rehabilitate bridge-sized culverts for 

the purpose of improving flood control 

and improved habitat connectivity. It 

has a focus on improving the condition 

of bridges in poor condition and 

supporting activities to prevent bridges 

in fair condition from dropping to poor 

condition. For additional information 

on the BIP, see Bridge Investment 

Program (BIP) Questions and Answers 

(Q&As).63


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64See 23 U.S.C. 133. 

65U.S. Department of Transportation, Federal 

Highway Administration, Implementation Guidance 

for the Surface Transportation Block Grant Program 

(STBG) as Revised by the Bipartisan Infrastructure 

Law (Jun. 1, 2022), https://www.fhwa.dot.gov/ 

specialfunding/stp/bil_stbg_implementation_

guidance-05_25_22.pdf. 

66See 23 U.S.C. 148. 

67U.S. Department of Transportation, Federal 

Highway Administration, Highway Safety 

Improvement Program (HSIP) Eligibility Guidance 

(Feb. 2, 2022), https://safety.fhwa.dot.gov/hsip/ 

rulemaking/docs/BIL_HSIP_Eligibility_

Guidance.pdf. 

68See 23 U.S.C. 149. 

69U.S. Department of Transportation, Federal 

Highway Administration, Congestion Mitigation 

and Air Quality (CMAQ) Improvement Program 

Fact Sheet (Feb. 8, 2022), https://

www.fhwa.dot.gov/bipartisan-infrastructure-law/ 

cmaq.cfm. 

70See 23 U.S.C. 151(f). 

71U.S. Department of Transportation, Federal 

Highway Administration, Charging and Fueling 

Infrastructure Grant Program (Mar. 30, 2023), 

https://www.fhwa.dot.gov/environment/cfi/. 

72See 23 U.S.C. 165 

73U.S. Department of Transportation, Federal 

Highway Administration, Territorial and Puerto 

Rico Highway Program Fact Sheet (Feb. 24. 2022), 

https://www.fhwa.dot.gov/bipartisan-infrastructurelaw/territorial_puerto_rico_hp_fact_sheet.cfm. 

74See 23 U.S.C. 167. 

75U.S. Department of Transportation, Federal 

Highway Administration, Implementation Guidance 

for the National Highway Freight Program as 

Revised by the Bipartisan Infrastructure Law (Dec. 

14, 2022), https://ops.fhwa.dot.gov/freight/ 

documents/NHFP_Implementation_Guidance.pdf. 

76See 23 U.S.C. 173. 

77See the U.S. Department of Transportation’s 

Rural Surface Transportation Grant website at 

https://www.transportation.gov/grants/ruralsurface-transportation-grant. 

78See 23 U.S.C. 175. 

79Public Law 117–58. 

• Surface Transportation Block Grant 

Program (STBG) 64—602(c)(5)(B)(iv) of 

the Social Security Act—The STBG 

provides flexible funding that may be 

used for projects to preserve and 

improve the conditions and 

performance on any Federal-aid 

highway, bridge and tunnel projects on 

any public road, pedestrian and bicycle 

infrastructure, and transit capital 

projects, including intercity bus 

terminals. For additional information on 

the STBG, see Implementation 

Guidance for the Surface Transportation 

Block Grant Program (STBG) as Revised 

by the Bipartisan Infrastructure Law.65

• Highway Safety Improvement 

Program (HSIP) 66—602(c)(5)(B)(vi) of 

the Social Security Act—The HSIP 

provides formula funding with the 

purpose of helping to achieve a 

significant reduction in traffic fatalities 

and serious injuries on all public roads, 

including non-state-owned public roads 

and roads on Tribal land. HSIP funds 

are typically available for defined 

highway safety improvement projects, 

as well as ‘‘specified safety projects.’’ 

For additional information on the HSIP, 

see the Highway Safety Improvement 

Program (HSIP) Eligibility Guidance.67

• Congestion Mitigation and Air 

Quality Improvement Program 

(CMAQ) 68—602(c)(5)(B)(vii) of the 

Social Security Act—The CMAQ 

provides a flexible funding source for 

transportation projects and programs to 

help meet the requirements of the Clean 

Air Act. Funding is available to reduce 

congestion and improve air quality for 

areas that do not meet the National 

Ambient Air Quality Standards for 

ozone, carbon monoxide, or particulate 

matter (nonattainment areas) and for 

former nonattainment areas that are now 

in compliance (maintenance areas). A 

wide range of transportation projects 

leading to reduction in emissions are 

eligible for support under the CMAQ, 

including projects involving new 

transit, alternative fuels, shared micromobility, traffic flow improvements, and 

demand management. For additional 

information on CMAQ, see the 

Congestion Mitigation and Air Quality 

(CMAQ) Improvement Program Fact 

Sheet.69

• Charging and Fueling Infrastructure 

Discretionary Grant Program (CFI 

Program) 70—602(c)(5)(B)(viii) of the 

Social Security Act—Established in the 

Bipartisan Infrastructure Law, the CFI 

Program provides competitive grants to 

strategically deploy publicly accessible 

electric vehicle charging and alternative 

fueling infrastructure in the places 

people live and work—urban and rural 

areas alike—in addition to along 

designated Alternative Fuel Corridors. 

For additional information about the 

CFI Program, see Charging and Fueling 

Infrastructure Grant Program.71

• Territorial and Puerto Rico 

Highway Program 72—602(c)(5)(B)(ix) of 

the Social Security Act—The Territorial 

and Puerto Rico highway program 

allocates funds to the Commonwealth of 

Puerto Rico for a highway program, as 

well as to American Samoa, the 

Commonwealth of the Northern Mariana 

Islands, Guam, and the U.S. Virgin 

Islands to assist in constructing and 

improving a system of arterial and 

collector highways and necessary interisland connectors. For additional 

information on the Territorial and 

Puerto Rico Highway program, see the 

Territorial and Puerto Rico Highway 

Program Fact Sheet.73

• National Highway Freight Program 

(NHFP) 74—602(c)(5)(B)(x) of the Social 

Security Act—The NHFP provides 

funding intended to improve the 

condition and performance of the 

National Highway Freight Network 

(NHFN) and support several goals, 

including: 

Æ investing in infrastructure and 

operational improvements that 

strengthen economic competitiveness, 

reduce congestion, reduce the cost of 

freight transportation, improve 

reliability, and increase productivity; 

Æ improving the safety, security, 

efficiency, and resiliency of freight 

transportation in rural and urban areas; 

Æ improving the state of good repair 

of the NHFN; 

Æ using innovation and advanced 

technology to improve NHFN safety, 

efficiency, and reliability; 

Æ improving the efficiency and 

productivity of the NHFN; 

Æ improving State flexibility to 

support multi-State corridor planning 

and address highway freight 

connectivity; and 

Æ reducing the environmental 

impacts of freight movement on the 

NHFN. 

For additional information on the 

NHFP, see Implementation Guidance for 

the National Highway Freight Program 

as Revised by the Bipartisan 

Infrastructure Law.75

• Rural Surface Transportation Grant 

Program 76—602(c)(5)(B)(xi) of the 

Social Security Act—The Rural Surface 

Transportation Grant Program provides 

competitive grants to support projects to 

improve and expand the surface 

transportation infrastructure in rural 

areas to increase connectivity, improve 

the safety and reliability of the 

movement of people and freight, and 

generate regional economic growth and 

improve quality of life. Grant funds 

typically support highway, bridge, or 

tunnel projects eligible under the NHPP, 

the STBG program, or the Tribal 

Transportation Program; highway 

freight projects eligible under the NHFP; 

highway safety improvement projects; 

projects on a publicly-owned highway 

or bridge improving access to certain 

facilities that support the economy of a 

rural area; integrated mobility 

management systems, transportation 

demand management systems, or ondemand mobility services. For 

additional information about the Rural 

Surface Transportation Grant Program, 

see the Rural Surface Transportation 

Grant website.77

• Carbon Reduction Program 

(CRP) 78—602(c)(5)(B)(xii) of the Social 

Security Act—Established in the 

Bipartisan Infrastructure Law,79 CRP 

provides funds by formula for a widerange of projects designed to reduce 

transportation emissions, defined as 

carbon dioxide emissions from on-road 

highway sources. For additional 


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80U.S. Department of Transportation, Federal 

Highway Administration, Carbon Reduction 

Program (CRP) Implementation Guidance (Apr. 21, 

2022), https://www.fhwa.dot.gov/environment/ 

sustainability/energy/policy/crp_guidance.pdf. 

81See 23 U.S.C. 176. 

82U.S. Department of Transportation, Federal 

Highway Administration, Promoting Resilient 

Operations for Transformative, Efficient, and CostSaving Transportation (PROTECT) Formula 

Program Implementation Guidance (Jul. 29, 2022), 

https://www.fhwa.dot.gov/environment/ 

sustainability/resilience/policy_and_guidance/ 

protect_formula.pdf. 

83See 23 U.S.C. 202. 

84U.S. Department of Transportation, Federal 

Highway Administration, Tribal Transportation 

Program Fact Sheet (Oct. 26, 2022), https://

www.fhwa.dot.gov/bipartisan-infrastructure-law/ 

ttp.cfm. 

85See 23 U.S.C. 203. 

86U.S. Department of Transportation, Federal 

Highway Administration, Implementation Guidance 

for the Federal Lands Transportation Program (Jun. 

29, 2022), https://highways.dot.gov/sites/ 

fhwa.dot.gov/files/docs/federal-lands/programs/ 

federal-lands-transportation-program/8186/fltpguidance-cleared.pdf. 

87See 23 U.S.C. 204. 

88U.S. Department of Transportation, Federal 

Highway Administration, Implementation Guidance 

for the Federal Lands Access Program (Aug. 6, 

2018), https://highways.dot.gov/sites/fhwa.dot.gov/ 

files/docs/federal-lands/programs/federal-landsaccess-program/6971/flap-implem-guidance.pdf. 

89U.S. Department of Transportation, Notice of 

Funding Opportunity for the Department of 

Transportation’s National Infrastructure 

Investments (i.e., the Rebuilding American 

Infrastructure with Sustainability and Equity 

(RAISE) Grant Program) under the Infrastructure 

Investment and Jobs Act (‘‘Bipartisan Infrastructure 

Law’’), Amendment No. 2 (Jan. 3, 2023), https://

www.transportation.gov/sites/dot.gov/files/2023-02/ 

RAISE%202023%20NOFO%20Amendment2.pdf. 

90See 23 U.S.C. Chapter 6. 

91See the U.S. Department of Transportation’s 

TIFIA Program Overview website at https://

www.transportation.gov/buildamerica/financing/ 

tifia. 

92See 49 U.S.C. 5307. 

93While Urbanized Area Formula Grants 

typically may be used to support operating 

expenses, operating expenses are not an eligible use 

of SLFRF spending for projects eligible under 

section 602(c)(5)(B)(xx) of the Social Security Act. 

See operating expenses within the Pathway One 

applicable requirements section for more 

information. 

information on eligible projects under 

CRP, see the Carbon Reduction Program 

(CRP) Implementation Guidance.80

• Promoting Resilient Operations for 

Transformative, Efficient, and CostSaving Transportation (PROTECT) 81— 

602(c)(5)(B)(xiii) of the Social Security 

Act—Established in the Bipartisan 

Infrastructure Law, the PROTECT 

Program provides both formula funding 

and competitive funding for projects 

that, among other activities, provide 

resilience improvements; strengthen 

and protect evacuation routes; and 

protect at-risk coastal infrastructure. For 

additional information on the PROTECT 

Formula Program, see Promoting 

Resilient Operations for Transformative, 

Efficient, and Cost-Saving 

Transportation (PROTECT) Formula 

Program Implementation Guidance.82

• Tribal Transportation Program 

(TTP) 83—602(c)(5)(B)(xiv) of the Social 

Security Act—TTP provides formula 

funding to Tribal governments to aid in 

providing safe and adequate 

transportation and public road access to 

and within Indian reservations, Indian 

lands, and Alaska Native Village 

communities, contributing to the 

economic development, selfdetermination, and employment of 

Indians and Native Americans. TTP 

funds a wide range of eligible 

transportation activities including the 

construction and maintenance of roads 

and bridges. For additional information 

about TTP, see Tribal Transportation 

Program Fact Sheet.84

• Federal Lands Transportation 

Program (FLTP) 85—602(c)(5)(B)(xv) of 

the Social Security Act—FLTP provides 

funds to improve the transportation 

infrastructure owned and maintained by 

Federal agencies with land and natural 

resource management responsibilities. 

Eligible projects under FLTP include 

construction and maintenance of transit 

facilities and transportation projects 

eligible under Title 23 that are on a 

public network that provides access to, 

adjacent to, or through Federal lands. 

For additional information on FLTP, see 

Implementation Guidance for the 

Federal Lands Transportation 

Program.86

• Federal Lands Access Program 

(FLAP) 87—602(c)(5)(B)(xvi) of the 

Social Security Act—FLAP provides 

formula funding to improve 

transportation facilities that provide 

access to, are adjacent to, or are located 

within Federal lands. FLAP 

supplements state and local resources 

for public roads, transit systems, and 

other transportation facilities, with an 

emphasis on high-use recreation sites 

and economic generators. For additional 

information on FLAP, see the 

Implementation Guidance for the 

Federal Lands Access Program.88

• Rebuilding American Infrastructure 

with Sustainability and Equity (RAISE) 

Grant Program—602(c)(5)(B)(xvii) of the 

Social Security Act—The RAISE Grant 

Program helps communities build 

transportation projects that have 

significant local or regional impact and 

improve safety and equity. RAISE 

provides funds through competitive 

grants to state, local, Tribal, and 

territorial governments, among others, 

for surface transportation capital 

projects, including highway, bridge, or 

other road projects eligible under title 

23 of the U.S. Code; public 

transportation projects eligible under 

chapter 53 of title 49 of the U.S. Code; 

passenger and freight rail transportation 

projects; port infrastructure 

investments; the surface transportation 

components of an airport project eligible 

for assistance under part B of subtitle 

VII of title 49 of the U.S. Code; 

intermodal projects; projects to replace 

or rehabilitate a culvert or prevent 

stormwater runoff; projects investing in 

surface transportation facilities that are 

located on Tribal land; and other surface 

transportation infrastructure projects 

that the Secretary of Transportation 

considers to be necessary to advance the 

goals of the program—including public 

road and non-motorized projects that 

are not otherwise eligible under title 23 

of the U.S. Code, transit-oriented 

development projects, mobility ondemand projects that expand access and 

reduce transportation cost burden, and 

intermodal projects. The addition of 

Federal funds, including SLFRF funds, 

to an existing RAISE project is subject 

to the Department of Transportation’s 

approval. For more information on 

RAISE grants, see Notice of Funding 

Opportunity for the Department of 

Transportation’s National Infrastructure 

Investments (i.e., the Rebuilding 

American Infrastructure with 

Sustainability and Equity (RAISE) Grant 

Program) under the Infrastructure 

Investment and Jobs Act (‘‘Bipartisan 

Infrastructure Law’’), Amendment No. 

2.89

• Transportation Infrastructure 

Finance and Innovation Act (TIFIA) 90— 

602(c)(5)(B)(xviii) of the Social Security 

Act—The TIFIA Program provides 

Federal credit assistance in the form of 

direct loans, loan guarantees, and 

standby lines of credit to finance surface 

transportation projects of national and 

regional significance. Eligible projects 

typically include highways and bridges; 

intelligent transportation systems; 

intermodal connectors; transit vehicles 

and facilities; intercity buses and 

facilities; freight transfer facilities; 

pedestrian bicycle infrastructure 

networks; transit-oriented development; 

rural infrastructure projects; passenger 

rail vehicles and facilities; surface 

transportation elements of port projects; 

and airports that meet certain standards 

of credit worthiness and readiness. For 

additional information about TIFIA, see 

TIFIA Program Overview.91

• Urbanized Formula Grants 92— 

602(c)(5)(B)(xx) of the Social Security 

Act—The Urbanized Area Formula 

Funding Program makes Federal 

resources available for transit capital 

assistance in urbanized areas and for 

transportation-related planning.93


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94U.S. Department of Transportation, Federal 

Transit Administration, Urbanized Area Formula 

Program Guidance, 79 FR 2930 (Feb. 27, 2020), 

https://www.transit.dot.gov/regulations-andguidance/fta-circulars/urbanized-area-formulaprogram-program-guidance-and. 

95See 49 U.S.C. 5309. 

96U.S. Department of Transportation, Federal 

Transit Administration, Capital Investment Grants 

Policy Guidance (Jan. 12, 2023), https://

www.transit.dot.gov/sites/fta.dot.gov/files/2023-01/ 

CIG-Policy-Guidance-January-2023.pdf. 

97See 49 U.S.C. 5311. 

98While Rural Area Formula Grants typically 

may be used to support operating expenses, 

operating expenses are not an eligible use of SLFRF 

spending for projects eligible under section 

602(c)(5)(B)(xxii) of the Social Security Act. See 

operating expenses within the Pathway One 

applicable requirements section for more 

information. 

99U.S. Department of Transportation, Federal 

Transit Administration, Formula Grants Rural Areas 

Program Guidance and Application Instructions, 79 

FR 63663 (Feb. 27, 2020), https://

www.transit.dot.gov/regulations-and-guidance/ftacirculars/formula-grants-rural-areas-programguidance-and-application. 

100See 49 U.S.C. 5337. 

101U.S. Department of Transportation, Federal 

Transit Administration, State of Good Repair Grant 

Program Guidance and Application Instructions 

(May 29, 2020), https://www.transit.dot.gov/ 

regulations-and-guidance/fta-circulars/state-goodrepair-grant-program-guidance-and-application. 

102See 49 U.S.C. 5339. 

103U.S. Department of Transportation, Federal 

Transit Administration, Buses and Bus Facilities 

Program Guidance and Application Instructions 

(Feb. 27, 2020), https://www.transit.dot.gov/ 

regulations-and-guidance/fta-circulars/bus-andbus-facilities-program-guidance-and-application. 

104See 49 U.S.C. 6703. 

105U.S. Department of Transportation, Federal 

Highway Administration, National Culvert 

Removal, Replacement, & Restoration Grants 

(Culvert Hydraulics Aquatic Organisms Passage 

Program) website Program Overview (Jan. 31, 2023), 

https://www.fhwa.dot.gov/engineering/hydraulics/ 

culverthyd/aquatic/culvertaop.cfm. 

106See title VIII of division J of Public Law 117– 

58. 

107U.S. Department of Transportation, Federal 

Highway Administration, Bridge Formula Program 

(BFP) Implementation Guidance (Jan. 14, 2022), 

https://www.fhwa.dot.gov/bridge/bfp/ 

20220114.cfm. 

108See section 602(c)(5)(B)(v) of the Social 

Security Act. See also 23 U.S.C. 134 for more 

details. 

109See section 602(c)(5)(B)(xix) of the Social 

Security Act. See also 40 U.S.C. 14501 for more 

details on the Appalachian Development Highway 

System. 

Eligible activities under the Urbanized 

Formula grants typically include: 

planning, engineering, design, and 

evaluation of transit projects and other 

technical transportation-related studies; 

capital investments in bus and busrelated activities such as replacement, 

overhaul, and rebuilding of buses, crime 

prevention and security equipment and 

construction of maintenance and 

passenger facilities; and capital 

investments in new and existing fixed 

guideway systems including rolling 

stock, overhaul and rebuilding of 

vehicles, track, signals, 

communications, and computer 

hardware and software. In addition, 

associated transit improvements and 

certain expenses associated with 

mobility management programs are 

eligible under the program. For 

additional information about Urbanized 

Formula Grants, see Urbanized Area 

Formula Program Guidance.94

• Fixed Guideway Capital Investment 

Grants 95—602(c)(5)(B)(xxi) of the Social 

Security Act—The Fixed Guideway 

Capital Investment Grants Program is a 

discretionary grant program that funds 

transit capital investments, including 

heavy rail, commuter rail, light rail, 

streetcars, and bus rapid transit. More 

details are available in the Federal 

Transit Administration’s Capital 

Investment Grants Policy Guidance.96

• Formula Grants for Rural Areas 97— 

602(c)(5)(B)(xxii) of the Social Security 

Act—The Formula Grants for Rural 

Areas Program provides capital and 

planning assistance to support public 

transportation in rural areas with 

populations of less than 50,000, where 

many residents often rely on public 

transit to reach their destinations.98 The 

program also provides funding for 

training and technical assistance 

through the Rural Transportation 

Assistance Program. Eligible activities 

typically include planning, capital, job 

access and reverse commute projects, 

and the acquisition of public 

transportation services. For additional 

information about Formula Grants for 

Rural Areas, see Formula Grants Rural 

Areas Program Guidance.99

• State of Good Repair Grants 100— 

602(c)(5)(B)(xxiii) of the Social Security 

Act—The State of Good Repair Grants 

Program provides capital assistance for 

maintenance, replacement, and 

rehabilitation projects of high-intensity 

fixed guideway and bus systems to help 

transit agencies maintain assets in a 

state of good repair. Capital projects 

eligible for State of Good Repair Grants 

funds typically include projects to 

replace and rehabilitate rolling stock; 

track; line equipment and structures; 

signals and communications; power 

equipment and substations; passenger 

stations and terminals; security 

equipment and systems; maintenance 

facilities and equipment; and 

operational support equipment 

computer hardware and software. For 

additional information about State of 

Good Repair Grants, see State of Good 

Repair Grant Program Guidance.101

• Grants for Buses and Bus 

Facilities 102—602(c)(5)(B)(xxiv) of the 

Social Security Act—The Grants for 

Buses and Bus Facilities Program 

provides funding to help support capital 

projects to replace, rehabilitate, and 

purchase buses, vans, and related 

equipment, and to construct bus-related 

facilities, including technological 

changes or innovations to modify low or 

no emission vehicles or facilities. For 

additional information about Grants for 

Buses and Bus Facilities, see Buses and 

Bus Facilities Program Guidance.103

• National culvert removal, 

replacement, and restoration grant 

program (Culvert AOP Program) 104— 

602(c)(5)(B)(xxv) of the Social Security 

Act—Established by the Bipartisan 

Infrastructure Law, the Culvert AOP 

Program awards grants for projects for 

the replacement, removal, and repair of 

culverts or weirs that meaningfully 

improve or restore fish passage for 

anadromous fish. Anadromous fish 

species are born in freshwater such as 

streams and rivers, spend most of their 

lives in the marine environment, and 

migrate back to freshwater to spawn. For 

additional information on the Culvert 

AOP Program, see the National Culvert 

Removal, Replacement, and Restoration 

Grants (Culvert AOP Program) 

website.105

• Bridge Replacement, Rehabilitation, 

Preservation, Protection, and 

Construction Program (Bridge Formula 

Program or BFP) 106—602(c)(5)(B)(xxvii) 

of the Social Security Act—Established 

by the Bipartisan Infrastructure Law, 

BFP provides formula funds for 

highway bridge replacement, 

rehabilitation, preservation, protection, 

and construction projects on public 

roads. For additional information of 

BFP, see Bridge Formula Program (BFP) 

Implementation Guidance.107

• Additionally, as provided by 

section 602(c)(5) of the Social Security 

Act, Surface Transportation projects 

also include activities to carry out 

metropolitan transportation planning 108

and projects that further the completion 

of a designated route of the Appalachian 

Development Highway System 

(ADHS) 109—a system of designated 

corridors and roadways within the 13 

States that make up the Appalachian 

Region. With regard to metropolitan 

transportation planning, requirements 

leading to the development of 

transportation improvement plans are 

described in section 134 of title 23 of 

the U.S. Code and section 5303 of title 

49 of the U.S. Code. 

b. Pathway One: Applicable 

Requirements 

Recipients using SLFRF funds for 

Surface Transportation projects under 

Pathway One must comply with certain 


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110 42 U.S.C. 4601 et seq. 

111See Public Law 97–424, 96 Stat. 2097 (Jan. 6, 

1983). 

112See, e.g., 23 U.S.C. 313 (Federal Highway 

Administration Buy America statute); 49 U.S.C. 

5323(j) (Federal Transit Administration Buy 

America statute); 49 CFR part 661 (Federal Transit 

Administration Buy America regulation); and 23 

CFR 635.410 (Federal Highway Administration Buy 

America regulation). 

113To treat the provisions of section 

602(c)(5)(C)(iii)(III) as completely optional would 

give these provisions no meaning, because states 

would be permitted to carry out projects in the 

manner contemplated by the provision regardless of 

whether the statute identified this ability or not. 

Such a reading would render the provisions as 

requirements and restrictions 

established by the 2023 CAA, in 

addition to the other applicable 

provisions of section 602 and 603 of the 

Social Security Act, the 2022 final rule, 

and recipients’ award terms and 

conditions. As described earlier in this 

interim final rule, recipients may only 

use the greater of 30% of their award 

and $10 million (not to exceed their 

total award) for Surface Transportation 

projects (described in this section) and 

Title I projects (described in the 

following section), taken together. As 

also described earlier in this interim 

final rule, recipients using SLFRF funds 

for Surface Transportation projects must 

obligate funds by December 31, 2024, 

and expend funds by September 30, 

2026. In the section that follows, this 

interim final rule describes the 

additional requirements that apply to 

Surface Transportation projects funded 

with SLFRF funds under Pathway One. 

Pathway One: Application of Titles 

23, 40, and 49 of the U.S. Code. Sections 

602(c)(5)(C)(iii) and 603(c)(6)(B)(iii) of 

the Social Security Act provide that the 

requirements of titles 23, 40, and 49 of 

the U.S. Code apply to Surface 

Transportation projects, except as 

otherwise determined by the Secretary 

or the head of a Federal agency to which 

the Secretary has delegated authority. 

When using SLFRF funds under 

Pathway One, the statutory 

requirements that normally apply when 

carrying out such projects continue to 

apply. Recipients should consult with 

DOT before using SLFRF funds for these 

projects. The responsibility for 

completing or ensuring compliance with 

all requirements falls to the recipient, as 

would typically be the case for a DOTfunded project in the absence of SLFRF 

funds. Immediately below, this interim 

final rule summarizes some of the 

requirements that generally apply: 

• Uniform Relocation Assistance and 

Real Property Acquisition Policies Act 

of 1970 (Uniform Act) 110—The Uniform 

Act is a Federal law that establishes 

minimum standards for Federally 

funded programs and projects that 

require the acquisition of real property 

or displace persons from their homes, 

businesses, or farms. The Act’s 

protections and assistance apply to the 

acquisition, rehabilitation, or 

demolition of real property for Federal 

or Federally funded projects. The 

provisions of the Uniform Act and its 

implementing regulations apply to all 

activities funded with a recipient’s 

SLFRF award, as described in the 

SLFRF award terms and conditions. 

• Prevailing Wage and Employee 

Protection Requirements—The Surface 

Transportation projects are generally 

subject to wage and employee 

protection requirements, including the 

requirements of 23 U.S.C. 113 and 49 

U.S.C. 5333(a) and (b), applying DavisBacon prevailing wage protections for 

highway and transit projects, 

respectively, receiving Federal financial 

assistance. 

• Title VI of the Civil Rights Act of 

1964—Title VI of the Civil Rights Act of 

1964 states that no person in the Unites 

States shall, on the grounds of race, 

color, or national origin, be excluded 

from participation in, be denied the 

benefits of, or be otherwise subjected to 

discrimination under any program or 

activity for which the recipient receives 

Federal assistance. As with all activities 

funded with a recipients’ SLFRF award, 

the requirements of Title VI and 

Treasury’s implementing regulations at 

31 CFR part 22 apply to SLFRF funds 

used for Surface Transportation 

projects. 

• Buy America Provisions—Buy 

America requirements were established 

pursuant to section 165 of the Surface 

Transportation Assistance Act of 1982 

to ensure that transportation 

infrastructure projects are built with 

American-made products.111 These 

requirements have been implemented 

by various DOT modes through statute 

and regulation.112

• Planning Requirements—Generally, 

projects that are eligible for funding 

under title 23 of the U.S. Code or 49 

U.S.C. Chapter 53 must meet planning 

requirements laid out in law or 

regulation, including the requirement 

that the project be included within a 

Statewide Transportation Improvement 

Program, which is a statewide 

prioritized listing or program of 

transportation projects covering a period 

of four years that is consistent with the 

long-range statewide transportation 

plan, metropolitan transportation plans, 

and relevant Transportation 

Improvement Program. Recipients using 

SLFRF funds for Surface Transportation 

projects under Pathway One must 

continue to comply with applicable 

planning requirements. 

Pathway One: Limitations on 

Operating Expenses. Sections 602(c)(5) 

and 603(c)(6) of the Social Security Act 

provide that SLFRF funds may not be 

used for operating expenses of the 

Surface Transportation projects. 

Specifically, recipients that use SLFRF 

funds for projects eligible under 

Urbanized Formula Grants, Fixed 

Guideway Capital Investment Grants, 

Formula Grants for Rural Areas, State of 

Good Repair Grants, or Grants for Buses 

and Bus Facilities may not use SLFRF 

funds for operating expenses of these 

projects. DOT typically defines 

operating expenses as those costs 

necessary to operate and manage a 

public transportation system. Operating 

expenses usually include costs such as 

driver salaries, the cost of fuel, and the 

cost of equipment and supplies having 

a useful life of less than one year. For 

this purpose, operating expenses do not 

include preventive maintenance 

activities. This limitation does not apply 

to other Surface Transportation projects 

or to other uses of SLFRF funds, 

including under the revenue loss 

eligible use category. 

Pathway One: Projects that 

Demonstrate Progress Towards a State 

of Good Repair or Support Achieving 

Performance Targets. Section 

602(c)(5)(C)(iii)(III) of the Social 

Security Act provides that, except as 

otherwise determined by the Secretary 

or the head of the Federal agency to 

which the Secretary has delegated 

authority, states may use funds for 

Surface Transportation projects, as 

applicable, that demonstrate progress in 

achieving a state of good repair as 

required by the state’s asset 

management plan under 23 U.S.C. 

119(e) and that support the achievement 

of one or more performance targets of 

the state established under 23 U.S.C. 

150. Treasury interprets this provision 

to impose a mandatory requirement for 

states to comply with one of the two 

prongs in section 602(c)(5)(C)(iii)(III). 

Treasury understands the statute’s 

provision that states ‘‘may’’ use funds 

for applicable projects that meet this 

requirement to mean that states may 

only use funds for such projects that 

meet this requirement, because this 

provision is included in the section 

titled ‘‘Application of Requirements’’ 

alongside two other subparagraphs that 

impose mandatory requirements when 

recipients use funds on Surface 

Transportation projects and because 

otherwise, the provision would have no 

practical effect.113 But Treasury reads 


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surplusage. Instead, statutes should be read to give 

effect to all provisions, ‘‘so that no part will be 

inoperative or superfluous.’’ See, e.g., Ysleta Del 

Sur Pueblo v. Texas, 596 U.S. _, 124 S. Ct. 1929, 

1939 (2022) (internal citation omitted). 

114As discussed in United States v. Fisk, 70 U.S. 

445, 447 (1865), it can be necessary ‘‘to construe ‘or’ 

as meaning ‘and,’ and again ‘and’ as meaning ‘or’’’ 

(emphasis omitted). While the word ‘‘and’’ usually 

is conjunctive and the literal meaning of the words 

‘‘and’’ and ‘‘or’’ generally should be followed, it 

may be appropriate to interpret ‘‘and’’ as 

disjunctive when the statutory meaning is 

questionable or confusing. See also Singer, Norman 

J. et al., Sutherland Statutes and Statutory 

Construction § 21:14 (7th ed. 2010). 

115See section 7 of the SLFRF Award Terms and 

Conditions. 

the word ‘‘and’’ as disjunctive, such that 

states need only comply with either 

subparagraph (aa) or (bb).114 While it 

may be possible for a state to carry out 

some types of Surface Transportation 

projects in a way that both demonstrates 

progress in achieving a state of good 

repair as required by the state’s asset 

management plan under 23 U.S.C. 

119(e) and that supports the 

achievement of one or more 

performance targets of the state 

established under 23 U.S.C. 150, 

Treasury is concerned that an 

interpretation that requires states to 

meet both criteria would effectively read 

certain programs out of the list of 

programs that Congress specifically 

provided in section 602(c)(5)(B) of the 

Social Security Act. 

This interim final rule provides that 

only projects eligible under title 23 of 

the U.S. Code, or that otherwise would 

be subject to the requirements of title 

23, will be subject to the requirement to 

either demonstrate progress in achieving 

a state of good repair under 23 U.S.C. 

119(e) or support the achievement of 

one or more state performance targets 

under 23 U.S.C. 150. Section 

602(c)(5)(C)(iii)(III) of the Social 

Security Act provides that this 

requirement applies to Surface 

Transportation projects ‘‘as applicable,’’ 

and it would not make sense for these 

conditions to apply to projects eligible 

under titles 40 or 49 of the U.S. Code 

as that would effectively make such 

projects unavailable to states, despite 

the inclusion of these types of projects 

in section 602(c)(5)(B) of the Social 

Security Act. 

Pathway One: Application of NonFederal Cost Share Requirements to 

SLFRF Funds. Generally, the nonFederal cost share provisions associated 

with projects and programs 

administered by DOT require a certain 

percentage of funds to be contributed 

from non-Federal sources. When other 

Federal funds are added to a 

transportation infrastructure project, the 

total amount of Federal funds associated 

with the project increases. In the case of 

some programs, this addition increases 

the overall amount of funds required 

from non-Federal sources, as is the case 

with the State of Good Repair Grant 

Formula Program (49 U.S.C. 5337(e)), 

the Railcar Vehicle Replacement 

Program (49 U.S.C. 5337(f)), and Grants 

for Buses and Bus Facilities Program (49 

U.S.C. 5339). In the case of other 

programs, the addition of Federal funds, 

like SLFRF, will not increase the overall 

amount of funds required from nonFederal sources. 

As described above, the requirements 

of titles 23, 40, and 49 of the U.S. Code 

apply to recipients using SLFRF funds 

for Surface Transportation projects 

under Pathway One, except as otherwise 

determined by the Secretary. This 

provision permits Treasury to determine 

not to apply certain requirements of the 

cross-referenced statutes when such 

requirements would conflict with the 

existing SLFRF framework or otherwise 

are likely to preclude recipients from to 

exercising the additional authorities 

provided by the statute. For these 

reasons, recipients using SLFRF funds 

for Surface Transportation projects 

under Pathway One will not be required 

to contribute cost-sharing or matching 

funds alongside those SLFRF funds. In 

other words, the use of SLFRF funds on 

its own will not result in the application 

of an additional cost-share requirement 

beyond the cost-share requirement that 

already applies to DOT grantees 

carrying out projects with DOT funds. 

This approach is consistent with the 

way recipients are permitted to use 

SLFRF funds under the 2022 final rule, 

which does not require recipients to 

provide cost sharing or matching funds 

in order to use their SLFRF funds.115 If 

Treasury were to apply cost-share 

requirements to the SLFRF funds used 

in Pathway One, on top of the cost-share 

requirements that already apply to the 

projects as funded by DOT, recipients 

would be required to source additional 

matching funds before being able to 

carry out a Surface Transportation 

project, which would frustrate the 

flexibility provided by the statutory 

framework and inhibit SLFRF 

recipients’ ability to use funds already 

received prior to the approaching 

obligation and expenditure deadlines. 

Because SLFRF funds are Federal 

funds, using SLFRF funds under 

Pathway One will still impact the costshare requirements that apply to certain 

Surface Transportation projects due to 

differences in applicable non-Federal 

cost share requirements across DOT 

projects and programs. In some cases, 

DOT programs are capped in the 

amount of Federal funds that may be 

used in a project, regardless of whether 

those funds are provided by DOT or 

another Federal source. This is true, for 

example, of the State of Good Repair 

Grant Formula Program (49 U.S.C. 

5337(e)), the Railcar Vehicle 

Replacement Program (49 U.S.C. 

5337(f)), and Grants for Buses and Bus 

Facilities Program (49 U.S.C. 5339) 

noted above. In those and other similar 

scenarios, recipients can contribute 

SLFRF funds up to the maximum 

Federal funds limit without an 

accompanying increase in non-Federal 

share, but once that maximum is 

reached, the statutory cost share 

applicable to the project will apply to 

the SLFRF funds. However, in the case 

of many other programs, the approach 

described above will provide an avenue 

for recipients to use funds for Surface 

Transportation projects under Pathway 

One without requiring additional nonFederal share contributions. Recipients 

using SLFRF funds for Surface 

Transportation projects under Pathway 

One must consult with DOT to 

determine the applicable non-Federal 

cost share requirements. 

Pathway One: Delegation of 

Authority. Sections 602(c)(5)(C)(iv) and 

603(c)(6)(B)(iv) of the Social Security 

Act provide that the Secretary may 

delegate oversight and administration of 

the requirements applicable to Surface 

Transportation projects to the 

appropriate Federal agency. Given 

DOT’s expertise and experience with 

oversight and administration of their 

own infrastructure projects, Treasury is 

delegating authority for oversight and 

administration of Surface 

Transportation projects under Pathway 

One. As such, recipients proposing to 

spend SLFRF on such projects must 

follow DOT guidance for determining 

the eligibility of using SLFRF funds for 

a proposed project. Recipients using 

SLFRF funds for such projects will be 

required to comply with the relevant 

existing DOT reporting requirements 

associated with an existing Surface 

Transportation project that is receiving 

DOT funds. Recipients using SLFRF 

funds under Pathway One will also be 

required to report certain information to 

Treasury, including, among other 

things, the amount of SLFRF funds 

directed toward Surface Transportation 

projects and Title I projects to ensure 

that recipients comply with the cap on 

funds associated with these eligible use 

categories. See the section titled 

Reporting for additional information. 

Treasury and DOT will work together to 

issue guidance to provide recipients 

additional clarity on how the delegation 


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116See 23 CFR part 625. 

117U.S. Department of Transportation, FY 2023 

RAISE Grants Notice of Funding Opportunity, 

https://www.transportation.gov/sites/dot.gov/files/ 

2023-02/RAISE%202023%20NOFO%

20Amendment2.pdf. 

118See 23 U.S.C. 138. 

119See 54 U.S.C. 306108. 

120Although Treasury is only adopting the 

streamlined approach for projects eligible for the 

RAISE program, as discussed above, this program 

includes most eligible types of projects. 

of oversight and administration will 

apply to Pathway One projects. 

c. Pathway Two: Surface Transportation 

Projects Not Receiving Funding From 

DOT 

This section describes Pathway Two, 

through which recipients may use 

SLFRF funds for Surface Transportation 

projects that are not receiving funding 

from DOT, whether or not SLFRF funds 

are blended with other sources of funds. 

This second pathway is available to all 

SLFRF recipients, including those that 

do not routinely apply for or receive 

funding directly from DOT. 

In this interim final rule, Treasury is 

articulating a streamlined framework 

under Pathway Two for recipients to 

undertake certain projects that are 

expected to pose less financial, 

compliance, and environmental risk. In 

this streamlined framework, Treasury 

has determined not to require recipients 

to submit an application to, or receive 

approval from, Treasury to conduct a 

project that meets certain criteria, as 

discussed further below. 

To pursue projects outside the 

thresholds described in the streamlined 

framework, recipients must submit a 

notice of intent to Treasury through the 

process described further below. 

Treasury will evaluate the projects 

included in these notices of intent, 

along with comments to this interim 

final rule, to design and implement the 

framework for approving these projects. 

For information, refer to the section 

titled Pathway Two: Notice of Intent for 

Projects Outside Streamlined 

Framework. 

As summarized earlier, Treasury has 

determined to adopt a streamlined 

approach for projects that qualify for the 

RAISE grant program and that meet 

criteria that indicate lower risk. Projects 

eligible under the DOT RAISE program 

are among the types of projects added 

by the 2023 CAA as eligible uses of 

SLFRF. Under the RAISE program, as 

detailed in the RAISE Notice of Funding 

Opportunity, recipients must submit 

applications to DOT and receive 

approval from DOT for their proposed 

projects. 

In this streamlined approach, 

Treasury has determined not to require 

recipients to submit an application to, 

or receive approval from, Treasury to 

conduct a project that would be eligible 

under the RAISE grant program and 

meets the other criteria applicable to the 

streamlined framework, as would 

normally be required when DOT 

administers the program pursuant to the 

RAISE Notice of Funding Opportunity. 

Depending on the nature of the project, 

a recipient may nevertheless be required 

to obtain approval pursuant to a specific 

requirement under titles 23, 40 or 49 or 

the regulations adopted by DOT 

thereunder. For example, a project that 

involves new construction, 

reconstruction, resurfacing (except for 

maintenance resurfacing), restoration, or 

rehabilitation of a national highway 

must meet the design standards 

approved by DOT; if the recipient 

wishes to vary from these standards, it 

must apply to DOT for an exception.116

The eligibility of projects under the 

RAISE program is described in the 

‘‘Notice of Funding Opportunity for the 

Department of Transportation’s 

National Infrastructure Investments (i.e., 

the Rebuilding American Infrastructure 

with Sustainability and Equity (RAISE) 

Grant Program) under the Infrastructure 

Investment and Jobs Act (‘‘Bipartisan 

Infrastructure Law’’), Amendment No. 

2’’ (2023 RAISE Grant NOFO) under ‘‘3. 

Other’’ in ‘‘C. Eligibility 

Information.’’ 117 These projects include 

highway, bridge, or other road projects 

eligible under title 23 of the U.S. Code; 

public transportation projects eligible 

under chapter 53 of title 49 of the U.S. 

Code; passenger and freight rail 

transportation projects; port 

infrastructure investments; the surface 

transportation components of an airport 

project eligible for assistance under part 

B of subtitle VII of title 49 of the U.S. 

Code; intermodal projects; projects to 

replace or rehabilitate a culvert or 

prevent stormwater runoff; projects 

investing in surface transportation 

facilities that are located on Tribal land; 

and other surface transportation 

infrastructure projects that the Secretary 

of Transportation considers to be 

necessary to advance the goals of the 

RAISE program—including public road 

and non-motorized projects that are not 

otherwise eligible under title 23 of the 

U.S. Code, transit-oriented development 

projects, mobility on-demand projects 

that expand access and reduce 

transportation cost burden, and 

intermodal projects. 

For a RAISE-eligible project to qualify 

for the streamlined approach, it must 

satisfy the following criteria: 

• Contribute no more than $10 

million in SLFRF funds. The recipient’s 

contribution of SLFRF funding to the 

project under Pathway Two must not 

exceed $10 million. 

• Limited to activities that typically 

do not have a significant environmental 

impact. The entire project scope must 

be limited to the set of actions or 

activities identified by DOT as meeting 

the criteria for categorical exclusion as 

listed under 23 CFR 771.116(c)(1)–(22), 

771.117(c)(1)–(30), and 771.118(c)(1)– 

(16). The recipient also must determine 

that those actions do not involve 

unusual circumstances, as described in 

23 CFR 771.116(b), 771.117(b), and 

771.118(b). Such unusual circumstances 

include significant environmental 

impacts; substantial controversy on 

environmental grounds; significant 

impact on properties protected by 

section 4(f) of the Department of 

Transportation Act of 1966 118 or section 

106 of the National Historic 

Preservation Act (NHPA); 119 or 

inconsistencies with any Federal, state, 

or local law, requirement, or 

administrative determination relating to 

the environmental aspects of the action. 

In considering whether the effects of a 

proposed action are significant, 

recipients should analyze the 

potentially affected environment and 

degree of the effects of the action 

consistent with how a Federal agency 

would analyze it, as described in 40 

CFR 1501.3(b). For example, an action 

may be significant if—in the short-term 

or the long-term and either individually 

or cumulatively—it greatly alters or 

impacts planned growth or land use for 

the area; requires the relocation of large 

numbers of people; has a strong effect 

on any natural, cultural, recreational, 

historic, or other resource; significantly 

impacts air, noise, or water quality; 

greatly affects travel patterns; or has 

some other form of environmental 

impact that is significant. 

Without the streamlined framework, 

recipients likely would not be able to 

engage within required timelines in the 

types of projects that Congress has 

authorized.120 As approximately 30,000 

SLFRF recipients could seek to use 

funds for hundreds of Surface 

Transportation projects under Pathway 

Two, application of the statutory and 

regulatory approval requirements to 

such a volume of projects likely would 

preclude recipients from carrying out 

such projects while meeting the 

statutory deadlines for obligation and 

expenditure of funds. By contrast, 

Treasury expects far fewer recipients to 

seek to use SLFRF funds for higher-risk 

projects involving greater complexity, 

given the approaching obligation 

deadline of December 31, 2024. The 


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121 Given that RAISE is a competitive grant 

program, the approval process also involves the 

selection of the most meritorious projects, but this 

objective is not relevant to the SLFRF program, 

under which recipients are provided funds by 

Treasury in advance for projects of their own 

choosing. 

122See 23 CFR 771.116, 771.117, and 771.118. 

123The TIGER, BUILD, and RAISE grant programs 

are discretionary grants awarded by DOT to fund 

road, rail, transit, and port projects that promise to 

achieve national objectives. The programs have 

different names but share similar goals and 

eligibility requirements. The names reflect the 

changing priorities and themes of the DOT over 

time. The programs were first created in 2009 as 

part of the American Recovery and Reinvestment 

Act of 2009 and have since funded hundreds of 

projects in all 50 states, the District of Columbia, 

and Puerto Rico. 

approval requirements apply to Surface 

Transportation projects that do not meet 

the above streamlined framework 

criteria, and Treasury will design a 

process for recipients seeking to finance 

larger projects, based in part on the 

comments to this interim final rule, as 

discussed further below. 

Recipients using SLFRF funds for an 

eligible project under Pathway Two 

must maintain records to support their 

determination that the project meets the 

relevant requirements and the criteria 

described above, including qualifying as 

an ‘‘eligible project’’ under the RAISE 

grant program, not exceeding $10 

million in SLFRF funds, and being 

limited to activities that typically do not 

have a significant environmental impact 

as outlined above. Recipients should be 

prepared to attest to having completed 

these determinations as part of their 

ongoing reporting to Treasury. Treasury 

will amend its reporting guidance to 

provide reporting requirements 

applicable to projects conducted under 

Pathway Two. 

Treasury aligned the streamlined 

framework for projects under Pathway 

Two with the projects available under 

the RAISE grant program because these 

projects substantially overlap with the 

projects available under the other 

programs referenced in section 

602(c)(5)(B) of the Social Security Act. 

Furthermore, the RAISE program’s 

availability on a competitive basis to 

most SLFRF recipients means that the 

program and its requirements are 

already familiar to many recipients, 

enabling them to quickly and clearly 

assess the eligibility of a proposed 

project and meet the obligation and 

expenditure deadlines. 

Based on Treasury’s initial 

conversations with DOT and 

stakeholders with an interest in Surface 

Transportation projects, it is Treasury’s 

expectation that compliance with the 

streamlined framework will 

substantially address the risks and 

policy concerns associated with projects 

that the requirement to submit an 

application for DOT approval under the 

RAISE program is meant to address. 

The requirement to obtain DOT 

approval allows DOT to assess whether 

the project meets eligibility 

requirements, whether a recipient has 

the financial and technical capability to 

design and carry out the project, 

whether the recipient has received 

required permits and will comply with 

applicable law, and how the project will 

impact the environment.121

Environmental risk is addressed by the 

requirement to qualify for one of the 

NEPA categorical exclusions, absent any 

unusual circumstances, which is crossreferenced in the third criterion. 

Categorical exclusions (absent unusual 

circumstances) represent the class of 

actions that DOT has determined, after 

review by the Council on Environmental 

Quality, do not typically individually or 

cumulatively have a significant effect on 

the human environment and for which, 

therefore, neither an environmental 

assessment nor an environmental 

impact statement is normally required 

under DOT’s environmental review 

process.122 Further, the risk of a project 

being ineligible for a specific DOT 

program is less of a concern under 

Pathway Two than it would be under 

certain specific DOT programs, given 

that the scope of eligible projects as 

added by the 2023 CAA is so wide. 

There is generally less risk of a recipient 

not having the financial or technical 

capabilities to complete a project in the 

case of a project that would meet the 

$10 million threshold. 

As noted above, projects eligible 

under the RAISE grant program 

substantially overlap with the projects 

available under the other programs 

referenced in section 602(c)(5)(B) of the 

Social Security Act, and the program is 

available on a competitive basis to most 

SLFRF recipients. These projects, 

therefore, represent the types of projects 

that SLFRF recipients may be expected 

to undertake under Pathway Two, and 

Treasury qualitatively reviewed recent 

RAISE grants as well as earlier grants 

awarded through the similar TIGER and 

BUILD programs, covering fiscal years 

2012 through 2022, to develop a better 

understanding of the types of projects 

that recipients may choose to 

undertake.123 Treasury observed that 

projects funded by these grants 

generally present reduced financial 

complexity and compliance risk and are 

narrower in scope. Adjusted for 

inflation, applicants awarded less than 

$10 million in TIGER, BUILD, or RAISE 

grant funding have generally carried out 

a wide range of projects including: road 

repairs, sidewalk installment and 

replacement, bike and pedestrian trails, 

pedestrian bridges, replacement of 

existing vehicle bridges, intermodal or 

transit-oriented infrastructure buildouts, marine facility investments, and 

railway repairs and expansion. These 

projects were generally focused on 

maintenance or upgrades of existing 

infrastructure and thus were 

significantly less likely to expand the 

overall footprint of surface 

transportation projects. This suggests 

that these types of projects tend to carry 

fewer complexities and are the types of 

Surface Transportation projects with 

which nearly all SLFRF recipients are 

familiar as part of the normal course of 

maintaining surface transportation in 

their respective geographic areas. 

Approximately half of TIGER, BUILD, 

and RAISE awards under $10 million 

fund transportation infrastructure; the 

other half are planning or research 

grants. Treasury observed in its review 

that nearly 80% of the transportation 

infrastructure awards under $10 million 

did not meaningfully expand the 

footprint of existing infrastructure. 

Furthermore, of the awards that may 

have required a footprint expansion, 

nearly half of those awards were for bike 

and pedestrian trails and bridges, which 

are expected to be less environmentally 

impactful, time intensive, and complex 

than new roads, vehicle bridges, rail 

lines, or multimodal infrastructure. 

Based on this analysis, nearly 90% of 

awards did not require an expansion of 

the footprint of a project and over 75% 

of projects were maintenance or upgrade 

oriented. When reviewing awards above 

$10 million, Treasury found increasing 

complexity among awards that was not 

present in significant numbers below 

the $10 million threshold. This 

complexity involved awards that 

crossed multi-jurisdictional boundaries 

or significantly expanded the footprint, 

such as bridge reconstruction and 

widening over a major river between 

two states and a project for a 

multimodal transportation center. 

Although compliance with the 

streamlined framework criteria does not 

alone address these risks as fully as 

agency review of the project would, 

Treasury believes it reasonable to permit 

projects funded with $10 million or less 

in SLFRF funds and that fit within the 

DOT NEPA categorical exclusions to go 

forward without the application of 

approval requirements to enable 

recipients to successfully pursue these 

projects within the time remaining in 

the program. 

Pathway Two: Notice of Intent for 

Projects Outside Streamlined 


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Framework. As described earlier, 

Treasury recognizes that recipients may 

want to use SLFRF funds (without any 

funding from DOT) to pursue projects 

that do not meet the three criteria for the 

streamlined framework described above 

(i.e., a project not eligible under the 

RAISE program, a project above the $10 

million threshold, or a project including 

activities that do not fall within the 

categorical exclusions). To do so, 

recipients must submit a notice of intent 

to Treasury. The notice of intent must 

be submitted to NOI-SLFRF@

Treasury.gov and is due by December 

20, 2023. Ideally, the notice of intent 

will provide the following information: 

• Project description, including 

description of how the project meets the 

applicable requirements under the 

relevant Surface Transportation 

program; 

• Dollar value of SLFRF-financed 

portion of the project, including 

confirmation that the SLFRF-funded 

portion will not exceed the greater of 

$10 million or 30% of the recipient’s 

total SLFRF award; 

• Total expected project cost; 

• Presence of other Federal funding; 

• Status of NEPA review; 

• Recipients’ plans to source the 

project in accordance with the Buy 

America requirements set forth in titles 

23, 40, and 49 of the U.S. Code, as 

applicable; 

• Brief assessment of project 

readiness, including recipient’s 

assessment of its ability to obligate and 

expend funds for the SLFRF-financed 

portion of the project in accordance 

with the December 31, 2024 obligation 

deadline and September 30, 2026, 

expenditure deadline; and 

• Brief assessment of recipient’s 

institutional, managerial, and financial 

capability to ensure proper planning, 

management, and completion of the 

project. 

Treasury will evaluate the projects 

included in these notices of intent, 

along with comments to this interim 

final rule, to design and implement a 

framework for approving these projects. 

d. Pathway Two: Applicable 

Requirements 

Recipients using SLFRF funds under 

Pathway Two must comply with certain 

requirements and restrictions. These 

requirements and restrictions are in 

addition to the eligibility criteria 

applicable to the streamlined Pathway 

Two framework discussed above. As 

described earlier in this interim final 

rule, recipients may only use the greater 

of 30% of their award and $10 million 

(not to exceed their award) for Surface 

Transportation projects (described in 

this section) and Title I projects 

(described in the following section), 

taken together. For example, an SLFRF 

recipient with an allocation of $20 

million would have $10 million (as $10 

million is greater than 30% of the 

allocation, or $6 million) to direct to 

Surface Transportation projects and 

Title I projects. If this recipient chose to 

expend $10 million toward a Surface 

Transportation project under the 

streamlined framework in Pathway 

Two, it would have expended the full 

amount of SLFRF funds available under 

the cap and would not be able to pursue 

any additional Surface Transportation 

projects or any Title I projects. 

Recipients using SLFRF funds under 

Pathway Two must also comply with 

the requirement that SLFRF funds 

supplement and not supplant other 

funds, described earlier in this interim 

final rule. Also as described earlier in 

this interim final rule, for Surface 

Transportation projects, recipients must 

obligate funds by December 31, 2024, 

and expend funds by September 30, 

2026. In the section that follows, this 

interim final rule describes how the 

requirements of NEPA and titles 23, 40, 

and 49 of the U.S. Code apply to SLFRF 

funds used for Surface Transportation 

projects under Pathway Two. 

Pathway Two: NEPA. As described 

above, recipients using funds for 

Surface Transportation projects that 

qualify for the streamlined framework 

under Pathway Two, and that are 

therefore not subject to approval 

requirements, are not required to 

conduct NEPA environmental reviews. 

Recipients are reminded, however, that 

projects supported with payments from 

SLFRF may still be subject to NEPA 

review and other environmental statutes 

such as section 106 of the NHPA that 

impose conditions on a Federal agency’s 

approval of a project if they are also 

funded by other Federal financial 

assistance programs or have certain 

Federal licensing or registration 

requirements. In addition, a project that 

qualifies for the streamlined framework 

may still be subject to limitations or 

prohibitions as a result of the 

application of other environmental 

statutes. 

For projects under Pathway Two 

outside of the streamlined framework, 

recipients must submit a notice of intent 

as outlined above, and the requirements 

of NEPA and other environmental laws, 

such as section 106 of the NHPA, that 

impose limits on a Federal agency’s 

approval of a project, apply to these 

Surface Transportation projects. 

Treasury will provide additional 

information about the application and 

administration of environmental 

requirements to projects under Pathway 

Two not qualifying for the streamlined 

framework at a later date, following 

review of the comments to this interim 

final rule and the notices of intent 

submitted by recipients. 

Pathway Two: Application of Titles 

23, 40, and 49 of the U.S. Code. The 

2023 CAA provides that, except as 

otherwise determined by the Secretary, 

the requirements of titles 23, 40, and 49 

of the U.S. Code apply to SLFRF funds 

used for Surface Transportation 

projects. Generally, the requirements 

provided within the following sections 

of titles 23, 40, and 49 apply to 

recipients’ use of SLFRF funds under 

Pathway Two, because these sections 

govern the types of Surface 

Transportation projects that recipients 

may undertake pursuant to the 2023 

CAA: 

• Title 23: All parts of title 23 

• Title 40: Chapters 141 and 145 

• Title 49: Chapters 53, 55, 67, 471, and 

subtitle V 

More specifically, applicable 

provisions include those relating to the 

following requirements: 

• Underlying project requirements. 

For example, if a recipient intends to 

use SLFRF funds under Pathway Two 

for an INFRA project that would be 

eligible under title 23 (as contemplated 

by the RAISE program), then in addition 

to complying with the requirements 

established in the RAISE NOFO, the 

recipient must also comply with the 

project eligibility and execution 

requirements that govern the INFRA 

program, set forth at 23 U.S.C. 117. 

• Design, planning, construction, 

operation, maintenance, vehicle weight 

limit, and toll requirements with respect 

to particular projects. For a discussion 

of planning requirements specifically 

related to STIPs and TIPs, please see 

below. 

• Location requirements for particular 

projects. For example, pursuant to 23 

U.S.C. 133(c), recipients of the Surface 

Transportation Block Grant program 

may not undertake a project on a road 

functionally classified as a local road or 

a rural minor collector unless the road 

was on a Federal-aid highway system on 

January 1, 1991, subject to certain 

exceptions. Recipients using SLFRF 

funds for projects pursuant to sections 

602(c)(5)(B)(iv) and 603(c)(6)(A) of the 

Social Security Act as added by the 

2023 CAA, which provided that projects 

eligible under the Surface 

Transportation Block Grant program are 

eligible uses of the SLFRF, must comply 

with the location requirements of 23 

U.S.C. 133(c) with respect to such 

projects. Recipients seeking to use funds 


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124For an illustrative list of the other applicable 

laws, rules, regulations, executive orders, polices, 

guidelines, and requirements as they relate to a 

RAISE grant project overseen by the FHWA, see 

https://www.transportation.gov/grants/raise/raisefy2022-fhwa-exhibits-october-18-2022. 

125See 23 CFR 625.3(d). Application of these 

requirements to projects funded under the SLFRF 

includes the provision for determinations by the 

Division Administrator in certain instances as 

provided for by 23 CFR 625.3(e). 

126The 2023 CAA provides that the requirements 

of titles 23, 40, and 49 of the U.S. Code apply to 

funds used for Surface Transportation projects, 

except as otherwise determined by the Secretary. 

Treasury is also applying the associated regulations 

because they generally inform and provide context 

for how to apply with the requirements set forth in 

the statute. 127See 23 U.S.C. 173(i). 

under the streamlined framework under 

Pathway Two are reminded that the 

‘‘public road and nonmotorized projects 

not otherwise eligible under title 23’’ 

prong of the 2023 RAISE NOFO would 

include local road projects. 

• Project approval requirements. The 

approval requirements of titles 23, 40, 

and 49 of the U.S. Code apply to 

Pathway Two projects other than those 

that qualify for the streamlined 

framework described above. Treasury 

has determined not to require recipients 

to submit an application to, or receive 

approval from, Treasury to conduct a 

project that would be eligible under the 

RAISE grant program and meets the 

criteria of the streamlined framework of 

Pathway Two. As discussed above, 

depending on the nature of the project, 

a recipient may nevertheless be required 

to obtain approval pursuant to a specific 

requirement under titles 23, 40 or 49 or 

the regulations adopted by DOT 

thereunder. 

• Procurement requirements. For 

example, the requirements of 23 U.S.C. 

112 generally apply. Please see 

discussion below in the section titled 

Pathway Two: Buy America 

Requirements for a discussion of the 

specific applicability of Buy American 

requirements under 23 U.S.C. 313 and 

the Infrastructure Investment and Jobs 

Act. 

• Wage and labor requirements. For 

example, the requirements of 23 U.S.C. 

113, imposing Davis-Bacon prevailing 

wage protections for highway projects, 

apply. 

• Compliance requirements. 

Compliance provisions apply to the 

extent that they require recipients to 

establish and maintain measures to 

oversee the eligible projects that they 

are undertaking. 

• Definitions of terms used in the 

provisions above. 

In addition, the RAISE program 

includes eligibility for projects with 

applicable requirements that are found 

outside of titles 23, 40, and 49. If a 

recipient would like to use SLFRF funds 

for a project eligible under the RAISE 

program but governed by laws outside 

titles 23, 40, and 49, the general 

principles described above for titles 23, 

40, and 49 will apply, and recipients 

may ask Treasury for more detail about 

the specific requirements that apply to 

the particular project. 

Recipients using SLFRF funds for 

Surface Transportation projects under 

Pathway Two must meet the relevant 

requirements outlined above, which 

will depend on the project type and 

whether the project ordinarily would be 

overseen by the Federal Highway 

Administration (FHWA), Federal 

Transit Administration (FTA), Federal 

Railroad Administration (FRA), or other 

relevant DOT administrations. For 

example, for projects that ordinarily 

would be overseen by FHWA, 

applicable Federal laws include those 

set forth in title 23 of the U.S. Code, 

chapters 141 and 145 of title 40 of the 

U.S. Code (if undertaking a project 

related to the completion of a 

designated route of the Appalachian 

Development Highway System), chapter 

67 of title 49 of the U.S. Code (if 

undertaking a project related to national 

culvert removal, replacement, or 

restoration), and applicable 

regulations.124 For projects that 

ordinarily would be overseen by the 

FTA, applicable Federal laws include 

the requirements of chapters 53, 55, and 

67 of title 49 of the U.S. Code and 

chapter VI of title 49 of the Code of 

Federal Regulations. For projects that 

ordinarily would be overseen by the 

FRA, applicable Federal laws include 

those described in chapters 55 and 67 

and subtitle V of title 49 of the U.S. 

Code. 

Restrictions that apply to projects 

regardless of the source of funds of the 

project apply as they would to any other 

project carried out by a recipient. For 

example, the design and construction 

standards set forth in 23 CFR part 625 

apply to construction, reconstruction, 

resurfacing (except for maintenance 

resurfacing), restoration, or 

rehabilitation of a highway that is part 

of the national highway system, 

regardless of what funds are used for 

such activities.125 For all of the 

requirements under titles 23, 40, and 49 

that apply to recipients’ use of funds to 

undertake projects under this 

framework, the associated DOT 

regulations also apply, unless Treasury 

states otherwise.126

Pathway Two: Inapplicable 

requirements of title 23, 40, and 49 of 

the U.S. Code. The Secretary has 

determined that certain sections of the 

relevant chapters of titles 23, 40, and 49 

of the U.S. Code do not apply to 

recipients’ use of SLFRF funds for 

Surface Transportation projects under 

Pathway Two when such requirements 

would conflict with the existing SLFRF 

framework or otherwise are likely to 

preclude recipients from exercising the 

additional authorities provided by the 

statute. For these reasons, the following 

types of provisions generally do not 

apply: 

• Grant size requirements. 

Limitations on the size of grants that 

DOT can award to grantees do not apply 

to SLFRF recipients using funds to carry 

out Surface Transportation projects. For 

example, under the Rural Surface 

Transportation Grant Program, DOT 

generally may only award grants in 

amounts not less than $25 million.127

SLFRF recipients are not subject to this 

funding minimum when using SLFRF 

funds for projects eligible under the 

Rural Surface Transportation Grant 

Program. These limitations conflict with 

the SLFRF statutory framework and are 

likely to preclude recipients from 

exercising the additional authorities 

provided by the statute: they apply by 

their terms to DOT rather than to 

recipients, and recipients have already 

received their SLFRF payments from 

Treasury. Instead, recipients are subject 

to the aggregate limit on the use of 

SLFRF for Surface Transportation 

projects and Title I projects discussed 

above. Recipients wishing to use the 

streamlined framework for a particular 

project are also limited to using $10 

million of the SLFRF for such project. 

• Allocation requirements that 

require states to distribute funds 

received under certain programs to their 

local governments or to spend funds 

received under certain programs for the 

benefit of particular areas. Treasury has 

determined for example, that the 

requirements of 23 U.S.C. 133(h) are not 

applicable to the SLFRF program, as 

they conflict with the SLFRF statutory 

framework and are likely to preclude 

certain recipients from exercising the 

additional authorities provided by the 

statute. The 2023 CAA amendments 

make clear that SLFRF recipients are 

permitted to use funds for projects 

carried out by the recipient itself. 

Furthermore, all SLFRF recipients are 

eligible to use their funds for Surface 

Transportation projects, so it is 

unnecessary to require states to further 

distribute amounts for the specific 

benefit of their localities that may not 

receive DOT funding directly. Finally, 

even if Treasury were to apply these 

allocation requirements to the SLFRF 

program, a state that wanted to use 


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128See section 7 of the SLFRF Award Terms and 

Conditions. 

129 ‘‘Regionally significant project’’ is defined in 

23 CFR 450.104 to mean ‘‘a transportation project 

. . . that is on a facility that serves regional 

transportation needs (such as access to and from the 

area outside the region; major activity centers in the 

region; major planned developments such as new 

retail malls, sports complexes, or employment 

centers; or transportation terminals) and would 

normally be included in the modeling of the 

metropolitan area’s transportation network. At a 

minimum, this includes all principal arterial 

highways and all fixed guideway transit facilities 

that offer an alternative to regional highway travel.’’ 

130See 23 U.S.C. 313 for FHWA, 49 U.S.C. 5323 

for FTA, and 49 U.S.C. 22905(a) and 49 U.S.C. 

24395 for FRA. 

SLFRF funds for a project eligible under 

a program subject to an allocation 

requirement could in most if not all 

cases avoid the requirement by citing a 

different program without an allocation 

requirement as the authority for its uses 

of funds. 

• Non-Federal cost-share 

requirements. As discussed under 

Pathway One, titles 23, 40, and 49 

include cost-share requirements that 

generally apply to projects under 

transportation programs. However, 

recipients using SLFRF funds for 

Surface Transportation projects under 

Pathway Two are not required to 

contribute cost-sharing or matching 

funds alongside those SLFRF funds. 

This approach is consistent with the 

way recipients spend SLFRF funds 

under the 2022 final rule, which does 

not require recipients to provide cost 

sharing or matching funds in order to 

use their SLFRF funds.128 If Treasury 

were to apply cost-share requirements to 

the SLFRF funds used in Pathway Two, 

recipients would be required to source 

additional matching funds before being 

able to carry out a Surface 

Transportation project, which would 

frustrate the flexibility provided by the 

2023 CAA and inhibit recipients’ ability 

to use funds already received prior to 

the approaching obligation and 

expenditure deadlines. 

• Reporting requirements that would 

normally apply when DOT provides 

funding for a project. SLFRF recipients 

generally are not required to report their 

use of SLFRF funds for a project under 

Pathway Two to DOT or any other 

agency other than Treasury. Instead, 

recipients are required to provide a 

detailed accounting of their uses of 

funds and report such information as 

Treasury shall require pursuant to 

section 602(d)(2) and 603(d). Treasury 

will amend its reporting guidance to 

provide reporting requirements 

applicable to projects conducted under 

Pathway Two. 

Pathway Two: STIP and TIP. The 

statutory provisions of titles 23, 40, and 

49 related to STIP and TIP inclusion, 

generally do not apply to SLFRF funds 

used for Surface Transportation projects 

under Pathway Two. Typically, 

applicants for RAISE funding need to 

demonstrate that a project that is 

required to be included in the relevant 

state, metropolitan, and local planning 

documents has been or will be included 

in such documents. Such local planning 

documents include the STIP or TIP. 

This requirement for inclusion in 

planning documents provides useful 

context on how specific projects fit 

within broader transportation 

investments. The requirement that 

certain projects be addressed in these 

planning documents, however, is 

inconsistent with the 2023 CAA 

amendments’ provision of authority to 

local governments themselves to 

undertake Surface Transportation 

projects with funds on hand rather than 

through funding overseen by state or 

regional entities and therefore would 

likely preclude certain recipients from 

exercising the additional authorities 

provided by the statute. Accordingly, 

these planning requirements do not 

apply to recipients’ use of SLFRF funds 

for Surface Transportation projects 

under Pathway Two. 

However, as discussed above, 

requirements that apply to projects 

regardless of the source of funds of the 

project apply as they would to any other 

project carried out by a recipient. 

Pursuant to 23 CFR 450.218(h), a STIP 

must contain all regionally significant 

projects requiring an action by the 

FHWA or FTA despite source of funds, 

and must also contain (if appropriate 

and included in any TIPs), all regionally 

significant projects proposed to be 

funded with Federal funds, among 

others. 129 For this reason, if a project 

receiving SLFRF funds under this 

framework is regionally significant and 

requires an action by the FHWA or the 

FTA, it will still be required to be 

included in the STIP or TIP. If a project 

receiving SLFRF funds under this 

framework is included in a TIP, for 

informational and conformity purposes, 

it also may be required to be included 

in the STIP. 

Pathway Two: Buy America 

Requirements. Under titles 23 and 49 of 

the U.S. Code, programs overseen by the 

FHWA, FTA, and FRA are subject to 

Buy America domestic content 

procurement preference provisions 

related to steel, iron, and manufactured 

goods. These Buy America provisions 

provide that DOT shall not obligate 

funds to carry out projects under titles 

23 and 49 unless steel, iron, and 

manufactured products used in such 

project are produced in the United 

States.130 Recipients generally must 

satisfy the Buy America requirements of 

titles 23, 40, and 49 of the U.S. Code 

when funds are used on Surface 

Transportation projects under Pathway 

Two. However, recipients are not 

required to satisfy the Buy America 

requirements in the case of Surface 

Transportation projects meeting the 

criteria for streamlined projects under 

Pathway Two that result in lower-risk 

uses of funds. Treasury expects that 

recipients may seek to use funds for 

hundreds of lower-risk projects, and 

application of the Buy America 

requirements to such a volume of 

projects likely would preclude 

recipients from carrying out such 

projects while meeting the statutory 

deadlines for obligation and 

expenditure of funds. Treasury expects 

that developing the recipient 

compliance process and addressing 

requests for waivers for potentially 

hundreds of lower-risk projects in time 

for recipients to carry out such projects 

while meeting the statutory deadlines 

for obligation and expenditure of funds 

could inhibit recipients’ ability to use 

SLFRF funds in the time remaining in 

the program in line with the flexibility 

provided by the statutory framework. By 

contrast, Treasury expects far fewer 

recipients to seek to use SLFRF funds 

for higher-risk projects involving greater 

complexity, in light of the approaching 

obligation deadline of December 31, 

2024, and expenditure deadline of 

September 30, 2026. The Buy America 

requirements apply to Surface 

Transportation projects that do not meet 

the criteria, and Treasury will work 

with recipients seeking to fund projects 

outside of the streamlined framework, 

as discussed further above. 

Pathway Two: Projects that 

demonstrate progress towards a state of 

good repair or support achieving 

performance targets. Consistent with the 

requirements applicable to Pathway 

One, states using SLFRF funds under 

Pathway Two for Surface Transportation 

projects eligible under title 23 of the 

U.S. Code, or that otherwise would be 

subject to the requirements of title 23, 

must either demonstrate progress in 

achieving a state of good repair or 

support the achievement of one or more 

performance targets. This requirement 

would not apply when states use SLFRF 

funds for Surface Transportation 

projects eligible under programs 

authorized by laws outside of title 23 of 

the U.S. Code, for the reasons discussed 

above. 


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131See 42 U.S.C. 5301 et seq. 

Pathway Two: Limitations on 

Operating Expenses. Consistent with the 

requirements described in Pathway One, 

recipients may not use SLFRF funds 

under this pathway for operating 

expenses in projects that would be 

eligible under Urbanized Formula 

Grants, Fixed Guideway Capital 

Investment Grants, Formula Grants for 

Rural Areas, State of Good Repair 

Grants, or Grants for Buses and Bus 

Facilities. For this purpose, operating 

expenses do not include preventive 

maintenance activities. Public 

transportation projects eligible under 

chapter 53 of title 49 of the U.S. Code 

are eligible projects under the RAISE 

grant program and therefore are 

available for SLFRF recipients to pursue 

under Pathway Two, pursuant to other 

requirements as outlined above. Given 

the statutory limitation on using SLFRF 

funds for operating expenses on projects 

eligible under the above-mentioned 

programs, such limits also apply to 

projects eligible under the programs 

with statutory limitations on using 

SLFRF funds for operating expenses that 

recipients may pursue under Pathway 

Two. This limitation does not apply to 

other Surface Transportation projects 

under Pathway Two or to other uses of 

SLFRF funds, including under the 

revenue loss eligible use category. 

e. Pathway Three: Non-Federal Share 

Requirements for Certain Surface 

Transportation Projects 

This section discusses the third 

pathway for using SLFRF funds for 

Surface Transportation projects. 

Sections 602(c)(5)(A) and 603(c)(6)(A) of 

the Social Security Act provide that 

SLFRF funds may be used to satisfy 

non-Federal share requirements for 

projects eligible under INFRA Grants 

(23 U.S.C. 117), Fixed Guideway Capital 

Investment Grants (49 U.S.C. 5309), or 

Mega Grants (49 U.S.C. 6701), as well as 

projects eligible for credit assistance 

under the TIFIA program (23 U.S.C. 

chapter 6). Recipients may also use 

SLFRF funds to repay a loan provided 

under the TIFIA program. These eligible 

activities are referred to as Pathway 

Three. 

Recipients may use SLFRF funds 

under Pathway Three for projects that 

have, or will prior to the SLFRF 

obligation deadline, receive funding 

from DOT under one of the abovereferenced programs. Recipients must 

comply with the requirement that they 

may only use the greater of 30% of their 

award and $10 million for Surface 

Transportation projects and Title I 

projects, taken together. Recipients 

using SLFRF funds under Pathway 

Three must also comply with the 

requirement that SLFRF funds 

supplement and not supplant other 

funds, described earlier in this interim 

final rule. 

As discussed above, the requirements 

of titles 23, 40, and 49 of the U.S. Code 

include cost-share requirements that 

generally apply to projects under 

transportation programs, and these 

requirements apply to the use of SLFRF 

for Surface Transportation projects. 

However, given the specific provision in 

sections 602(c)(5)(A) and 603(c)(6)(A) of 

the Social Security Act that SLFRF may 

be used to meet the non-Federal share 

requirements of the three programs 

referenced above, if a recipient uses 

SLFRF funds to satisfy the non-Federal 

share requirements for projects eligible 

under one of those programs, DOT will 

not treat the SLFRF funds as Federal 

funds for this limited purpose and will 

credit SLFRF toward applicable costshare or non-Federal match 

requirements accordingly. For example, 

under the INFRA program, Federal 

funds other than the participating DOT 

funds generally do not satisfy nonFederal cost share requirements, and 

Federal funds together must contribute 

not more than 80% of a project’s costs. 

SLFRF funds used to cover the 

applicable non-Federal cost share 

requirements of a project under Pathway 

Three will not be treated as Federal 

funds and therefore are not considered 

against the 80% limit on Federal 

funding sources. Recipients using 

SLFRF funds to satisfy non-Federal cost 

share requirements under Pathway 

Three must consult with DOT to 

understand the applicable non-Federal 

cost share requirements and how SLFRF 

funds may be used for these purposes. 

Although the statute expressly 

permits recipients to use SLFRF funds 

to satisfy non-Federal cost share 

requirements for the above-referenced 

programs, as with any use of funds to 

meet non-Federal cost share 

requirements, the requirements 

associated with the project, as 

administered by DOT, continue to apply 

to the use of all the funding for the 

project unless otherwise provided by 

DOT. 

Under Pathway Three, recipients will 

be required to comply with the relevant 

existing DOT reporting requirements 

associated with the Surface 

Transportation project for which they 

are using SLFRF funds for non-Federal 

share requirements. Recipients will be 

required to report certain information to 

Treasury, including the amount of 

SLFRF funds directed toward Surface 

Transportation projects and Title I 

projects, to ensure that recipients 

comply with the cap on funds 

associated with these eligible use 

categories. 

As discussed in the 2022 final rule, 

recipients may continue to use SLFRF 

funds available under the revenue loss 

eligible use category to satisfy nonFederal matching requirements. See the 

2022 final rule for further information. 

Question 1: What, if any, additional 

clarification should Treasury provide as 

relates to determining whether Surface 

Transportation projects are eligible uses 

of the SLFRF? 

Question 2: What additional 

information or clarification is needed 

for recipients to understand the 

applicable program requirements for 

Pathway One for Surface Transportation 

projects? 

Question 3: What are the advantages 

and disadvantages of the eligibility 

criteria for the streamlined framework 

outlined in Pathway Two? Do these 

criteria adequately account for project 

risk in a manner that is both accurate 

and administrable? Why or why not? 

Question 4: What additional 

information or clarification is needed 

for recipients to understand the 

applicable program requirements for 

Pathway Two? 

Question 5: With respect to Pathway 

Two, what information should Treasury 

consider in developing the framework 

for projects outside the streamlined 

framework, in addition to the 

information that recipients will provide 

in the notices of intent? What types of 

projects do recipients intend to pursue 

under Pathway Two that would not be 

covered by the streamlined approach? 

2. Title I Projects 

Background 

The 2023 CAA amends sections 602 

and 603 of the Social Security Act to 

permit recipients to use SLFRF funds 

for certain infrastructure projects, 

including projects eligible under Title I 

of the Housing and Community 

Development Act of 1974 (Title I 

projects).131 As described earlier in this 

interim final rule, recipients may only 

use the greater of 30% of their SLFRF 

award and $10 million, not to exceed a 

recipient’s allocation, for all Surface 

Transportation projects (described in 

the prior section) and Title I projects 

(described in this section) taken 

together. 

In title I of the HCDA (Title I), 

Congress consolidated several complex 

and overlapping Federal assistance 

programs focused on community 

development into a more flexible block 

of funds distributed through a formula 


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132See 42 U.S.C. 5301. 

133See 42 U.S.C. 5306. 

134See 24 CFR 1003.100(a). 

135HUD’s implementation of CDBG varies based 

on the type of CDBG grantees, with specific 

treatment for entitlement grants (including 

metropolitan city and urban county grantees), 

nonentitlement funds (including HUD-administered 

Small Cities and Insular Area programs), and stateadministered CDBG nonentitlement funds. For 

example, in the state CDBG program, a state’s 

primary function is to administer CDBG grants for 

non-entitlement units of government, rather than to 

undertake eligible activities as grantees themselves. 

Meanwhile, entitlement grantees of CDBG are able 

to expend their CDBG allocations directly and 

without being subject to certain limitations that 

exist under the state CDBG program. 

136SLFRF funds also remain available under the 

revenue loss eligible use category up to the amount 

of revenue lost due to the pandemic for the 

provision of government services. As described in 

the 2022 final rule, the provision of government 

services means any service traditionally provided 

by a government, which means that recipients 

could also choose to use SLFRF funds in the 

revenue loss eligible use category for community 

development activities. 

137While CDBG activities are outlined in 

planning documents submitted to HUD, these 

planning documents cover a grantee’s programmatic 

plans for all HUD awards (not just those authorized 

under Title I) on an annual basis with respect to 

action plans and a multi-year basis with respect to 

consolidated plans. Based on the structure of the 

SLFRF program, certification and approval 

requirements associated with these plans are 

irrelevant for the SLFRF program. In any event, 

HUD does not affirmatively approve CDBG grantees’ 

planning documents, but the agency may 

disapprove plans as necessary. 

138See Final Rule FAQ 13.17 for additional 

information about obligations. This approach 

allocation, known as the Community 

Development Block Grant (CDBG) and 

administered by the Department of 

Housing and Urban Development 

(HUD).132 Annual allocations through 

the CDBG program are based on 

population and various other measures, 

including poverty, age of housing, and 

housing overcrowding.133 CDBG funds 

are available to states and units of 

general local government (cities and 

counties); Tribal governments are 

eligible for Indian CDBG (ICDBG) grants 

that are awarded on a mainly 

competitive basis in the form of single 

purpose grants, and occasionally on a 

noncompetitive, first-come first-served 

basis to alleviate imminent threats to 

public health or safety.134

There are varied ways that different 

government entities may be eligible for 

CDBG.135 To reflect the structure of the 

SLFRF program, under which each 

recipient received an individual award 

from Treasury and expends funds on its 

own behalf, Treasury’s implementation 

of the Title I eligible use category for 

non-Tribal recipients aligns to HUD’s 

treatment of entitlement grants under 

CDBG. For Tribal governments using 

SLFRF funds under the Title I eligible 

use category, Treasury’s implementation 

generally reflects HUD’s treatment of 

Tribal government grantees under 

ICDBG single purpose grants, as further 

described below. 

As discussed in the 2022 final rule, 

various types of activities that are 

eligible under the CDBG program are 

also eligible uses of the SLFRF program 

under the public health and negative 

economic impacts eligible use category, 

including homeownership assistance, 

investing in affordable housing 

preservation and repairs, and 

rehabilitation or demolition of blighted 

or abandoned properties. As noted 

above, the 2023 CAA did not alter the 

existing four eligible use categories 

under the SLFRF program, and the 

eligible uses articulated in the 2022 

final rule in the public health and 

negative economic impacts eligible use 

category remain unchanged. As such, 

recipients wishing to pursue these types 

of projects with SLFRF funds may want 

to continue doing so under the public 

health and negative economic impacts 

eligible use category rather than 

complying with the additional 

requirements of the new Title I projects 

eligible use category. 

The new Title I projects eligible use 

category makes additional activities 

available to SLFRF recipients, up to the 

cap on funds for this eligible use 

category. As described in the section 

titled Use of Funds to Satisfy NonFederal Share Requirements, this 

includes using SLFRF funds for nonFederal match or cost-share 

requirements of a Federal financial 

assistance program in support of 

activities that would be eligible under 

Title I.136 By permitting state, local, and 

Tribal governments to use SLFRF funds 

for Title I projects, the statute provides 

additional flexibility for recipients to 

use SLFRF funds to meet the needs of 

their communities and provides clarity 

for recipients that may already have 

experience pursuing projects under 

Title I. The Title I requirements for 

programs administered by HUD are 

already familiar to many SLFRF 

recipients, which will help state, local, 

and Tribal governments to supplement 

funding more easily for existing projects 

under Title I or to pursue new projects 

using a familiar set of program 

requirements. Below, this interim final 

rule discusses eligible projects and 

applicable requirements for the Title I 

eligible use category. 

Unlike Pathway Two for Surface 

Transportation projects, discussed in 

the previous section, the interim final 

rule does not provide a ‘‘streamlined 

framework’’ for Title I projects. Title I 

projects differ from Surface 

Transportation projects in several 

meaningful ways. First, as discussed 

above, the project approval and 

certification requirements of titles 23, 

40, and 49 of the U.S. Code and title I 

of the HCDA generally must be satisfied 

prior to recipients obligating and 

expending funds on Surface 

Transportation projects and Title I 

projects. However, under CDBG, there is 

no formal approval on a project-by 

project-basis by HUD other than in the 

case of projects subject to certain 

environmental reviews.137 Accordingly, 

it is more feasible for recipients to 

determine to use SLFRF funds for Title 

I projects, to submit required 

environmental information prior to 

undertaking projects, and to obtain 

Treasury approval, all in time for the 

2024 obligation and 2026 expenditure 

deadlines, even if a large number of 

SLFRF recipients decide to spend funds 

under this eligible use category. Second, 

as mentioned above, many of the 

eligible activities under Title I projects 

are already available to SLFRF 

recipients under the public health and 

negative economic impacts eligible use 

category, including using funds for 

capital expenditures, for which 

recipients are able to use their full 

SLFRF award toward eligible uses and 

are not subject to the limitations 

discussed in this section. In the case of 

Surface Transportation projects, 

recipients are only able to undertake 

similar activities as a government 

service through the revenue loss eligible 

use category. For these reasons, 

Treasury anticipates that recipients will 

undertake fewer projects under the Title 

I projects eligible use category. 

Prohibition on Supplanting Other 

Funds. The 2023 CAA provides that 

funds used for Title I projects shall 

‘‘supplement, and not supplant, other 

Federal, State, territorial, Tribal, and 

local government funds (as applicable) 

otherwise available for such uses.’’ The 

phrase ‘‘other . . . funds available for 

such uses’’ refers to (i) in the case of 

non-Federal funds, non-SLFRF funds 

that have been obligated for specific 

uses that are eligible under the Title I 

eligible use category or (ii) in the case 

of Federal funds, funds that a Federal 

agency has committed to a particular 

project pursuant to an award agreement 

or otherwise. 

Under prong (i), for the purpose of 

identifying non-Federal funds that have 

been obligated for specific uses, the 

definition of ‘‘obligation’’ used in the 

2022 final rule applies, which is ‘‘an 

order placed for property and services 

and entering into contracts, subawards, 

and similar transactions that require 

payment.’’ 138 As such, under prong (i), 


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applies a concrete standard that is known to SLFRF 

recipients and administrable by Treasury. 

139CDBG grantees have a line of credit that 

includes the amount of CDBG funds that are 

available for those grantees. According to program 

rules on timely expenditures, ‘‘a grantee cannot 

have more than 1.5 times their annual allocation 

sitting in their line of credit at the U.S. Treasury.’’ 

Moreover, if a grantee ‘‘chronically has more than 

1.5 times their allocation in their line of credit as 

of 60 days prior to the end of the grantee’s program 

year, HUD can withhold future grants until the 

grantee effectively spends their existing resources.’’ 

For more information, see Basically CDBG for 

Entitlements, Chapter 11: Financial Management, 

Section 11.7 (‘‘Timely Expenditure of Funds’’) 

(Sept. 2017), available at https://www.hud.gov/sites/ 

documents/DOC_16480.PDF. 

140See 42 U.S.C. 5301 et seq. 

141See e.g., Department of Housing and Urban 

Development, Guide to National Objectives and 

Eligible Activities for CDBG Entitlement 

Communities, Chapter 2: Categories of Eligible 

Activities (Jan. 2014), available at https://

www.hud.gov/sites/documents/DOC_17133.PDF. 

a recipient may not de-obligate funds 

that were obligated for specific uses that 

are eligible under this section (e.g., by 

cancelling, amending, renegotiating, or 

otherwise revising or abrogating a 

contract, subaward, or similar 

transaction that requires payment) and 

replace those previously obligated funds 

with SLFRF funds under this eligible 

use category. 

The restriction in prong (ii), on 

replacing funds that a Federal agency 

has committed to a particular project 

pursuant to an award agreement or 

otherwise, applies to all funding sources 

covered by the commitment. Prong (ii) 

does not apply to HUD funds provided 

to a CDBG grantee for activities 

included in its annual action plan, 

because imposition of this restriction 

would be inconsistent with the 

substantial flexibility that the CDBG 

program otherwise provides its grantees. 

For example, a CDBG grantee’s annual 

action plan reflects planned spending 

on activities across multiple HUDadministered programs, and grantees 

have significant flexibility to amend 

plans to reflect adjusted planned 

spending throughout the year. 

Thus, a recipient may not de-obligate 

funds and replace those previously 

obligated funds with SLFRF funds 

under this eligible use category. Nor 

may a recipient use SLFRF funds to 

replace Federal or non-Federal funds 

identified in a Federal commitment, 

such as an award agreement. 

However, a recipient may use SLFRF 

funds (1) to provide additional funding 

to a project without reducing the 

amount of other funds obligated to such 

project, thereby funding additional 

activities or expanding the scope of 

projects; (2) to undertake a project for 

which funds have not been previously 

obligated or identified in a Federal 

commitment, such as an award 

agreement. For example, if a recipient 

had obligated non-SLFRF funds for the 

construction of a community garden, 

SLFRF funds under this eligible use 

category could be used to provide 

additional resources to that project or to 

undertake a separate eligible project, but 

the recipient could not terminate or 

renegotiate an existing contract for the 

construction of that garden and use 

SLFRF funds to replace the funds 

previously obligated for that purpose. 

SLFRF recipients that are also CDBG 

grantees (but not ICDBG grantees) 

should note that HUD program 

requirements related to timely 

expenditures of CDBG funds—providing 

that ‘‘a grantee cannot have more than 

1.5 times their annual allocation sitting 

in their line of credit at the U.S. 

Treasury’’—continue to apply to CDBG 

funds.139 Accordingly, Treasury 

encourages SLFRF recipients that are 

also CDBG grantees to continue to spend 

their CDBG funds in compliance with 

such requirements. 

a. Eligible Title I Projects 

Recipients may use SLFRF funds for 

Title I projects, which includes any 

projects that are currently eligible 

activities, programs, and projects under 

CDBG and ICDBG, as described further 

below. Principally, Title I authorizes 

CDBG and ICDBG, as well as several 

other grant programs with largely 

overlapping eligible activities as 

CDBG.140 As discussed below, grants 

made under these other Title I programs 

do not cover eligible activities 

incremental to what is allowable under 

CDBG and ICDBG, and thus their 

incorporation here would not make any 

additional eligible uses under Title I 

available to SLFRF recipients. 

In the Title I eligible use category, 

recipients may use SLFRF funds for any 

of the activities listed in section 105(a) 

of the HCDA (42 U.S.C. 5305(a)). When 

carrying out these activities, recipients 

should comply with the related 

eligibility requirements set forth at 24 

CFR 570.201–570.209 with respect to 

recipients that are not Tribal 

governments and 24 CFR 1003.201– 

1003.209 with respect to Tribal 

governments. Recipients may refer to 

additional HUD guidance for further 

information about the projects eligible 

under CDBG, including guidance about 

complying with the national objectives 

and other program requirements.141

Below is an illustrative list of Title I 

projects for which recipients may use 

SLFRF funds pursuant to section 105(a) 

of the HCDA: 

• Acquisition of certain real property 

for a public purpose, subject to certain 

limitations; 

• Disposition of certain property, 

subject to certain limitations and rules; 

• Acquisition, construction, 

reconstruction, rehabilitation, or 

installation of public facilities and 

improvements, clearance and 

remediation activities; 

• Public services, subject to the 

limitation discussed below; 

• Interim assistance where immediate 

action is required for certain activities 

such as street repair, and costs to 

complete an urban renewal project 

under Title I; 

• Relocation payments for relocated 

families, businesses, nonprofit 

organizations, and farm operations, 

under certain conditions; 

• Payments to housing owners for 

loss of certain rental income; 

• Certain housing services; 

• Acquisition, construction, 

reconstruction, rehabilitation, or 

installation of privately owned utilities; 

• Rehabilitation and reconstruction of 

housing, conversion of structures to 

housing, or construction of certain 

housing; 

• Homeownership assistance; 

• Technical assistance to entities to 

increase capacity to carry out CDBGeligible projects; 

• Assistance to certain institutions of 

higher education to carry out eligible 

activities; 

• Administration activities including 

general management, oversight, and 

coordination costs, fair housing 

activities, indirect costs, and submission 

of applications for Federal programs; 

• Planning activities including the 

development of plans and studies, 

policy planning, and management and 

capacity building activities; and 

• Satisfying the non-Federal share 

requirements of a Federal financial 

assistance program in support of 

activities that would be eligible under 

the CDBG and ICDBG programs, as 

discussed below. 

Use of SLFRF Funds to Satisfy NonFederal Match of Cost-Share 

Requirements Under Title I. As noted 

above, recipients may use SLFRF funds, 

subject to the cap on funds for this 

eligible use category, to meet the nonFederal match or cost-share 

requirements of a Federal financial 

assistance program in support of 

activities that would be eligible under 

the CDBG and ICDBG programs and 

would comply with all applicable CDBG 

and ICDBG requirements. Recipients 

should analyze the projects and 

activities for which they intend to use 

SLFRF funds to meet non-Federal share 


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142See 42 U.S.C. 5305(a). 

143See id. 

144See id. at FAQ 13.11. How does Treasury treat 

program income? 

145See 42 U.S.C. 5307. 

146See 42 U.S.C. 5318. 

147See 42 U.S.C. 5318a. 

148See 42 U.S.C. 5308. 

149See 42 U.S.C. 5308. 

150See 42 U.S.C. 5318. 

requirements to confirm that the project 

or activity would constitute an eligible 

activity under section 105 of the HCDA 

and would comply with HUD’s 

statutory, regulatory, and other 

requirements applicable to CDBG and 

ICDBG activities. 

As articulated in the 2022 final rule, 

SLFRF funds remain available under the 

revenue loss eligible use category to 

meet non-Federal matching 

requirements. For discussion of the use 

of SLFRF funds for non-Federal 

matching requirements under the 

revenue loss eligible use category or as 

otherwise authorized by statute, see the 

2022 final rule. For discussion of the 

use of SLFRF funds for non-Federal 

matching requirements for Surface 

Transportation projects, see the Surface 

Transportation projects section. 

Use of Loans and Revolving Loan 

Funds Towards Eligible Activities Under 

Title I. CDBG and ICDBG grantees 

generally may utilize financing vehicles 

such as loans and revolving loan funds 

to carry out eligible activities. For 

example, sections 105(a)(14), (22), and 

(25) of the HCDA provide that CDBG 

recipients may use their funds to 

provide loans or finance revolving loan 

funds for certain activities.142

Recipients using SLFRF funds for 

Title I projects may extend credit, by 

making loans using SLFRF funds or 

using SLFRF to establish revolving loan 

funds, to support activities that are 

eligible uses of funds under CDBG. Such 

activities are subject to Treasury’s 

existing guidance on loans under the 

SLFRF program,143 as well as Treasury’s 

guidance on program income, in light of 

the nature of the SLFRF program where 

these funds are available for a limited 

time, not on a recurring basis, and 

subject to approaching obligation and 

expenditure deadlines.144 As a 

reminder, extensions of credit with 

SLFRF funds are subject to program 

requirements as described in the 

Applicable Requirements for Title I 

Projects section of this interim final rule 

and the cap on funds that applies to this 

eligible use category. 

Other Supplemental Assistance. From 

time to time, Congress appropriates 

additional funding for certain activities 

that are generally available under CDBG 

but are limited to addressing specific 

challenges that communities face. Even 

though these activities largely mirror 

those eligible under Title I, this 

supplemental assistance is not 

authorized under Title I. Accordingly, 

they are not separately eligible 

categories of activities under Title I for 

purposes of the SLFRF program. For 

example, recipients may be familiar 

with CDBG-Disaster Recovery (CDBG– 

DR) and CDBG-Mitigation (CDBG–MIT). 

These forms of supplemental assistance 

appropriate emergency supplemental 

funds on a case-by-case basis for 

specific disasters and permit recipients, 

in addition to their regular CDBG credit 

line or ICDBG grants, to spend funds on 

certain eligible activities related to 

disaster relief, long-term recovery, 

restoration of housing and 

infrastructure, economic revitalization 

and mitigation. When additional funds 

are appropriated through CDBG–DR or 

CDBG–MIT, HUD is typically granted 

authority to grant waivers and impose 

alternative requirements to those 

existing Title I requirements that govern 

the CDBG and ICDBG programs. Such 

waivers or alternative requirements are 

not applicable to this eligible use 

category, as this supplemental 

assistance is not a project under Title I 

and such authority is not provided for 

in the HCDA, but rather in the 

individual CDBG–DR or CDBG–MIT 

appropriations. 

Nonetheless, recipients considering 

using SLFRF funds to respond to both 

the near- and long-term consequences of 

disasters are reminded that the eligible 

activities under section 105 of Title I are 

very flexible and may address certain 

disaster relief and disaster mitigation 

needs. Accordingly, SLFRF recipients 

may pursue such activities under the 

Title I projects eligible use as long as all 

requirements are met. In addition, 

recipients may provide emergency relief 

from the physical and negative 

economic impacts of natural disasters, 

including mitigation activities, through 

the eligible use category discussed in 

the section titled Emergency Relief from 

Natural Disasters of this interim final 

rule. 

Other Title I Programs Not Available 

Under the SLFRF Program. Certain 

sections of Title I authorize HUD to 

make grants and loans to governments 

under different programs in addition to 

CDBG. These programs are listed below 

and, other than the section 108 Loan 

Guarantee program, are considered 

inactive by HUD: 

• Special Purpose Grants 145

• Urban Development Action Grant 

Program 146

• John Heinz Neighborhood 

Development Program 147

• Section 108 Loan Guarantee 

Program 148

While the 2023 CAA amended the 

SLFRF program to permit recipients to 

use SLFRF funds for Title I projects, 

some of these programs address HUD’s 

programmatic authorities rather than 

expanding eligible uses available to 

HUD grantees. Therefore, these 

programs are not relevant for purposes 

of implementing this Title I eligible use 

under the SLFRF program. For example, 

Special Purpose Grants are 

competitively awarded by HUD to the 

same recipients as CDBG and ICDBG, as 

well as an expanded set of recipient 

types (e.g., Historically Black Colleges 

and Universities as direct recipients of 

grants) to undertake certain of the 

activities available under CDBG. This 

program expands HUD’s grantmaking 

authority rather than expanding eligible 

uses available to grantees under Title I, 

and therefore is not included as a new 

eligible project under the SLFRF 

program. Similarly, the John Heinz 

Neighborhood Development Program 

authorizes HUD to provide Federal 

matching funds to eligible neighborhood 

development organizations on a 

competitive basis, expanding the 

entities to which HUD may award grants 

rather than expanding eligible uses for 

Title I grantees. 

Similarly, the Section 108 Loan 

Guarantee Program authorizes HUD to 

provide loan guarantees to recipients of 

CDBG, as opposed to authorizing an 

eligible activity by grantees 

themselves.149 The Urban Development 

Action Grant program authorizes HUD 

to issue grants to cities and urban 

counties experiencing severe economic 

distress to help stimulate economic 

development activity needed to aid in 

economic recovery by undertaking 

eligible activities under CDBG, as 

enumerated under section 105(a) of the 

HCDA.150 Both of these programs 

address HUD’s programmatic authority 

and do not provide HUD grantees 

eligible activities beyond those already 

available under CDBG and ICDBG, and 

therefore these programs are not 

relevant for purposes of implementing 

this Title I eligible use under the SLFRF 

program. 

Additionally, HUD can award 

imminent threat grants under ICDBG to 

Tribal governments. Imminent threat 

grants alleviate an imminent threat to 

public health or safety that requires 

immediate resolution and are awarded 

only after the HUD Office of Native 

American Programs determines that 


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151See 24 CFR 1003.100(a). 

152See 24 CFR 570.207 and 1003.207. 

153See e.g., Department of Housing and Urban 

Development, Guide to National Objectives and 

Eligible Activities for CDBG Entitlement 

Communities, Chapter 2: Categories of Eligible 

Activities, 2–87 (Jan. 2014), available at https://

www.hud.gov/sites/documents/DOC_17133.PDF. 

154Treasury is applying the regulations associated 

with the applicable provisions of Title I because 

they generally inform and provide context for how 

to apply with the requirements set forth in the 

statute. 155See 42 U.S.C. 5304(g) and 24 CFR part 58. 

such conditions exist and if funds are 

available for such grants.151 Grants 

made under this program do not 

authorize eligible activities incremental 

to what is allowable under ICDBG single 

purpose grants, and thus their 

incorporation here would not make any 

additional eligible uses under Title I 

available to SLFRF recipients. 

Accordingly, imminent threat grants are 

not separately eligible as Title I projects. 

Given the eligible activities available to 

ICDBG grantees under imminent threat 

grants are the same as are available 

under single purpose grants, Tribal 

government recipients of SLFRF are still 

able to use SLFRF funds for projects 

they generally could fund with ICDBG 

imminent threat grants under the Title 

I projects eligible use category. As 

described further below, the 

applicability of program requirements 

for Tribal governments will mirror the 

program requirements grantees comply 

with under ICDBG single purpose 

grants. As noted above, recipients may 

provide emergency relief from the 

physical and negative economic impacts 

of natural disasters, including 

mitigation activities, through the 

eligible use category discussed in the 

section titled Emergency Relief from 

Natural Disasters of this interim final 

rule. 

Ineligible Activities Under Title I. The 

HUD regulations implementing the 

eligible activities under CDBG and 

ICDBG provide that certain projects are 

generally not eligible CDBG activities, 

and accordingly, SLFRF recipients may 

not use SLFRF funds for those 

projects.152 The activities that are 

generally ineligible under CDBG and 

ICDBG are the following, subject to 

certain exceptions as described more 

fully at 24 CFR 570.207 with respect to 

SLFRF recipients that are not Tribal 

governments and 24 CFR 1003.207 with 

respect to Tribal government recipients: 

• Buildings or portions thereof used for 

the general conduct of government 

• General government expenses 

• Political activities 

• Purchase of equipment 

• Operating and maintenance expenses 

• New housing construction 

• Income payments 

Recipients may reference the 

‘‘Activities Specified as Ineligible’’ 

section of HUD’s Guide to National 

Objectives and Eligible Activities for 

CDBG Entitlement Communities for 

more information.153 However, while 

the projects listed above are not eligible 

uses of SLFRF funds as a Title I project, 

they still may be eligible uses of SLFRF 

funds under other SLFRF eligible use 

categories. See the 2022 final rule for 

additional information. As with all 

other eligible uses in the SLFRF 

program, the general restrictions on use 

outlined in the 2022 final rule apply to 

SLFRF funds used for Title I projects, 

unless the applicable requirements of 

Title I provide otherwise. 

b. Applicable Requirements for Title I 

Projects 

Recipients using SLFRF funds for 

Title I projects must comply with 

certain requirements and restrictions. 

These requirements and restrictions are 

in addition to the eligibility 

requirements discussed above. As 

described earlier in this interim final 

rule, recipients may only use the greater 

of 30% of their award and $10 million 

(not to exceed their award) for Title I 

projects (described in this section) and 

Surface Transportation projects 

(described above), taken together. Also 

as described earlier in this interim final 

rule, for Title I projects, recipients must 

obligate funds by December 31, 2024 

and expend funds by September 30, 

2026. In the section that follows, this 

interim final rule describes how the 

requirements of Title I, NEPA, and the 

associated implementing regulations 

apply to SLFRF funds used for Title I 

projects. 

The 2023 CAA provides that, except 

as otherwise determined by the 

Secretary, the requirements of Title I 

and NEPA apply to SLFRF funds used 

for Title I projects. Accordingly, state, 

local, and Tribal governments that use 

SLFRF funds for Title I projects 

generally must comply with Title I 

requirements and the associated 

regulations, except where noted 

below.154 In addition, recipients must 

comply with NEPA requirements, as 

implemented by Title I and the 

associated HUD regulations, and as 

adapted to the SLFRF program by 

Treasury. Unless Title I provides 

otherwise or Treasury has otherwise 

clarified, SLFRF recipients should 

continue to comply with SLFRF 

regulations and guidance as found in 

the 2022 final rule, SLFRF Compliance 

and Reporting Guidance, and other 

guidance released by Treasury for 

SLFRF. In the section that follows, this 

interim final rule discusses the 

requirements of Title I that apply to 

recipients using SLFRF funds under this 

eligible use category and the 

requirements of Title I that do not apply 

to recipients using SLFRF funds under 

this eligible use category. 

Treasury has determined not to apply 

certain requirements of Title I when 

such requirements conflict with the 

existing SLFRF framework or otherwise 

are likely to preclude recipients from 

exercising the additional authorities 

provided by the statute. For example, 

and as discussed above, Treasury 

determined that the project-level 

approval and certification requirements 

generally must be satisfied prior to 

recipients obligating and expending 

funds on Title I projects. Under CDBG, 

while projects are outlined in planning 

documents submitted to HUD, there is 

no formal approval on a project-by 

project-basis by HUD other than projects 

subject to certain environmental 

reviews.155 Accordingly, only these 

project-level requirements must be 

satisfied, as described further below. On 

the other hand, recipients are not 

required to provide the Title I 

certification requirements that apply at 

the consolidated and annual planning 

level, because that level of planning and 

the associated certifications conflict 

with the SLFRF program framework 

under which recipients already have 

funds in hand and are authorized to use 

funds for discrete projects, rather than 

being required to design an annual 

process for how funding will be used. 

Furthermore, to require recipients to 

prepare consolidated and annual plans 

and undergo a public review process 

likely would preclude recipients from 

exercising the additional authorities 

provided by the statute, under which 

recipients have limited time remaining 

to determine how to obligate and 

expend funds. In contrast, certain of the 

applicable requirements discussed 

below also would apply at the aggregate 

CDBG funding level, like the primary 

objective, but those requirements are 

more readily adaptable as project-level 

requirements, consistent with the 

SLFRF framework, and Treasury has 

taken that approach as described further 

below. The requirements of Title I 

generally apply to recipients using 

SLFRF funds for Title I projects, with 

some modification to harmonize the 

provisions with the SLFRF framework, 

as discussed further below. The 

statutory requirements include the 

following: 


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156See 42 U.S.C. 5301(c). 

157See 24 CFR 1003.208. 

158See 42 U.S.C. 5302(a)(20)(a). 

159See 42 U.S.C. 5302(a)(20)(b). 

160See 24 CFR 570.3. 

161HUD’s Office of Policy Development and 

Research publishes annual income limits for certain 

housing-related programs, and develops these limits 

based on Median Family Income estimates and Fair 

Market Rent area definitions. See https://

www.huduser.gov/portal/datasets/il.html#2022_

data. 

162See 24 CFR 1003.4. 

163See e.g., 24 CFR 1003.208(a)(3), which states 

that ‘‘in determining whether there is a sufficiently 

large percentage of low- and moderate-income 

persons residing in the area served by an activity 

. . . the most recently available decennial census 

information shall be used to the fullest extent 

feasible, together with the Section 8 income limits 

that would have applied at the time the income 

information was collected by the Census Bureau. 

Grantees that believe that the census data does not 

reflect current relative income levels in an area, or 

where census boundaries do not coincide 

sufficiently well with the service area of an activity, 

may conduct (or have conducted) a current survey 

of the residents of the area to determine the percent 

of such persons that are low and moderate income.’’ 

164See 24 CFR 1003.208. 

• Activity eligibility requirements, 

including the following requirements 

articulated in section 105 of the 

HCDA: 

Æ CDBG Primary Objective 

requirement 

Æ CDBG National Objectives 

requirement 

Æ Public Services Cap 

• Definitions relevant for project 

administration, oversight, and 

execution 

• Procurement requirements 

• Wage and labor requirements 

• Environmental requirements and 

related project approval requirements 

(environmental certifications) 

For each of the applicable 

requirements, the associated HUD 

regulations generally will apply as well. 

Specifically, HUD regulations related to 

these requirements apply where they: 

• Enumerate and clarify eligible 

activities under CDBG 

• Specify cost caps or the method to 

calculate costs caps 

• Direct recipients to the applicability 

of other Federal laws and regulations 

CDBG Primary Objective. Section 

101(c) of the HCDA describes the 

‘‘primary objective’’ of Title I as ‘‘the 

development of viable urban 

communities, by providing decent 

housing and a suitable living 

environment and expanding economic 

opportunities, principally for persons of 

low and moderate income.’’ 156 Section 

101(c) of the HCDA further provides 

that not less than 70% of the aggregate 

funds provided to non-Tribal CDBG 

grantees under section 106 of the HCDA 

shall be used for the support of 

activities that benefit persons of low and 

moderate income. Under ICDBG, Tribal 

governments must use not less than 

70% of each single purpose grant to 

principally benefit low- and moderateincome persons.157 This 70% threshold 

requirement is referred to as the 

‘‘primary objective’’ requirement. 

Section 102(a)(20) of the HCDA 

defines low- and moderate-income 

persons to mean families and 

individuals whose incomes do not 

exceed 80% of median income of the 

area involved, based on data published 

most recently by HUD, with adjustments 

for smaller and larger families; 158 it also 

authorizes HUD to establish income 

thresholds that are higher or lower 

because of unusually high or low 

incomes in such area.159 HUD 

regulations for CDBG grantees 

implement the statutory definition by 

aligning low- and moderate-income 

designations for CDBG activities to 

Section 8’s very low- and low-income 

thresholds respectively,160 which HUD 

publishes annually.161 CDBG grantees 

are then required to comply with the 

requirements of 24 CFR 570.200(a)(3) 

and its cross-referenced provisions to 

determine compliance with the primary 

objective, including requirements 

associated with area benefit activities, 

limited clientele activities, housing 

activities, and job creation or retention 

activities. 

With respect to Tribal governments, 

HUD awards ICDBG single-purpose 

grants on a competitive basis and 

determines that an applicant sufficiently 

addresses the primary objective based, 

in part, on data made available by the 

Federal government, including HUD, 

and on data provided by Tribes. 

Specifically, HUD regulations for ICDBG 

grantees implement the statutory 

definition of low- and moderate-income 

persons by defining a ‘‘low and 

moderate income beneficiary’’ as a 

family, household, or individual whose 

income does not exceed 80 percent of 

the median income for the area, as 

determined by HUD, with adjustments 

for smaller and larger households or 

families.162 The regulations permit HUD 

to adjust the ceiling based on HUD’s 

findings that such variations are 

necessary because of unusually high or 

low household or family incomes. 

ICDBG grantees then follow the 

provisions of 24 CFR 1003.208 to 

determine compliance with the primary 

objective, including requirements 

associated with area benefit activities, 

limited clientele activities, housing 

activities, and job creation or retention 

activities. In each of these activity areas, 

the regulations provide criteria for the 

activity to be considered to benefit lowand moderate-income persons. In some 

instances, the criteria rely on Census 

Bureau data or instead Tribes may 

provide survey data.163

Under the HUD CDBG regulations, 

non-Tribal CDBG grantees may elect to 

apply the 70% requirement to their 

CDBG funds expended over a 1-, 2-, or 

3-year period, and a majority of these 

CDBG grantees elect a 3-year period. For 

example, a non-Tribal CDBG grantee 

that elects a 3-year period must use at 

least 70% of its CDBG funds over that 

3-year period to principally benefit lowand moderate-income persons. For 

ICDBG grants, the 70% requirement 

applies to each single purpose grant.164

Treasury is implementing the primary 

objective requirement by requiring 

recipients to direct at least 70% of their 

SLFRF funds used for Title I projects 

over the course of the SLFRF program 

to projects that principally benefit lowand moderate-income persons. NonTribal recipients must refer to low- and 

moderate-income thresholds as defined 

by HUD regulations at 24 CFR 570.3, 

which align such income thresholds to 

data published most recently by HUD 

for Section 8 low- and very low-income 

levels. To determine if an activity 

principally benefits low- and moderateincome persons, the requirements of 24 

CFR 570.200(a)(3) apply. 

Tribal government recipients must 

refer to the low- and moderate-income 

thresholds as defined by HUD at 24 

CFR. 1003.4, and to the requirements of 

24 CFR 1003.208 to determine if an 

activity principally benefits low- and 

moderate-income persons, subject to the 

following clarification. Recognizing that 

some Tribes do not have access to the 

above-referenced Census Bureau data 

and may not have the ability to conduct 

a survey within the short-time frame 

necessary to meet SLFRF obligation 

deadlines, Treasury is providing an 

alternative to satisfy the definition of 

‘‘low and moderate income’’ as part of 

complying with the primary objective 

requirement. Instead of relying on 

Census data, Tribal governments may 

demonstrate that beneficiaries of Title I 

assistance are low or moderate income 

based on an attestation by the Tribe that 

these beneficiaries are receiving or are 

eligible to receive needs-based services 

provided by the Tribe. Needs-based 

services are defined as services 

administered by the Tribal government 

on the basis of an individual’s income. 

Tribal governments undertaking Title I 

projects may rely on this self-attestation, 

in lieu of relying on Census Bureau or 

Section 8 data, when complying with 


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165See 86 FR 26786 (May 17, 2021). 166For instance, data from the American 

Community Survey is based on geographical 

location rather than Tribal membership. U.S. 

Census Bureau, My Tribal Area, https://

www.census.gov/Tribal/Tribal_glossary.php. 

167See 24 CFR 570.208(a)–570.208(c) and 

Department of Housing and Urban Development, 

Guide to National Objectives and Eligible Activities 

for CDBG Entitlement Communities, Chapter 3: 

Meeting a National Objective (Jan. 2014), available 

at https://www.hudexchange.info/sites/onecpd/ 

assets/File/CDBG-National-Objectives-EligibleActivities-Chapter-3.pdf. 

168See 24 CFR 1003.208. 

169See CFR 570.208 and Department of Housing 

and Urban Development, Guide to National 

Objectives and Eligible Activities for CDBG 

Entitlement Communities, Chapter 2: Categories of 

Eligible Activities (Jan. 2014), available at https:// 

www.hudexchange.info/sites/onecpd/assets/File/ 

CDBG-National-Objectives-Eligible-ActivitiesChapter-2.pdf. 

170See Department of Housing and Urban 

Development, Guide to National Objectives and 

Eligible Activities for CDBG Entitlement 

Communities, Chapter 3: Meeting a National 

Objective (Jan. 2014), available at https://

www.hudexchange.info/sites/onecpd/assets/File/ 

CDBG-National-Objectives-Eligible-ActivitiesChapter-3.pdf. 

171See 42 U.S.C. 5305(a)(8). 

the primary objective requirement. If a 

Tribal government prefers to 

demonstrate that its project satisfies the 

primary objective in accordance with 

the terms of 24 CFR 1003.4 and 

1003.208, rather than providing the 

alternative attestation, the Tribe may do 

so. As described earlier in this section, 

recipients may use SLFRF funds to 

supplement, but not supplant, an 

existing CDBG or ICDBG project. 

Accordingly, where Tribal governments 

use SLFRF funds to supplement funds 

for existing ICDBG projects, the Tribal 

government may rely on HUD’s prior 

determination of compliance with the 

requirements of 24 CFR 1003.208 for the 

existing project, since HUD would have 

already vetted the existing projects 

during the ICDBG application process. 

As discussed in the 2021 interim final 

rule, many Tribal communities have 

households with a wide range of income 

levels due in part to non-Tribal member, 

high income residents living in the 

community.165 Further, mixed income 

communities, with a significant share of 

Tribal members at the lowest levels of 

income, are often not included in 

eligible qualified census tracts. 

Additionally, as discussed in the 2022 

final rule, Tribal governments may face 

administrability challenges with 

operationalizing an income-based 

standard, and data on incomes of Tribal 

members in a respective Tribe is not 

readily available as presently this data 

is not collected at the Tribal 

membership level.166

For these reasons, using decennial 

Census Bureau data in determining if an 

activity benefits low- and moderateincome beneficiaries as described in 24 

CFR 1003.208(a)(3) would present 

similar challenges for many of the 

SLFRF Tribal government recipients, 

where location-based Census data may 

inaccurately portray the income and 

economic conditions of a Tribe. 

Additionally, requiring Tribes to 

conduct and provide survey data on 

residents of their areas would frustrate 

their ability to utilize SLFRF funds for 

Title I projects within the obligation and 

expenditure timelines provided by the 

2023 CAA. If a Tribe delivers needsbased services (e.g., housing services, 

child assistance, etc.), the Tribe 

generally also has verified income 

eligibility of the recipients of those 

services, as Tribes ordinarily restrict 

eligibility for these activities based on 

the income of applicants. 

The total amount of SLFRF funds 

used for Title I projects from the cost 

incurred date of December 29, 2022 

through September 30, 2026 must meet 

the primary objective requirements as 

described above. By applying these 

requirements over the course of the 

SLFRF program, this interim final rule 

aligns CDBG primary objective 

compliance for SLFRF funds used for 

Title I projects with the obligation and 

expenditure deadlines on SLFRF funds 

in general. Although CDBG state and 

local government grantees have the 

option to elect their own 1-, 2-, or 3- 

year reporting periods, and ICDBG 

Tribal grantees apply the CDBG primary 

objective requirement for their specific 

grant allocations, SLFRF recipients are 

not required to obligate or expend 

SLFRF funds on an annual basis and 

instead must comply with obligation 

and expenditure deadlines over the full 

period of performance, with flexibility 

to adjust and add programs prior to the 

obligation deadline. This alignment 

makes the CDBG primary objective 

requirement administrable by SLFRF 

recipients over the SLFRF period of 

performance and coordinates related 

reporting with SLFRF program closeout 

timelines. Recipients may reference 

Chapter 4 of HUD’s Guide to National 

Objectives and Eligible Activities for 

CDBG Entitlement Communities for 

more details on how to satisfy the 

primary objective requirement with 

their funds. Recipients’ use of SLFRF 

funds for Title I projects and their 

compliance with the primary objective 

will be assessed separately from HUD’s 

assessment of CDBG grantees’ 

compliance with requirements for use of 

their CDBG funds. 

CDBG National Objectives. In 

addition to describing the CDBG 

primary objective requirement, section 

101(c) of the HCDA also provides that 

states and units of general local 

governments may only use CDBG funds 

for the support of community 

development activities that are directed 

toward certain specific objectives, 

which are referred to as the national 

objectives. HUD regulations provide that 

the national objectives of the CDBG 

program are to: 

• Benefit low- and moderate-income 

persons, 

• Prevent or eliminate slums or 

blight, and 

• Meet other community 

development needs having a particular 

urgency because existing conditions 

pose a serious and immediate threat to 

the health or welfare of the community 

and other financial resources are not 

available to meet such needs.167

ICDBG grantees administering single 

purpose grants are not subject to the 

same requirement that activities must 

align with at least one national 

objective. As discussed above, Tribal 

governments administering an ICDBG 

single purpose grant must use at least 

70% of each grant to principally benefit 

low- and moderate-income persons, but 

otherwise may use their ICDBG grant 

aligned to purposes as approved in their 

ICDBG application.168

Treasury is implementing the national 

objectives requirement by providing that 

for non-Tribal SLFRF recipients, each 

Title I project funded by SLFRF funds 

must satisfy at least one CDBG national 

objective in accordance with relevant 

HUD regulations set forth at 24 CFR 

570.208.169 Thus all recipients, except 

for Tribal governments, using SLFRF 

funds for Title I projects must meet at 

least one national objective as described 

above, and compliance with this 

requirement will be assessed separately 

from existing CDBG national objectives 

requirements applicable to CDBG 

grantees. Tribal government recipients 

that use SLFRF funds for Title I projects 

are not subject to this requirement, 

reflecting that there is no requirement 

for Tribal government grantees under 

ICDBG to use their funds for any 

specific national objective outside of the 

primary objective. For more information 

on the CDBG national objectives, see 

Chapter 3 of HUD’s Guide to National 

Objectives and Eligible Activities for 

CDBG Entitlement Communities.170

Applicability of Public Services Cap. 

Section 105(a)(8) of the HCDA provides 

that the provision of public services is 

an eligible activity under Title I 171 but 

that not more than 15% of a grantee’s 


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172See 42 U.S.C. 5305(a)(8). 

173See Department of Housing and Urban 

Development, Basically CDBG for Entitlements, 

Chapter 7: Public Services (Sept. 2017), available at 

https://www.hud.gov/sites/documents/DOC_

16476.PDF. 

174See 42 U.S.C. 5305(a)(13). 

175See 24 CFR 1003.206. 176 Department of Housing and Urban 

Development, Basically CDBG for Entitlements, 

Chapter 11: Financial Management, Sections 11.1– 

11.2 (Sept. 2017), available at https://www.hud.gov/ 

sites/documents/DOC_16480.PDF. 

177See Treasury’s SLFRF Final Rule FAQ 2.15: 

‘‘Can I use SLFRF funds to raise public sector wages 

and hire public sector workers?,’’ available at 

https://home.treasury.gov/system/files/136/SLFRFFinal-Rule-FAQ.pdf. 

178See 42 U.S.C. 5310. 

179See Department of Housing and Urban 

Development, Basically CDBG, Chapter 16: Labor 

Standards, Sections 16.1.1 (Sept. 2017), available at 

https://www.hud.gov/sites/documents/CDBG

CHAPTER16.PDF. 

180 In other SLFRF eligible use categories, labor 

standards requirements pursuant to the DavisBacon Act generally do not apply to projects funded 

solely with SLFRF funds (except for certain SLFRFfunded construction projects undertaken by the 

District of Columbia). See Treasury’s SLFRF Final 

Rule FAQ 6.15: ‘‘Are eligible water, sewer, and 

broadband infrastructure projects, eligible capital 

CDBG allocation may be spent on 

eligible ‘‘public services’’ activities.172

This 15% public services cap is applied 

annually to CDBG grantees and on a 

grant-by-grant basis for ICDBG grantees. 

Treasury is implementing this 

requirement by providing that not more 

than 15% of SLFRF funds used for Title 

I projects over the course of the SLFRF 

program may be spent under the ‘‘public 

services’’ category, in accordance with 

relevant HUD regulations set forth at 24 

CFR 570.201(e) for non-Tribal recipients 

and at 24 CFR 1003.201(e) for Tribal 

recipients. Thus, the total amount of 

SLFRF funds used for Title I projects for 

costs incurred from December 29, 2022 

through September 30, 2026 must meet 

the public services cap as described 

above, and compliance with this 

requirement will be assessed separately 

from existing CDBG and ICDBG public 

services cap compliance on CDBG and 

ICDBG grantees. The approach to align 

public services cap compliance to 

SLFRF program obligation and 

expenditure deadlines and the 

accompanying rationale mirror the 

approach taken for SLFRF recipients’ 

compliance to the CDBG primary 

objective, as outlined earlier in this 

section. This alignment makes the 

public services cap administrable by 

SLFRF recipients over the SLFRF period 

of performance and coordinates related 

reporting with SLFRF program closeout 

timelines. For more information on 

activities considered public services for 

purposes of the 15% cap, or more 

information on the public services cap 

itself, see Chapter 7 of HUD’s ‘‘Basically 

CDBG’’ Guide.173

Applicability of Planning and 

Administrative Costs Cap. Section 

105(a)(13) of the HCDA provides that 

the payment of reasonable 

administrative costs and carrying 

charges related to the planning and 

execution of community development 

and housing activities is an eligible 

activity under Title I.174 HUD 

regulations implement this provision for 

non-Tribal recipients at 24 CFR 570.205 

and 570.206 and for Tribal recipients at 

24 CFR 1003.205 and 206. In addition, 

HUD regulations at 24 CFR 570.200(g) 

provide that non-Tribal grantees may 

expend no more than 20% of any CDBG 

annual grant for planning and program 

administrative costs. HUD regulations 

for Tribal governments include the same 

requirement.175 The planning and 

administrative cap is applied annually 

to CDBG grantees and on a grant-bygrant basis for ICDBG grantees. 

Treasury is implementing this 

requirement by providing that not more 

than 20% of SLFRF funds used for Title 

I projects over the course of the SLFRF 

program may be spent on planning and 

administrative costs, in accordance with 

relevant HUD regulations set forth at 24 

CFR 570.200(g), 570.205, and 570.206 

for non-Tribal recipients and at 24 CFR 

1003.205 and 1003.206 for Tribal 

recipients. Thus, the total amount of 

SLFRF funds used for Title I projects for 

costs incurred from December 29, 2022 

through September 30, 2026 must meet 

the planning and administrative costs 

cap as described above, and compliance 

with this requirement will be assessed 

separately from existing CDBG and 

ICDBG planning and administrative 

costs cap compliance for CDBG and 

ICDBG grantees. As discussed above, 

recipients are not required to obligate or 

expend SLFRF funds on an annual basis 

and instead must comply with 

obligation and expenditure deadlines 

over the full period of performance, 

with flexibility to adjust and add 

programs prior to the obligation 

deadline. Accordingly, this alignment 

makes the planning and administrative 

costs cap administrable by SLFRF 

recipients over the SLFRF period of 

performance and coordinates related 

reporting with SLFRF program closeout 

timelines. For more information on 

activities considered planning and 

administrative costs for purposes of the 

20% cap, or more information on the 

planning and administrative costs cap 

itself, see Chapter 11 of HUD’s 

‘‘Basically CDBG’’ Guide.176

While the 20% planning and 

administrative costs cap will apply to 

recipients using funds for Title I 

projects, recipients should note that the 

2022 final rule provides additional 

flexibility for recipients to use SLFRF 

funds on administrative expenses. In 

addition to the ability to use SLFRF 

funds for certain types of administrative 

expenses under the public health and 

negative economic impacts eligible use 

category, Treasury clarified in the 2022 

final rule that coverage of direct and 

indirect administrative expenses is a 

permissible use of SLFRF funds under 

other eligible use categories, with 

further detail provided in Treasury’s 

Compliance and Reporting Guidance. 

As described in the 2022 final rule, 

recipients can also use SLFRF funds 

under the public health and negative 

economic impacts category to support a 

broad set of uses to restore and support 

public sector employment, including 

filling vacancies or adding additional 

employees up to 7.5% over prepandemic levels. Furthermore, 

recipients may use earned income from 

interest earned on SLFRF payments to 

defray administrative expenses of the 

program.177 Finally, recipients may use 

funds under the revenue loss eligible 

use category for the provision of 

government services, which may 

include various activities, such as 

administrative expenses. 

Labor Standards Requirements. 

Section 110 of the HCDA provides that 

Federal prevailing wage rate 

requirements in accordance with the 

Davis-Bacon Act and other regulations 

related to contractors and 

subcontractors per 40 U.S.C. 3145 apply 

to construction work financed by Title 

I.178 HUD regulations and guides clarify 

that these labor standards include the 

Davis-Bacon Act, the Copeland AntiKickback Act, the Contract Work Hours 

and Safety Standards Act, and Section 

3 of the Housing and Urban 

Development Act of 1968, and apply to 

CDBG projects.179 Section 107(e)(2) of 

the HCDA provides the authority to 

waive the labor standards requirements 

under section 110 of the HCDA for 

ICDBG grants, and HUD waives 

applicability of such labor standards for 

ICDBG grantees in 24 CFR 1003.603. 

Treasury is implementing this 

requirement by providing that 

prevailing wage rate requirements in 

accordance with the Davis-Bacon Act 

and other labor standards applied by 

HUD to construction work under Title I 

apply to Title I projects funded by nonTribal recipients of the SLFRF program, 

in accordance with HUD regulations for 

Title I labor standards requirements set 

forth at 24 CFR 570.603 for non-Tribal 

recipients.180 SLFRF recipients are 


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expenditures under the public health and negative 

economic impacts eligible use category, and eligible 

projects under the revenue loss eligible use category 

subject to the Davis-Bacon Act?,’’ available at 

https://home.treasury.gov/system/files/136/SLFRFFinal-Rule-FAQ.pdf. 

181See Department of Housing and Urban 

Development, Basically CDBG for Entitlements, 

Chapter 16: Labor Standards, Section 16.1.2 (Sept. 

2017), available at https://www.hud.gov/sites/ 

documents/CDBGCHAPTER16.PDF. 

182See id. at Section 16.1.3. 

183See id. at Section 16.1.4. 

184See id. at Section 16.1.5. 

185See 24 CFR 1003.603. 

186See Department of Housing and Urban 

Development, Basically CDBG for Entitlements, 

Chapter 16: Labor Standards, Sections 16.1.1 (Sept. 

2017), available at https://www.hud.gov/sites/

documents/CDBGCHAPTER16.PDF. 

187See Department of Housing and Urban 

Development, Davis-Bacon and Labor Standards: 

Agency Contractor Guide (Aug. 2022), available at 

https://files.hudexchange.info/resources/

documents/Davis-Bacon-and-Labor-StandardsAgency-and-Contractor-Guide.pdf. 

188See id. 

189See 42 U.S.C. 802(c)(5)(C)(iii)(II) and 

803(c)(6)(B)(iii)(II). 

190See Section 1.2 of NTIA’s BEAD Program 

‘‘Letter of Intent and Initial Planning Funding Grant 

Application Guidance,’’ available at https://

broadbandusa.ntia.doc.gov/sites/default/files/2022- 

05/BEAD%20Planning%

20Application%20Guidance.pdf. 

191 24 CFR 58.2(a)(3) defines extraordinary 

circumstances as a situation in which an 

environmental assessment (EA) or environmental 

impact statement (EIS) is not normally required but, 

due to unusual conditions, an EA or EIS is 

appropriate. Indicators of unusual conditions are: 

(i) actions that are unique or without precedent; (ii) 

actions that are substantially similar to those that 

normally require an EIS; (iii) actions that are likely 

to alter existing HUD policy or HUD mandates; or 

(iv) actions that, due to unusual physical conditions 

on the site or in the vicinity, have the potential for 

a significant impact on the environment or in which 

the environment could have a significant impact on 

users of the facility. 

encouraged to consult HUD guidance 

that provides general information on 

labor standards and directs CDBG 

grantees to do the following: 

• Include all applicable labor 

standards language and the appropriate 

wage decision in construction bid and 

contract documents,181

• Enforce labor standards 

requirements during construction, such 

as good construction management 

techniques and issuance of notices to 

proceed and payments tied to 

compliance with the labor requirements, 

payroll reviews, and worker 

interviews,182

• Pay any wage restitution promptly 

where underpayments of wages have 

occurred and are found during payroll 

or other reviews,183 and 

• Maintain documentation to 

demonstrate compliance with labor 

standards requirements such as bid and 

contract documents, payroll forms, 

signed statements of compliance, and 

documentation of on-site job 

interviews.184

Consistent with the ICDBG program, 

these labor standards will not apply to 

Title I projects funded by Tribal 

government recipients of SLFRF 

funds.185 For more information on Title 

I labor standards requirements, see 

Chapter 16.1.1 of HUD’s ‘‘Basically 

CDBG’’ Guide,186 HUD’s ‘‘Davis-Bacon 

and Labor Standards: Agency/ 

Contractor Guide,’’ 187 and HUD’s 

‘‘Davis-Bacon and Labor Standards: 

Contractor Guide Addendum.’’ 188

BEAD Program Requirements. The 

2023 CAA provides that the 

requirements of the Broadband Equity, 

Access, and Deployment (BEAD) 

program as outlined in section 60102 of 

the Infrastructure Investment and Jobs 

Act (IIJA) apply to recipients 

undertaking projects with SLFRF funds 

under Title I that relate to broadband 

infrastructure.189 Recipients should 

refer to program guidance, guides, and 

FAQs provided by the Department of 

Commerce’s National 

Telecommunications and Information 

Administration for more information 

about BEAD requirements.190

As outlined in the 2022 final rule, in 

addition to broadband-related activities 

available under eligible Title I projects, 

recipients also may undertake 

broadband infrastructure projects to 

make necessary investments to expand 

affordable access to broadband internet. 

Broadband projects available under the 

broadband eligible use category are not 

subject to BEAD program requirements 

and there is no limit on the amount of 

SLFRF funds a recipient may dedicate 

to such projects. 

Environmental Requirements. The 

2023 CAA provides that the 

requirements of NEPA apply to 

recipients’ use of SLFRF funds for Title 

I projects. Accordingly, and for the 

reasons discussed above, recipients 

using funds for Title I projects must 

satisfy NEPA environmental review 

requirements based on the procedures 

set forth in section 104(g) of the HCDA, 

as implemented at 24 CFR part 58, and 

as adapted to the SLFRF program by 

Treasury. 

Section 104(g) of the HCDA 

authorizes the HUD Secretary, in lieu of 

the environmental protection 

procedures otherwise applicable 

pursuant to NEPA, to promulgate 

regulations providing for the release of 

funds for particular projects to 

recipients of Title I assistance who 

assume all of the responsibilities for 

environmental review, decision making, 

and action pursuant to NEPA. Section 

104(g) further provides that the HUD 

Secretary shall approve the release of 

funds for projects subject to these 

procedures 15 days after the grantee has 

requested release of funds and 

submitted a certification. The HUD 

Secretary’s approval of the certification 

is deemed to satisfy her responsibilities 

under NEPA and other provisions of law 

identified in the regulations insofar as 

those responsibilities relate to the 

release of funds for projects covered by 

the certification. HUD regulations at 24 

CFR part 58 provide additional 

substantive and procedural information 

for compliance with this provision, 

including providing that certain projects 

do not require grantees to request 

release of funds or submit a 

certification. 

Before recipients use SLFRF funds for 

Title I projects that trigger the 

environmental compliance process 

contemplated by Title I and 24 CFR part 

58, the SLFRF recipients must comply 

with the environmental review 

requirements set forth in the HUD 

statute and regulations, submit a 

certification to Treasury, and receive 

approval. Because SLFRF funds have 

already been distributed to recipients, 

recipients are not required to submit a 

request for release of funds. As noted 

above, under Title I, CDBG grantees 

directly or indirectly assume all 

responsibilities for environmental 

review, decision making, and action 

pursuant to NEPA, and this approach 

also applies to recipients using the 

SLFRF funds for Title I projects. 

Following issuance of this interim final 

rule, Treasury will publish guidance 

describing the environmental 

compliance process in greater detail, 

including the certification’s contents 

and the process for submitting it. 

As noted above, under the regulations 

at 24 CFR part 58, certain projects do 

not require HUD grantees to submit a 

certification or obtain HUD’s approval 

for funds to be released for a particular 

project. Similarly, SLFRF recipients are 

not required to submit certifications or 

obtain Treasury approval for a Title I 

project that either is: 

• An ‘‘exempt activity’’ as 

contemplated by 24 CFR 58.34(a), or 

• ‘‘Categorically excluded’’ and not 

subject to 24 CFR 58.5, as contemplated 

by 24 CFR 58.35(b), provided that the 

extraordinary circumstances described 

in 24 CFR 58.35(c) are not present. 

If a project meets either of the two 

criteria above, recipients may begin 

using SLFRF funds for the project right 

away. Recipients should refer to HUD’s 

definition of extraordinary 

circumstances provided at 24 CFR 

58.2(a)(3).191 If a recipient determines 


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65020 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 

192Treasury publishes the Recovery Plans 

submitted by recipients each year on its website. 

For additional detail on Treasury’s guidance on 

SLFRF recipients’ compliance and reporting 

responsibilities, see https://home.treasury.gov/ 

policy-issues/coronavirus/assistance-for-state-localand-tribal-governments/state-and-local-fiscalrecovery-funds/recipient-compliance-and-reportingresponsibilities. 

that its project presents extraordinary 

circumstances, the recipient must 

submit a certification to Treasury and 

receive approval prior to using SLFRF 

funds for the project, as will be 

discussed in Treasury’s forthcoming 

guidance regarding the environmental 

compliance process. 

To claim an activity or project as 

exempt pursuant to 24 CFR 58.34(a), 

recipients must document in writing 

their determination that the activity or 

project is exempt and meets the 

conditions specified for such 

exemption. For categorically excluded 

projects, recipients are required to 

maintain a well-organized written 

record of the process and 

determinations, including those related 

to the evaluation of whether the project 

presents extraordinary circumstances, 

made with respect to the categorical 

exclusion, which HUD refers to as an 

Environmental Review Record. Treasury 

will provide additional information on 

the Environmental Review Record 

requirements following issuance of this 

interim final rule. 

Inapplicable sections of Title I. This 

the following sections of Title I do not 

apply to SLFRF-funded Title I projects: 

• Section 103 of the HCDA (authorizing 

HUD to make grants) 

• Sections 104(a)–(f), (h)–(j), and (l)–(m) 

of the HCDA (certain CDBG grant 

prerequisites, including consolidated 

plan, annual plan, plan publication, 

citizen participation, and associated 

certifications; performance and 

evaluation submission to HUD; 

revolving loan fund distributions; 

program income provisions applicable 

to certain CDBG grantees; eligible 

CDBG grantees; and community 

development plans) 

• Sections 105(b), (d), (e), and (g) of the 

HCDA (services provided by HUD; 

HUD directive to establish regulations 

and guidance) 

• Sections 106–109 of the HCDA (HUD 

allocation and distribution 

requirements; other grant programs 

under Title I; and nondiscrimination 

requirements) 

• Sections 111–122 of the HCDA 

(noncompliance remedies; other grant 

authorizations; administrative 

requirements including as relates to 

reporting, duplication of benefits, and 

agency consultation; interstate 

agreements; transition provisions; 

emergency funding provisions) 

As noted above and discussed further 

below, Treasury has determined not to 

apply the foregoing requirements of 

Title I because such requirements 

conflict with the existing SLFRF 

framework or otherwise are likely to 

preclude recipients from exercising the 

additional authorities provided by the 

statute. HUD regulations associated with 

the statutory provisions noted above 

also do not apply to recipients using 

SLFRF funds for Title I projects. 

Prerequisite for Receiving, and 

Distribution of, CDBG Grants. Generally, 

the requirements under section 104 of 

the HCDA noted above are prerequisites 

for receiving annual CDBG allocations 

or relate to how HUD may distribute 

funds to its grantees. As discussed 

above, the planning prerequisites and 

associated certifications conflict with 

the SLFRF program framework under 

which recipients already have funds in 

hand and are authorized to use funds for 

discrete projects, rather than being 

required to design an annual process for 

how funding will be used. Furthermore, 

to require recipients to prepare 

consolidated and annual plans and 

undergo a public review process likely 

would preclude recipients from 

exercising the additional authorities 

provided by the statute, under which 

recipients have limited time remaining 

to determine how to obligate and 

expend funds. While such requirements 

will not apply to SLFRF funds used for 

Title I projects, Treasury encourages 

recipients to engage with their 

communities on the projects they are 

undertaking with SLFRF funds in 

general. For example, certain SLFRF 

recipients are required to publish and 

submit to Treasury a Recovery Plan 

performance report that must be posted 

on an easily discoverable web page on 

the recipient’s public-facing website. 

The Recovery Plan provides the public 

and Treasury both retrospective and 

prospective information on the projects 

recipients are undertaking or planning 

to undertake with program funding, and 

how they are planning to ensure 

program outcomes are achieved in an 

effective, efficient, and equitable 

manner.192

HUD Programmatic Authority. Certain 

additional provisions are not applicable 

to the SLFRF program because they 

conflict with the SLFRF framework in 

that they are only relevant in the context 

of HUD’s programmatic authorities 

rather than Treasury’s administration of 

Title I projects and recipients’ use of 

funds for the eligible projects and 

activities that the statute makes 

available. For example, sections 108, 

111, 112, and 113 of the HCDA provide 

certain authorities and impose certain 

responsibilities on HUD that it would 

not make sense to impose on Treasury’s 

administration of Title I projects, 

including those related to providing 

loan guarantees, remedying 

noncompliance, providing grants to 

settle outstanding urban renewal loans, 

promulgating regulations, and reporting. 

Question 1: What, if any, additional 

clarification should Treasury provide as 

it relates to determining eligibility of 

projects under the Title I eligible use, or 

complying with program requirements 

such as CDBG national objectives or 

spending caps? 

Question 2: What additional 

information or clarification is needed 

for recipients to understand Treasury’s 

guidance on how recipients can use 

loans and revolving loan funds to 

support Title I eligible uses? 

Question 3: What if any additional 

flexibilities would benefit recipients in 

terms of the use of revolving loan funds 

across the SLFRF program or for 

particular uses in the Title I projects 

eligible use category? Please include a 

discussion of how additional flexibilities 

would comply with the December 31, 

2024 obligation and December 31, 2026 

expenditure deadlines. 

Question 4: What additional 

information or clarification is needed 

for recipients to understand Treasury’s 

guidance on how to comply with 

environmental review requirements for 

Title I projects? 

Question 5: What activities not 

already eligible under the public health 

and negative economic impacts eligible 

use category, as articulated in the 2022 

final rule, are recipients interested in 

undertaking under the Title I projects 

eligible use category? 

III. Discussion of Revenue Loss and 

Program Administration Provisions 

The 2023 CAA codified the ‘‘standard 

allowance’’ discussed in the 2022 final 

rule under the revenue loss eligible use 

category. The section that follows 

discusses the revenue loss eligible use 

category as described in the 2022 final 

rule, as well as the program 

administration provisions to support 

recipients in understanding how this 

interim final rule will interact with 

previously established elements of the 

SLFRF program. As noted above, the 

2023 CAA generally did not alter the 

existing eligible uses articulated in the 

2022 final rule. Recipients may continue 

to use SLFRF funds for the eligible uses 

described under the 2022 final rule. 


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193The statute’s application of the non-supplant 

provision to the Surface Transportation projects 

eligible use category and Title I projects eligible use 

category but not to the emergency relief from 

natural disasters eligible use category makes sense 

only if recipients may not use SLFRF funds to cover 

expenses incurred prior to the enactment of the 

2023 CAA. The concern that recipients would 

supplant, after the date of enactment, funds 

previously dedicated to eligible uses is not 

particularly relevant in the case of natural disasters, 

which are generally unexpected and impose 

extraordinary costs on state, local, and Tribal 

governments. 

The use of December 29, 2022 is also supported 

by comparing the 2023 CAA amendments to the 

Infrastructure Investment and Jobs Act (IIJA) 

amendments to the ARPA from November 2021. In 

the IIJA, Congress included a ‘‘clarification of 

authority’’ to use SLFRF funds to meet match 

requirements for authorized Bureau of Reclamation 

water projects. The clarification stated that the 

amendments took effect ‘‘as if included in the 

enactment’’ of the ARPA. Accordingly, in the final 

rule, Treasury incorporated this eligible use and 

applied the March 3, 2021 cost incurred date that 

applied to all the other eligible uses in the ARPA. 

The absence of similar language in the 2023 CAA 

suggests Congress did not intend to apply the same 

retroactive approach. 

A. Revenue Loss 

Summary of the 2022 final rule: As 

stated above, the ARPA amended the 

Social Security Act to provide that 

SLFRF funds may be used ‘‘for the 

provision of government services to the 

extent of the reduction in revenue of 

such . . . government due to the 

COVID–19 public health emergency 

relative to revenues collected in the 

most recent full fiscal year of the . . . 

government prior to the emergency.’’ In 

the 2022 final rule, Treasury provided 

two options for how recipients may 

determine their amount of revenue loss. 

A recipient may claim a standard 

allowance of up to $10 million in total, 

not to exceed the recipient’s allocation, 

for the entire period of performance, or 

calculate revenue loss on an annual 

basis according to the four-step formula 

described in the 2022 final rule. The 

2022 final rule also provided additional 

clarifications, including how recipients 

that are determining revenue loss 

according to the formula should 

calculate general revenue and select 

their calculation date. The 2022 final 

rule maintained Treasury’s definition of 

government services articulated in the 

2021 interim final rule which provided 

that, generally speaking, services 

provided by recipient governments are 

‘‘government services,’’ unless Treasury 

has stated otherwise. 

The 2022 final rule also noted that 

Treasury intended to amend its 

reporting forms to provide a mechanism 

for recipients to make a one-time, 

irrevocable election to utilize either the 

revenue loss formula or the standard 

allowance. Treasury’s guidance and 

Final Rule FAQs included directions for 

recipients to indicate this choice in their 

Project and Expenditure Reports due 

April 30, 2022, and as described in 

subsequent guidance, recipients were 

able to update their revenue loss 

election, as appropriate, in future 

reporting cycles through the April 2023 

reporting period. Upon update, any 

prior revenue loss election was 

superseded. 

The Consolidated Appropriations Act, 

2023: The 2023 CAA provided SLFRF 

funds may be used ‘‘for the provision of 

government services up to an amount 

equal to the greater of— 

(i) the amount of the reduction in 

revenue of such . . . government due to 

the COVID–19 public health emergency 

relative to revenue collected in the most 

recent full fiscal year of such . . . 

government prior to the emergency; or: 

(ii) $10,000,000.’’ 

Thus, the 2023 CAA codified the 

framework articulated in the 2022 final 

rule that recipients may determine their 

revenue loss by calculating revenue loss 

according to the formula or claiming up 

to $10 million, not to exceed a 

recipient’s allocation. 

Recipients need not make any 

changes to their current revenue loss 

determination and may continue with 

their previous determination. Recipients 

who would like to update their revenue 

loss determination will be able to 

update their revenue loss determination, 

as appropriate, through the April 2025 

reporting period. Upon update, any 

prior revenue loss election will be 

superseded. Recipients continue to be 

required to employ a consistent 

methodology across the period of 

performance (i.e., choose either the 

standard allowance or the full formula) 

and may not elect one approach for 

certain reporting years and the other 

approach for different reporting years. 

Recipients must still communicate to 

Treasury the method for determining 

revenue loss, calculating according to 

the formula or claiming up to 

$10,000,000, not to exceed the 

recipient’s allocation. 

B. Program Administration Provisions 

1. Timeline for Use of SLFRF Funds 

Summary of the 2022 final rule: In the 

2022 final rule, Treasury maintained the 

timeline for using SLFRF funds outlined 

in the 2021 interim final rule. Recipient 

may only use funds to cover costs 

incurred during the period beginning 

March 3, 2021, and ending December 

31, 2024. The final rule provided that a 

cost shall be considered to have been 

incurred if the recipient has incurred an 

obligation with respect to such cost. 

Under the 2022 final rule, recipients 

must expend all funds by December 31, 

2026. The 2023 CAA did not alter these 

timelines for existing eligible uses 

described in the 2022 final rule. The 

eligible uses added by the 2023 CAA are 

subject to slightly different treatment, as 

discussed below. 

Consolidated Appropriations Act, 

2023: For the three eligible uses added 

by the 2023 CAA (emergency relief from 

natural disasters, Surface Transportation 

projects, and Title I projects), recipients 

may use SLFRF funds to cover costs 

incurred beginning December 29, 2022, 

which is the date that the 2023 CAA 

was enacted. Consistent with the 

discussion in the 2021 interim final rule 

with respect to the original eligible uses, 

SLFRF funds are available for the new 

eligible uses on a prospective basis. 

Similarly, consistent with the 2021 

interim final rule, permitting recipients 

to incur costs beginning December 29, 

2022, provides flexibility for recipients 

that may have been incurring costs in 

anticipation of the issuance of this 

interim final rule. Treasury considered 

adopting March 3, 2021, as the date that 

recipients may begin incurring costs 

under the new eligible uses but declined 

to do so because these eligible uses are 

available on a prospective basis and 

because March 3, 2021, would be 

inconsistent with the non-supplant 

requirement applicable to the majority 

of projects and activities available under 

the new eligible uses.193

As discussed earlier in this interim 

final rule, under the emergency relief 

from natural disasters eligible use 

category, recipients must comply with 

the December 31, 2024, obligation 

deadline and the December 31, 2026, 

expenditure deadline articulated in the 

2022 final rule. For Surface 

Transportation projects and Title I 

projects, funds must be obligated by 

December 31, 2024 and must be 

expended by September 30, 2026. This 

expenditure deadline is three months 

earlier than the December 31, 2026, 

expenditure deadline that applies to the 

other eligible uses. 

The 2022 final rule provides that a 

cost is considered to have been incurred 

for purposes of the December 31, 2024, 

statutory deadline if the recipient has 

incurred an obligation with respect to 

such cost by December 31, 2024. The 

2022 final rule defines an obligation as 

‘‘an order placed for property and 

services and entering into contracts, 

subawards, and similar transactions that 

require payment.’’ Treasury is 

maintaining this definition of obligation 

for the new eligible uses provided in the 

2023 CAA. 


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65022 Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 / Rules and Regulations 

194U.S. Department of the Treasury, Recipient 

Compliance and Reporting Responsibilities (Nov. 5, 

2021), https://home.treasury.gov/policy-issues/ 

coronavirus/assistance-for-state-local-and-tribalgovernments/state-and-local-fiscal-recovery-funds/ 

recipient-compliance-and-reporting-responsibilities. 

2. Use of Funds for Match or Cost-Share 

Requirements 

Summary of the 2022 final rule: In the 

2022 final rule, Treasury discussed its 

determination that SLFRF funds 

available for the provision of 

government services, up to the amount 

of the recipient’s reduction in revenue 

due to the public health emergency, 

generally may be used to meet the nonFederal cost-share or matching 

requirements of other Federal programs. 

The final rule also clarified that SLFRF 

funds beyond those that are available 

under the revenue loss eligible use 

category for the provision of government 

services may not be used to meet the 

non-Federal match or cost-share 

requirements of other Federal programs 

other than as specifically provided for 

by statute. For example, as discussed in 

the 2022 final rule, section 40909 of the 

Infrastructure Investment and Jobs Act 

provides that SLFRF funds may be used 

to meet the non-Federal match 

requirements of any authorized Bureau 

of Reclamation project, and section 

60102 of the Infrastructure Investment 

and Jobs Act provides that SLFRF funds 

may be used to meet the non-Federal 

match requirements of the broadband 

infrastructure program authorized under 

that section. See the 2022 final rule for 

further discussion. 

The Consolidated Appropriations Act, 

2023: As discussed above, the 2023 

CAA did not alter the existing eligible 

uses of SLFRF funds. Recipients may 

still use SLFRF funds in the revenue 

loss eligible use category to meet nonFederal matching requirements, as 

described in the 2022 final rule. As 

described in the Surface Transportation 

projects section of this interim final 

rule, the 2023 CAA provided that 

recipients may use SLFRF funds for 

non-Federal matching requirements for 

certain Surface Transportation 

programs. As described in the Title I 

projects section of this interim final 

rule, the 2023 CAA provided that 

recipients may use SLFRF funds for 

Title I projects, which includes using 

funds for non-Federal cost share and 

matching requirements of a Federal 

financial assistance program in support 

of activities that would be eligible under 

the CDBG and ICDBG programs. See the 

sections titled Surface Transportation 

projects and Title I projects of this 

interim final rule for further 

information. 

3. Reporting 

Summary of the 2022 final rule: The 

2022 final rule maintained Treasury’s 

authority to collect information from 

recipients through requested reports and 

any additional requests for information. 

The 2022 final rule also maintained 

Treasury’s flexibility to extend or 

accelerate reporting deadlines and to 

modify requested content for the Interim 

Report, Project and Expenditure reports, 

and Recovery Plan Performance reports. 

Since the publication of the 2021 

interim final rule, Treasury issued 

supplementary reporting guidance in 

the Compliance and Reporting Guidance 

and in the User Guide: Treasury’s Portal 

for Recipient Reporting (User Guide).194

Treasury continues to issue updated 

guidance prior to each reporting period 

clarifying any modifications to 

requested report content. 

The Consolidated Appropriations Act, 

2023: Generally, recipients using SLFRF 

funds for the eligible uses provided in 

the 2023 CAA will be required to report 

on these uses of funds in their Project 

and Expenditure reports and Recovery 

Plan Performance reports. For example, 

recipients using funds to provide 

emergency relief from natural disasters 

will generally be required to provide 

information regarding the declaration or 

designation associated with a natural 

disaster and for mitigation activity 

expenditures greater than $1 million, a 

written justification. Recipients using 

funds for Surface Transportation 

projects under Pathway One will 

generally be required to confirm which 

DOT program they are directing funds 

and attest to meeting additional 

statutory requirements like supplement, 

not supplant and state of good repair. 

Recipients using funds for Surface 

Transportation projects under Pathway 

Two will generally be required to 

provide additional information 

regarding the parameters of the 

streamlined framework and attest to 

meeting additional statutory 

requirements like supplement, not 

supplant and state of good repair. 

Recipients using funds for Title I 

projects will generally be required to 

provide information regarding the 

category of CDBG activities, the primary 

objective, and the national objectives, 

and attest to meeting additional 

statutory requirements like supplement, 

not supplant and environmental 

certifications. Like all eligible use 

categories in the SLFRF program, 

recipients will be required to provide 

general financial information and a 

project description for the new eligible 

uses categories discussed in this interim 

final rule. Treasury intends to update its 

reporting forms, Compliance and 

Reporting Guidance, and User Guide to 

further describe recipients’ reporting 

responsibilities for SLFRF funds 

directed toward these eligible uses. 

As described above, Treasury is 

delegating authority to DOT to oversee 

and administer Surface Transportation 

projects under Pathway One. As such, 

recipients using SLFRF funds for such 

projects will be required to comply with 

the relevant existing DOT reporting 

requirements associated with the 

Surface Transportation project that is 

receiving DOT funding for which they 

are adding SLFRF funds. DOT may 

provide additional guidance, as 

appropriate, for recipients using SLFRF 

funds under Pathway One for a Surface 

Transportation project that is receiving 

funding from DOT. Recipients using 

SLFRF funds under Pathway One will 

also be required to report certain 

information to Treasury, including the 

amount of SLFRF funds directed toward 

Surface Transportation projects and 

Title I projects to ensure that recipients 

comply with the cap on funds 

associated with these eligible use 

categories. 

Recipients using SLFRF funds under 

Pathway Two for a Surface 

Transportation project that is not 

receiving funding from DOT and funded 

solely with SLFRF funds will only have 

reporting responsibilities to Treasury. 

Under Pathway Three, recipients will 

be required to comply with the relevant 

existing DOT reporting requirements 

associated with the Surface 

Transportation project which they are 

using SLFRF funds for non-Federal 

share requirements. Recipients will also 

be required to report certain information 

to Treasury, including the amount of 

SLFRF funds directed toward Surface 

Transportation projects and Title I 

projects to ensure that recipients 

comply with the cap on funds 

associated with these eligible use 

categories. 

4. Uniform Guidance 

Summary of the 2022 final rule: The 

2022 final rule states that recipients of 

SLFRF funds are subject to the 

provisions of the Uniform Guidance (2 

CFR part 200) from the date of award to 

the end of the period of performance on 

December 31, 2026, unless otherwise 

specified in this rule or program specific 

guidance. 

The Consolidated Appropriations Act, 

2023: Consistent with the 2022 final 

rule, recipients using SLFRF funds, 

whether for the eligible uses described 

in the 2022 final rule or the eligible uses 

described in this interim final rule, are 

subject to the provisions of the Uniform 


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195See FAQ Section 13. ‘‘Uniform Guidance’’ 

U.S. Department of the Treasury, Coronavirus State 

and Local Fiscal Recovery Funds Final Rule: 

Frequently Asked Questions (Apr. 2023), https:// 

home.treasury.gov/system/files/136/SLFRF-FinalRule-FAQ.pdf. 

Guidance, unless stated otherwise by 

Treasury.195 Recipients using SLFRF for 

Surface Transportation projects and 

Title I projects, respectively, must also 

comply with the administrative 

requirements described above in the 

Surface Transportation projects and 

Title I projects sections. 

IV. Comments and Effective Date 

This interim final rule is being issued 

without advance notice and public 

comment to allow for immediate 

implementation of the changes to the 

SLFRF program resulting from the 

amendments made by the State, Local, 

Tribal, and Territorial Fiscal Recovery, 

Infrastructure, and Disaster Relief 

Flexibility Act, part of the Consolidated 

Appropriations Act, 2023, Public Law 

117–328 (Dec. 29, 2022). As discussed 

below, the requirements of advance 

notice and public comment do not 

apply ‘‘to the extent that there is 

involved . . . a matter relating to agency 

. . . grants.’’ This interim final rule 

implements statutory conditions on the 

eligible uses of the SLFRF funds and 

addresses the potential consequences of 

ineligible uses. In addition and as 

discussed below, the Administrative 

Procedure Act also provides an 

exception to ordinary notice-andcomment procedures ‘‘when the agency 

for good cause finds (and incorporates 

the finding and a brief statement of 

reasons therefor in the rules issued) that 

notice and public procedure thereon are 

impracticable, unnecessary, or contrary 

to the public interest.’’ This good cause 

justification also supports waiver of the 

60-day delayed effective date for major 

rules under the Congressional Review 

Act at 5 U.S.C. 808(2). Although this 

interim final rule is effective 

immediately, comments are solicited 

from interested members of the public 

and from recipient governments on all 

aspects of this interim final rule. These 

comments must be submitted on or 

before November 20, 2023. 

V. Regulatory Analyses 

Executive Orders 12866, 13563, and 

14094 

Regulatory Impact Assessment 

This interim final rule is a 

‘‘significant regulatory action’’ under 

section 3(f)(1) of Executive Order 12866 

for the purposes of Executive Orders 

12866 and 13563 because it may shift 

how state, local, and Tribal governments 

spend SLFRF funds annually by $200 

million or more, with an effect on the 

economy. 

As explained below, this regulation 

meets a substantial need: ensuring that 

recipients—states, territories, Tribal 

governments, and local governments— 

of SLFRF funds fully understand the 

requirements and parameters of the 

program as set forth in the Social 

Security Act and are able to deploy 

funds in a manner that best reflects 

Congress’ intent to provide necessary 

relief to recipient governments 

adversely impacted by the COVID–19 

public health emergency. Furthermore, 

as required by Executive Order 12866 as 

amended, Treasury has weighed the 

costs and benefits of this interim final 

rule and varying alternatives and has 

reasonably determined that the benefits 

of this interim final rule to recipients 

and their communities far outweigh any 

costs. The rule has been reviewed by the 

Office of Management and Budget 

(OMB) in accordance with Executive 

Order 12866 as amended. 

Executive Orders 12866, 13563, and 

14094 

Under Executive Order 12866, as 

amended by Executive Order 14094, 

OMB must determine whether this 

regulatory action is ‘‘significant,’’ and 

therefore, subject to the requirements of 

the Executive Order and subject to 

review by OMB. Section 3(f) of 

Executive Order 12866 as amended 

defines a significant regulatory action as 

an action likely to result in a rule that 

may, among other things, have an 

annual effect on the economy of $200 

million or more. This interim final rule 

may shift spending decisions by 

recipient governments by $200 million, 

therefore, it is subject to review by OMB 

under section 3(f)(1) of Executive Order 

12866 as amended. 

Treasury has also reviewed these 

regulations under Executive Order 

13563, which supplements and 

explicitly reaffirms the principles, 

structures, and definitions governing 

regulatory review established in 

Executive Order 12866. To the extent 

permitted by law, section 1(b) of 

Executive Order 13563 requires that an 

agency: (1) propose or adopt regulations 

only upon a reasoned determination 

that their benefits justify their costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

its regulations to impose the least 

burden on society, consistent with 

obtaining regulatory objectives taking 

into account, among other things, and to 

the extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than the 

behavior or manner of compliance a 

regulated entity must adopt; and (5) 

identify and assess available alternatives 

to direct regulation, including providing 

economic incentives—such as user fees 

or marketable permits—to encourage the 

desired behavior, or providing 

information that enables the public to 

make choices. Executive Order 13563 

also requires an agency ‘‘to use the best 

available techniques to quantify 

anticipated present and future benefits 

and costs as accurately as possible.’’ 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) has 

emphasized that these techniques may 

include ‘‘identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes.’’ 

Based on the analysis that follows and 

the reasons stated elsewhere in this 

document, Treasury believes that this 

interim final rule is consistent with the 

principles set forth in Executive Orders 

12866, 13563, and 14094. This 

Regulatory Impact Analysis discusses 

the need for regulatory action, the 

potential benefits, and the potential 

costs. Treasury has assessed the 

potential costs and benefits, both 

quantitative and qualitative, of this 

regulatory action, and is issuing this 

interim final rule only on a reasoned 

determination that the benefits exceed 

the costs. In choosing among alternative 

regulatory approaches, Treasury 

selected those approaches that would 

maximize net benefits. 

Need for Regulatory Action 

This interim final rule implements 

new eligible uses for the $350 billion 

SLFRF program provided in the 2023 

CAA, which Congress passed to provide 

additional flexibility in how state, local, 

and Tribal governments respond to the 

unique needs of their communities. As 

the agency charged with execution of 

these programs, Treasury has concluded 

that this interim final rule is needed to 

ensure that recipients of SLFRF funds 

fully understand the requirements and 

parameters of the program as modified 

by the 2023 CAA and deploy funds in 

a manner that best reflects Congress’ 

mandate for targeted fiscal relief. This 

interim final rule provides additional 

flexibility in the use of $350 billion in 

grant funds already disbursed from the 

Federal government to state, local, and 

Tribal governments. As noted earlier, 


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Treasury has disbursed nearly all of the 

$350 billion appropriated SLFRF funds. 

Treasury has sought to implement the 

program in ways that maximize its 

potential benefits while minimizing its 

costs. It has done so by: aiming to target 

relief in key areas according to the 

congressional mandate; offering clarity 

to state, local, and Tribal governments 

while maintaining their flexibility to 

respond to local needs; and limiting 

administrative burdens. 

Analysis of Benefits 

Relative to a pre-2023 CAA baseline, 

no additional resources are provided to 

state, local, and Tribal governments 

under the SLFRF program. Instead, 

state, local, and Tribal governments will 

have additional flexibility in how they 

use available SLFRF funds, that have 

already been disbursed, with the option 

to pursue additional eligible uses under 

this interim final rule to meet the needs 

of their communities. Treasury believes 

that this additional flexibility may 

generate substantial additional 

economic activity, although given the 

flexibility accorded to recipients in the 

use of funds, it is not possible to 

precisely estimate the extent to which 

this will occur and the timing with 

which it will occur. 

This interim final rule provides 

benefits by implementing the new 

eligible use categories, as defined in the 

2023 CAA: providing emergency relief 

from natural disasters or the negative 

economic impacts of natural disasters, 

using funds for Surface Transportation 

projects, and using funds for Title I 

projects. 

These benefits are achieved in this 

interim final rule through a broadly 

flexible approach that sets clear 

guidelines on these additional eligible 

uses of SLFRF funds and provides state, 

local, and Tribal government officials 

discretion to direct SLFRF funds to 

areas of greatest need within their 

jurisdiction, within available eligible 

use categories. While preserving 

recipients’ overall flexibility, this 

interim final rule includes several 

provisions that implement statutory 

requirements and will help support use 

of SLFRF funds to achieve the intended 

benefits. Preserving flexibility for 

recipients not only serves an important 

public policy goal by allowing them to 

meet particularized and diverse needs of 

their local communities but also 

enhances the economic benefits of this 

interim final rule by allowing recipients 

to choose eligible uses of funds that 

provide the highest utility in their 

jurisdictions. 

The remainder of this section clarifies 

how Treasury’s approach to key 

provisions in this interim final rule will 

contribute to greater realization of 

benefits from the program. Treasury 

considered issuing guidance rather than 

an interim final rule; however, Treasury 

determined that issuing an interim final 

rule that amends the regulatory text of 

the 2022 final rule was appropriate to 

bring the regulatory requirements in line 

with the 2023 CAA. 

Emergency Relief From Natural 

Disasters 

The eligible use category for 

providing emergency relief from natural 

disasters or the negative economic 

impacts of natural disasters covers a 

range of eligible uses of funds, including 

temporary emergency housing, food 

assistance, financial assistance for lost 

wages, other immediate needs, and 

mitigation activities. Treasury has 

structured this eligible use to minimize 

recipient administrative burden while 

also maintaining flexibility for 

recipients to provide emergency relief to 

address the particular needs of their 

communities after experiencing a 

natural disaster or prior to a natural 

disaster that is expected to occur 

imminently, or to avert the threat of a 

future natural disaster. In this interim 

final rule, Treasury enumerated eligible 

uses of SLFRF funds to provide 

emergency relief from the physical and 

negative economic impacts of natural 

disasters. Some of these enumerated 

eligible uses include temporary 

emergency housing, food assistance, 

financial assistance for lost wages, 

emergency protective measures, debris 

removal, repairing damage to public 

infrastructure, home repairs for 

uninsured primary residences, cash 

assistance, and mitigation activities to 

avert the potential impacts of a future 

natural disaster. In addition to the 

enumerated eligible uses, Treasury 

provides a framework whereby recipient 

may identify a natural disaster and 

identify emergency relief that responds 

to the physical or negative economic 

impacts of a natural disaster. The 

emergency relief must be related and 

reasonably proportional to the to the 

impact identified. By enumerating 

eligible uses, Treasury is reducing 

administrative burden for recipients 

through a clear list of uses of SLFRF 

funds they may consider providing as 

appropriate. By providing a framework 

for recipients to design their own 

emergency relief, Treasury is providing 

flexibility for recipients to direct SLFRF 

funds to the needs of their unique 

communities. 

Surface Transportation Projects 

In the eligible use category Surface 

Transportation projects, Treasury 

provides three pathways under which 

recipients may direct SLFRF funds 

towards Surface Transportation projects, 

subject to the cap on SLFRF funds for 

this eligible use. First, recipients may 

use SLFRF funds under Pathway One 

for Surface Transportation projects 

receiving funding from DOT. Recipients 

who use SLFRF funds for these projects 

must comply with all related DOT 

requirements for these projects. Second, 

recipients may use SLFRF funds under 

Pathway Two for Surface Transportation 

projects, that are not receiving funding 

from DOT, whether or not SLFRF funds 

are blended with other sources of funds. 

This second pathway is available to all 

SLFRF recipients, including those that 

do not routinely apply for or receive 

funding directly from DOT. Treasury is 

articulating a streamlined framework for 

recipients to undertake certain projects 

(1) fit the description of ‘‘eligible 

projects’’ under the RAISE grant 

program as described in the 2023 Notice 

of Funding Opportunity; (2) contribute 

SLFRF funds no greater than $10 

million, and (3) with an entire project 

scope that is limited to actions or 

activities that typically do not have a 

significant environmental impact, 

absent unusual circumstances, as 

described in 23 CFR 771.116(b), 

771.117(b), and 771.118(b). Recipients 

that use SLFRF funds for these projects 

must comply certain requirements, as 

articulated in the Surface 

Transportation projects section, and 

only report these projects to Treasury. 

Recipients seeking to use SLFRF funds 

for Surface Transportation projects 

under Pathway Two outside of the 

parameters of the streamlined 

framework must submit a notice of 

intent to Treasury. Treasury will use the 

notices of intent it receives along with 

comments on this interim final rule to 

develop a pathway for these types of 

projects. Third, recipients may use 

SLFRF funds under Pathway Three for 

non-Federal share requirements for 

certain DOT programs, as well as to 

repay TIFIA loans. By providing three 

pathways for recipients to pursue 

Surface Transportation projects with 

SLFRF funds, Treasury is providing 

flexibility for recipients to use SLFRF 

funds for DOT projects they are already 

pursuing and for recipient to also 

pursue new projects, particularly for 

those recipients that do not have any 

existing projects funded by DOT, subject 

to the requirements outlined in the 

Surface Transportation projects section. 


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Title I Projects 

The Title I projects eligible use 

category discusses how recipients may 

direct SLFRF funds toward Title I 

projects, subject to the cap on funds for 

this eligible use category. In this eligible 

use category, Treasury has provided that 

recipients may use SLFRF funds for 

CDBG and ICDBG projects, in alignment 

with the applicable administrative 

provisions. By aligning with CDBG and 

ICDBG, programs with which many 

recipients already are familiar, Treasury 

is reducing administrative burden. 

Treasury also discusses the CDBG and 

ICDBG provisions that apply to SLFRF 

funds. By analyzing which provisions 

are applicable to the unique 

requirements of the SLFRF program, 

including modifying certain 

requirements for this eligible use 

category in light of the SLFRF period of 

performance and the statutory 

requirement that SLFRF funds be 

obligated by December 31, 2024 and 

expended by September 30, 2026, 

Treasury is further reducing 

administrative burden for recipients. 

Analysis of Costs 

This regulatory action will not 

generate significant administrative costs 

relative to a pre-2023 CAA baseline. 

This interim final rule may result in 

state, local, and Tribal governments 

shifting SLFRF funds to new eligible 

uses included in the Social Security Act 

but does not result in additional funds 

being disbursed to SLFRF recipients. In 

addition, SLFRF recipients generally 

have already established processes 

required to administer their SLFRF 

funds, oversee subrecipients and 

beneficiaries, and file periodic reports 

with Treasury. As such, Treasury 

expects that the total costs required to 

administer SLFRF funds will not change 

significantly. Treasury expects that the 

administrative burden associated with 

the SLFRF program will remain 

moderate for a grant program of its size. 

Under the final rule implementing the 

SLFRF program as enacted in the ARPA, 

Treasury noted administrative costs as a 

generally allowable use of SLFRF funds, 

which defrays administrative expenses 

to recipients that may be needed to 

comply with reporting requirements. 

Treasury is maintaining this approach to 

administrative costs in this interim final 

rule. Treasury has also made clear in 

guidance that SLFRF funds may be used 

to cover certain expenses related to 

administering programs established 

using SLFRF funds. 

Executive Order 13132 

Executive Order 13132 (entitled 

Federalism) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial, direct compliance costs on 

state, local, and Tribal governments, and 

is not required by statute, or preempts 

state law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive order. This 

interim final rule does not have 

Federalism implications within the 

meaning of the Executive order and 

does not impose substantial, direct 

compliance costs on state, local, and 

Tribal governments or preempt state law 

within the meaning of the Executive 

Order. The compliance costs are 

imposed on state, local, and Tribal 

governments by sections 602 and 603 of 

the Social Security Act, as modified by 

the 2023 CAA. Pursuant to the 

requirements set forth in section 8(a) of 

Executive Order 13132, Treasury 

certifies that it has complied with the 

requirements of Executive Order 13132. 

Administrative Procedure Act 

The Administrative Procedure Act 

(APA), 5 U.S.C. 551 et seq., generally 

requires public notice and an 

opportunity for comment before a rule 

becomes effective. However, the APA 

provides that the requirements of 5 

U.S.C. 553 do not apply ‘‘to the extent 

that there is involved . . . a matter 

relating to agency . . . grants.’’ This 

interim final rule implements statutory 

conditions on the eligible uses of the 

SLFRF grants and addresses potential 

consequences of ineligible uses. The 

rule is thus ‘‘both clearly and directly 

related to a Federal grant program.’’ 

National Wildlife Federation v. Snow, 

561 F.2d 227, 232 (D.C. Cir. 1976). The 

rule sets forth the ‘‘process necessary to 

maintain state . . . eligibility for 

Federal funds,’’ id., as well as other 

‘‘integral part[s] of the grant program,’’ 

Center for Auto Safety v. Tiemann, 414 

F. Supp. 215, 222 (D.D.C. 1976). As a 

result, the requirements of 5 U.S.C. 553 

do not apply. 

The APA also provides an exception 

to ordinary notice-and-comment 

procedures ‘‘when the agency for good 

cause finds (and incorporates the 

finding and a brief statement of reasons 

therefor in the rules issued) that notice 

and public procedure thereon are 

impracticable, unnecessary, or contrary 

to the public interest.’’ 5 U.S.C. 

553(b)(3)(B); see also 5 U.S.C. 553(d)(3) 

(creating an exception to the 

requirement of a 30-day delay before the 

effective date of a rule ‘‘for good cause 

found and published with the rule’’). 

Assuming 5 U.S.C. 553 applied, 

Treasury would still have good cause 

under sections 553(b)(3)(B) and 

553(d)(3) for not undertaking section 

553’s requirements. The 2023 CAA 

amends sections 602 and 603 of the 

Social Security Act to make SLFRF 

available to provide emergency relief 

from natural disasters or their negative 

economic impacts, along with authority 

to use funds for an extensive list of 

eligible uses related to infrastructure, 

incorporated into the Social Security 

Act by cross-reference to other statutory 

provisions. As noted above, Congress 

authorized use of funds for emergency 

relief. American Fed’n of Gov’t 

Employees v. Block, 655 F.2d 1153, 

1156 (D.C. Cir. 1981). Expeditious 

promulgation of the interim final rule 

would make these funds available to 

provide emergency relief to natural 

disasters more quickly and would avoid 

a delay that would be contrary to the 

public interest. In addition, SLFRF 

funds are available to cover costs 

incurred through December 31, 2024. 

Following the ordinary requirements of 

notice-and-comment rulemaking would 

result in the passage of a significant 

amount of time before recipients are 

able to use funds for time sensitive 

needs related to natural disaster relief, 

and it would provide recipients a very 

limited amount of time to plan for and 

finance newly eligible infrastructure 

projects before the obligation deadline 

arrives in the following year. By linking 

the effectiveness of the amendments 

with the promulgation of a rule or 

issuance of guidance on a 60-day 

timeline, as provided in the 2023 CAA, 

Congress ‘‘clearly envisioned very 

speedy adoption of the mandated 

changes.’’ Petry v. Block, 737 F.2d 1193, 

1200 (D.C. Cir. 1984). Further, Congress, 

‘‘by setting an effective date so close to 

the date of enactment, expressed its 

belief that implementation of the 

amendments to the [program] was 

urgent.’’ Philadelphia Citizens in Action 

v. Schweiker, 669 F.2d 877, 884–885 (3d 

Cir. 1982) (finding good cause under 

circumstances, including statutory time 

limits, where APA procedures would 

have been ‘‘virtually impossible,’’ like a 

circumstance in which an agency 

promulgated a regulation to implement 

a statute that was enacted on August 13 

and became effective on October 1). 

Finally, there is an urgent need for 

States to undertake the planning 

necessary for sound fiscal policymaking, 

which requires an understanding of how 

funds provided under the ARPA will 

augment and interact with existing 

budgetary resources. The statutory 

urgency and practical necessity are good 


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cause to forego the ordinary 

requirements of notice-and-comment 

rulemaking. 

Congressional Review Act 

The Administrator of OIRA has 

determined that this rule qualifies under 

the definition set forth in 5 U.S.C. 

804(2) for purposes of Subtitle E of the 

Small Business Regulatory Enforcement 

and Fairness Act of 1996 (also known as 

the Congressional Review Act or CRA). 

Under the CRA, such a rule generally 

may take effect no earlier than 60 days 

after the rule is published in the Federal 

Register. 5 U.S.C. 801(a)(3). 

Notwithstanding this requirement, the 

CRA allows agencies to dispense with 

the requirements of section 801 when 

the agency for good cause finds that 

such procedure would be impracticable, 

unnecessary, or contrary to the public 

interest and the rule shall take effect at 

such time as the agency promulgating 

the rule determines. 5 U.S.C. 808(2). 

Pursuant to section 808(2), for the 

reasons discussed above, Treasury for 

good cause finds that a 60-day delay to 

provide public notice is impracticable 

and contrary to the public interest. 

Paperwork Reduction Act 

The information collections 

associated with the SLFRF program 

have been reviewed and approved by 

OMB pursuant to the Paperwork 

Reduction Act (44 U.S.C. Chapter 35) 

(PRA) and assigned control number 

1505–0271. Under the PRA, an agency 

may not conduct or sponsor, and a 

respondent is not required to respond 

to, an information collection unless it 

displays a valid OMB control number. 

This interim final rule is not altering the 

previously approved information 

collections for the SLFRF program. The 

table below includes the estimates of 

hourly burden under this program that 

have been approved in previously 

approved information collections. 

Reporting Number 

respondents 

Number 

responses 

per 

respondent 

Total 

responses 

Hours per 

response 

Total 

burden 

in hours 

Cost to 

respondents 

($48.80 per 

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 percent to account for fully loaded employer cost of employee compensation (benefits, etc.) for a fully loaded wage rate of $48.80. 

Regulatory Flexibility Analysis 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to section 553(b) of the APA or 

another law, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. 

Rules that are exempt from notice and 

comment under the APA or any other 

law are also exempt from the RFA 

requirements, including the requirement 

to conduct a regulatory flexibility 

analysis, when among other things the 

agency for good cause finds that notice 

and public procedure are impracticable, 

unnecessary, or contrary to the public 

interest. Because this rule is exempt 

from the notice and comment 

requirements of the APA, Treasury is 

not required to conduct a regulatory 

flexibility analysis. 

List of Subjects in 31 CFR Part 35 

Community development, Disaster 

assistance, Executive compensation, 

State and Local Governments, Public 

health emergency, Tribal governments, 

Transportation. 

For the reasons stated in the 

preamble, the United States Department 

of the Treasury amends 31 CFR part 35 

as follows: 

PART 35—PANDEMIC RELIEF 

PROGRAMS 

■ 1. The authority citation for part 35 

continues to read as follows: 

Authority: 42 U.S.C. 802(f); 42 U.S.C. 

803(f); 31 U.S.C. 321; 12 U.S.C. 5701–5710; 

Division N, Title V, Subtitle B, Pub. L. 116– 

260, 134 Stat. 1182 (12 U.S.C. 4703a); Section 

104A, Pub. L. 103–325, 108 Stat. 2160, as 

amended (12 U.S.C. 4701 et seq.); Pub. L. 

117–2, 135 Stat. 4 (42 U.S.C. 802 et seq.). 

■ 2. Revise Subpart A to read as follows: 

Subpart A—Coronavirus State and 

Local Fiscal Recovery Funds 

Sec. 

35.1 Purpose. 

35.2 Applicability. 

35.3 Definitions. 

35.4 Reservation of authority, reporting. 

35.5 Use of funds. 

35.6 Eligible uses. 

35.7 Pensions. 

35.8 Tax. 

35.9 Compliance with applicable laws. 

35.10 Recoupment. 

35.11 Payments to States. 

35.12 Distributions to nonentitlement units 

of local government and units of general 

local government. 

Authority: 42 U.S.C. 802(f); 42 U.S.C. 

803(f); section 102(c) of Division LL of the 

Consolidated Appropriations Act, 2023 (Pub. 

L. 117–328). 

§ 35.1 Purpose. 

This part implements sections 602 

and 603 of the Social Security Act, as 

added by section 9901 of the American 

Rescue Plan Act (Subtitle M of Title IX 

of Pub. L. 117–2) and amended by 

section 102 of Division LL of the 

Consolidated Appropriations Act, 2023 

(Pub. L. 117–328). 

§ 35.2 Applicability. 

This part applies to states, territories, 

Tribal governments, metropolitan cities, 

nonentitlement units of local 

government, counties, and units of 

general local government that accept a 


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payment or transfer of funds made 

under section 602 or 603 of the Social 

Security Act. 

§ 35.3 Definitions. 

Baseline means tax revenue of the 

recipient for its fiscal year ending in 

2019, adjusted for inflation in each 

reporting year using the Bureau of 

Economic Analysis’s Implicit Price 

Deflator for the gross domestic product 

of the United States. 

Capital expenditures has the same 

meaning given in 2 CFR 200.1. 

County means a county, parish, or 

other equivalent county division (as 

defined by the Census Bureau). 

Covered benefits include, but are not 

limited to, the costs of all types of leave 

(vacation, family-related, sick, military, 

bereavement, sabbatical, jury duty), 

employee insurance (health, life, dental, 

vision), retirement (pensions, 401(k)), 

unemployment benefit plans (Federal 

and State), workers’ compensation 

insurance, and Federal Insurance 

Contributions Act taxes (which includes 

Social Security and Medicare taxes). 

Covered change means a change in 

law, regulation, or administrative 

interpretation that reduces any tax (by 

providing for a reduction in a rate, a 

rebate, a deduction, a credit, or 

otherwise) or delays the imposition of 

any tax or tax increase. A change in law 

includes any final legislative or 

regulatory action, a new or changed 

administrative interpretation, and the 

phase-in or taking effect of any statute 

or rule if the phase-in or taking effect 

was not prescribed prior to the start of 

the covered period. 

Covered period means, with respect to 

a state or territory, the period that: 

(1) Begins on March 3, 2021; and 

(2) Ends on the last day of the fiscal 

year of such State or territory in which 

all funds received by the State or 

territory from a payment made under 

section 602 or 603 of the Social Security 

Act have been expended or returned to, 

or recovered by, the Secretary. 

COVID–19 means the Coronavirus 

Disease 2019. 

COVID–19 public health emergency 

means the period beginning on January 

27, 2020, and lasting until the 

termination of the national emergency 

concerning the COVID–19 outbreak 

declared pursuant to the National 

Emergencies Act (50 U.S.C. 1601 et 

seq.). 

Delivery sequence means the order in 

which disaster relief agencies and 

organizations provide assistance 

pursuant to 44 CFR 206.191. 

Deposit means an extraordinary 

payment of an accrued, unfunded 

liability. The term deposit does not refer 

to routine contributions made by an 

employer to pension funds as part of the 

employer’s obligations related to 

payroll, such as either a pension 

contribution consisting of a normal cost 

component related to current employees 

or a component addressing the 

amortization of unfunded liabilities 

calculated by reference to the 

employer’s payroll costs. 

Disaster loss means a loss suffered as 

a result of a major disaster or emergency 

declared under section 401 of the Robert 

T. Stafford Disaster Relief and 

Emergency Assistance Act (42 U.S.C. 

5170). 

Eligible employer means an employer 

of an eligible worker who performs 

essential work. 

Eligible workers means workers 

needed to maintain continuity of 

operations of essential critical 

infrastructure sectors, including health 

care; emergency response; sanitation, 

disinfection, and cleaning work; 

maintenance work; grocery stores, 

restaurants, food production, and food 

delivery; pharmacy; biomedical 

research; behavioral health work; 

medical testing and diagnostics; homeand community-based health care or 

assistance with activities of daily living; 

family or childcare; social services 

work; public health work; vital services 

to Tribes; any work performed by an 

employee of a State, local, or Tribal 

government; educational work, school 

nutrition work, and other work required 

to operate a school facility; laundry 

work; elections work; solid waste or 

hazardous materials management, 

response, and cleanup work; work 

requiring physical interaction with 

patients; dental care work; 

transportation and warehousing; work at 

hotel and commercial lodging facilities 

that are used for COVID–19 mitigation 

and containment; work in a mortuary; 

and work in critical clinical research, 

development, and testing necessary for 

COVID–19 response. 

(1) With respect to a recipient that is 

a metropolitan city, nonentitlement unit 

of local government, or county, workers 

in any additional non-public sectors as 

each chief executive officer of such 

recipient may designate as critical to 

protect the health and well-being of the 

residents of their metropolitan city, 

nonentitlement unit of local 

government, or county; or 

(2) With respect to a State, territory, 

or Tribal government, workers in any 

additional non-public sectors as each 

Governor of a State or territory, or each 

Tribal government, may designate as 

critical to protect the health and wellbeing of the residents of their State, 

territory, or Tribal government. 

Emergency relief means assistance 

that is needed to save lives and to 

protect property and public health and 

safety, or to lessen or avert the threat of 

catastrophe. 

Essential work means work that: 

(1) Is not performed while 

teleworking from a residence; and 

(2) Involves: 

(i) Regular in-person interactions with 

patients, the public, or coworkers of the 

individual that is performing the work; 

or 

(ii) Regular physical handling of items 

that were handled by, or are to be 

handled by patients, the public, or 

coworkers of the individual that is 

performing the work. 

Funds means, with respect to a 

recipient, amounts provided to the 

recipient pursuant to a payment made 

under section 602(b) or 603(b) of the 

Social Security Act or transferred to the 

recipient pursuant to section 603(c)(4) 

of the Social Security Act. 

General revenue means money that is 

received from tax revenue, current 

charges, and miscellaneous general 

revenue, excluding refunds and other 

correcting transactions and proceeds 

from issuance of debt or the sale of 

investments, agency or private trust 

transactions, and intergovernmental 

transfers from the Federal Government, 

including transfers made pursuant to 

section 9901 of the American Rescue 

Plan Act. General revenue also includes 

revenue from liquor stores that are 

owned and operated by state and local 

governments. General revenue does not 

include revenues from utilities, except 

recipients may choose to include 

revenue from utilities that are part of 

their own government as general 

revenue provided the recipient does so 

consistently over the remainder of the 

period of performance. Revenue from 

Tribal business enterprises must be 

included in general revenue. 

Infrastructure Investment and Jobs 

Act means the Infrastructure Investment 

and Jobs Act, Public Law 117–58, 135 

Stat. 429 (Nov. 15, 2021). 

Intergovernmental transfers means 

money received from other 

governments, including grants and 

shared taxes. 

Low-income household means a 

household with: 

(1) Income at or below 185 percent of 

the Federal Poverty Guidelines for the 

size of its household based on the 

poverty guidelines published most 

recently by the Department of Health 

and Human Services; or 

(2) Income at or below 40 percent of 

the Area Median Income for its county 

and size of household based on data 

published most recently by the 


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Department of Housing and Urban 

Development. 

Micro-business means a small 

business that has five or fewer 

employees, one or more of whom owns 

the small business. 

Moderate-income household means a 

household with: 

(1) Income at or below 300 percent of 

the Federal Poverty Guidelines for the 

size of its household based on poverty 

guidelines published most recently by 

the Department of Health and Human 

Services; or 

(2) Income at or below 65 percent of 

the Area Median Income for its county 

and size of household based on data 

published most recently by the 

Department of Housing and Urban 

Development. 

Metropolitan city has the meaning 

given that term in section 102(a)(4) of 

the Housing and Community 

Development Act of 1974 (42 U.S.C. 

5302(a)(4)) and includes cities that 

relinquish or defer their status as a 

metropolitan city for purposes of 

receiving allocations under section 106 

of such Act (42 U.S.C. 5306) for fiscal 

year 2021. 

Natural disaster means any hurricane, 

tornado, storm, flood, high water, winddriven water, tidal wave, tsunami, 

earthquake, volcanic eruption, 

landslide, mudslide, snowstorm, 

drought, or fire, in each case attributable 

to natural causes, that causes or may 

cause substantial damage, injury, or 

imminent threat to civilian property or 

persons. ‘‘Natural disaster’’ may also 

include another type of natural 

catastrophe, attributable to natural 

causes, that causes or may cause 

substantial damage, injury, or imminent 

threat to civilian property or persons. 

Net reduction in total spending is 

measured as the State or territory’s total 

spending for a given reporting year 

excluding its spending of funds, 

subtracted from its total spending for its 

fiscal year ending in 2019, adjusted for 

inflation using the Bureau of Economic 

Analysis’s Implicit Price Deflator for the 

gross domestic product of the United 

States for that reporting year. 

Nonentitlement unit of local 

government means a ‘‘city,’’ as that term 

is defined in section 102(a)(5) of the 

Housing and Community Development 

Act of 1974 (42 U.S.C. 5302(a)(5)), that 

is not a metropolitan city. 

Nonprofit means a nonprofit 

organization that is exempt from Federal 

income taxation and that is described in 

section 501(c)(3) or 501(c)(19) of the 

Internal Revenue Code. 

Obligation means an order placed for 

property and services and entering into 

contracts, subawards, and similar 

transactions that require payment. 

Operating expenses means costs 

necessary to operate and manage a 

public transportation system, including 

driver salaries, fuel, and items having a 

useful life of less than one year. 

Operating expenses do not include 

preventive maintenance activities. 

Pension fund means a defined benefit 

plan and does not include a defined 

contribution plan. 

Period of performance means the time 

period described in § 35.5 during which 

a recipient may obligate and expend 

funds in accordance with sections 

602(c)(1), 602(c)(5)(E), 603(c)(1), and 

603(c)(6)(D) of the Social Security Act 

and this subpart. 

Premium pay means an amount of up 

to $13 per hour that is paid to an 

eligible worker, in addition to wages or 

remuneration the eligible worker 

otherwise receives, for all work 

performed by the eligible worker during 

the COVID–19 public health emergency. 

Such amount may not exceed $25,000 in 

total over the period of performance 

with respect to any single eligible 

worker. Premium pay may be awarded 

to non-hourly and part-time eligible 

workers performing essential work. 

Premium pay will be considered to be 

in addition to wages or remuneration 

the eligible worker otherwise receives if, 

as measured on an hourly rate, the 

premium pay is: 

(1) With regard to work that the 

eligible worker previously performed, 

pay and remuneration equal to the sum 

of all wages and remuneration 

previously received plus up to $13 per 

hour with no reduction, substitution, 

offset, or other diminishment of the 

eligible worker’s previous, current, or 

prospective wages or remuneration; or 

(2) With regard to work that the 

eligible worker continues to perform, 

pay of up to $13 per hour that is in 

addition to the eligible worker’s regular 

rate of wages or remuneration, with no 

reduction, substitution, offset, or other 

diminishment of the worker’s current 

and prospective wages or remuneration. 

Qualified census tract has the same 

meaning given in 26 U.S.C. 

42(d)(5)(B)(ii)(I). 

Recipient means a State, territory, 

Tribal government, metropolitan city, 

nonentitlement unit of local 

government, county, or unit of general 

local government that receives a 

payment made under section 602(b) or 

603(b) of the Social Security Act or 

transfer pursuant to section 603(c)(4) of 

the Social Security Act. 

Reporting year means a single year or 

partial year within the covered period, 

aligned to the current fiscal year of the 

State or territory during the covered 

period. 

Secretary means the Secretary of the 

Treasury. 

State means each of the 50 States and 

the District of Columbia. 

Small business means a business 

concern or other organization that: 

(1) Has no more than 500 employees 

or, if applicable, the size standard in 

number of employees established by the 

Administrator of the Small Business 

Administration for the industry in 

which the business concern or 

organization operates, and 

(2) Is a small business concern as 

defined in section 3 of the Small 

Business Act (15 U.S.C. 632). 

Surface Transportation project means 

any of the following: 

(1) A project eligible under 23 U.S.C. 

117; 

(2) A project eligible under 23 U.S.C. 

119; 

(3) A project eligible under 23 U.S.C. 

124, as added by the Infrastructure 

Investment and Jobs Act; 

(4) A project eligible under 23 U.S.C. 

133; 

(5) An activity to carry out 23 U.S.C. 

134; 

(6) A project eligible under 23 U.S.C. 

148; 

(7) A project eligible under 23 U.S.C. 

149; 

(8) A project eligible under 23 U.S.C. 

151(f), as added by the Infrastructure 

Investment and Jobs Act; 

(9) A project eligible under 23 U.S.C. 

165; 

(10) A project eligible under 23 U.S.C. 

167; 

(11) A project eligible under 23 U.S.C. 

173, as added by the Infrastructure 

Investment and Jobs Act; 

(12) A project eligible under 23 U.S.C. 

175, as added by the Infrastructure 

Investment and Jobs Act; 

(13) A project eligible under 23 U.S.C. 

176, as added by the Infrastructure 

Investment and Jobs Act; 

(14) A project eligible under 23 U.S.C. 

202; 

(15) A project eligible under 23 U.S.C. 

203; 

(16) A project eligible under 23 U.S.C. 

204; 

(17) A project eligible under the 

program for national infrastructure 

investments commonly known as the 

‘‘Rebuilding American Infrastructure 

with Sustainability and Equity’’ grant 

program; 

(18) A project eligible for credit 

assistance under the Transportation 

Infrastructure Finance and Innovation 

Act program under 23 U.S.C. chapter 6; 

(19) A project that furthers the 

completion of a designated route of the 


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Appalachian Development Highway 

System under 40 U.S.C. 14501; 

(20) A project eligible under 49 U.S.C. 

5307; 

(21) A project eligible under 49 U.S.C. 

5309; 

(22) A project eligible under 49 U.S.C. 

5311; 

(23) A project eligible under 49 U.S.C. 

5337; 

(24) A project eligible under 49 U.S.C. 

5339; 

(25) A project eligible under 49 U.S.C. 

6703, as added by the Infrastructure 

Investment and Jobs Act; 

(26) A project eligible under the 

bridge replacement, rehabilitation, 

preservation, protection, and 

construction program under paragraph 

(1) under the heading ‘HIGHWAY 

INFRASTRUCTURE PROGRAM’ under 

the heading ‘FEDERAL HIGHWAY 

ADMINISTRATION’ under the heading 

‘DEPARTMENT OF 

TRANSPORTATION’ under title VIII of 

division J of the Infrastructure 

Investment and Jobs Act; and 

(27) A project eligible under 49 U.S.C. 

6701 for the purpose set forth in 

§ 35.6(h)(1)(i)(C). 

Tax revenue means revenue received 

from a compulsory contribution that is 

exacted by a government for public 

purposes excluding refunds and 

corrections and, for purposes of § 35.8, 

intergovernmental transfers. Tax 

revenue does not include payments for 

a special privilege granted or service 

rendered, employee or employer 

assessments and contributions to 

finance retirement and social insurance 

trust systems, or special assessments to 

pay for capital improvements. 

Territory means the Commonwealth 

of Puerto Rico, the United States Virgin 

Islands, Guam, the Commonwealth of 

the Northern Mariana Islands, or 

American Samoa. 

Title I eligible schools means schools 

eligible to receive services under section 

1113 of Title I, Part A of the Elementary 

and Secondary Education Act of 1965, 

as amended (20 U.S.C. 6313), including 

schools served under section 

1113(b)(1)(C) of that Act. 

Title I project means an activity 

eligible under section 105(a) of the 

Housing and Community Development 

Act of 1974 (42 U.S.C. 5305(a)). 

Tribal enterprise means a business 

concern: 

(1) That is wholly owned by one or 

more Tribal governments, or by a 

corporation that is wholly owned by one 

or more Tribal governments; or 

(2) That is owned in part by one or 

more Tribal governments, or by a 

corporation that is wholly owned by one 

or more Tribal governments, if all other 

owners are either United States citizens 

or small business concerns, as these 

terms are used and consistent with the 

definitions in 15 U.S.C. 657a(b)(2)(D). 

Tribal government means the 

recognized governing body of any 

Indian or Alaska Native Tribe, band, 

nation, pueblo, village, community, 

component band, or component 

reservation, individually identified 

(including parenthetically) in the list 

published on January 29, 2021, pursuant 

to section 104 of the Federally 

Recognized Indian Tribe List Act of 

1994 (25 U.S.C. 5131). 

Unemployment rate means the U–3 

unemployment rate provided by the 

Bureau of Labor Statistics as part of the 

Local Area Unemployment Statistics 

program, measured as total 

unemployment as a percentage of the 

civilian labor force. 

Unemployment trust fund means an 

unemployment trust fund established 

under section 904 of the Social Security 

Act (42 U.S.C. 1104). 

Unit of general local government has 

the meaning given to that term in 

section 102(a)(1) of the Housing and 

Community Development Act of 1974 

(42 U.S.C. 5302(a)(1)). 

§ 35.4 Reservation of authority, reporting. 

(a) Reservation of authority. Nothing 

in this part shall limit the authority of 

the Secretary to take action to enforce 

conditions or violations of law, 

including actions necessary to prevent 

evasions of this subpart. 

(b) Extensions or accelerations of 

timing. The Secretary may extend or 

accelerate any deadline or compliance 

date of this part, including reporting 

requirements that implement this 

subpart, if the Secretary determines that 

such extension or acceleration is 

appropriate. In determining whether an 

extension or acceleration is appropriate, 

the Secretary will consider the period of 

time that would be extended or 

accelerated and how the modified 

timeline would facilitate compliance 

with this subpart. 

(c) Reporting and requests for other 

information. During the period of 

performance, recipients shall provide to 

the Secretary or her delegate, as 

applicable, periodic reports providing 

detailed accounting of the uses of funds, 

modifications to a State or Territory’s 

tax revenue sources, and such other 

information as the Secretary or her 

delegate, as applicable, may require for 

the administration of this section. In 

addition to regular reporting 

requirements, the Secretary may request 

other additional information as may be 

necessary or appropriate, including as 

may be necessary to prevent evasions of 

the requirements of this subpart. False 

statements or claims made to the 

Secretary may result in criminal, civil, 

or administrative sanctions, including 

fines, imprisonment, civil damages and 

penalties, debarment from participating 

in Federal awards or contracts, and/or 

any other remedy available by law. 

§ 35.5 Use of funds. 

(a) In general. A recipient may only 

use funds for the purposes enumerated 

in § 35.6 (b) through (f) to cover costs 

incurred during the period beginning 

March 3, 2021, and ending December 

31, 2024, subject to the restrictions set 

forth in sections 602(c)(2) and 603(c)(2) 

of the Social Security Act, as applicable. 

A recipient may only use funds for the 

purposes enumerated in § 35.6 (g) 

through (h) to cover costs incurred 

during the period beginning December 

29, 2022, and ending December 31, 

2024, subject to the restrictions set forth 

in sections 602(c)(2), 602(c)(5)(C), 

603(c)(2), and 603(c)(6)(B) of the Social 

Security Act, as applicable. 

(b) Costs incurred. A cost shall be 

considered to have been incurred for 

purposes of paragraph (a) of this section 

if the recipient has incurred an 

obligation with respect to such cost by 

December 31, 2024. 

(c) Return of funds. A recipient must 

return any funds not obligated by 

December 31, 2024. A recipient must 

return funds obligated for a use 

identified in § 35.6 (b) through (g) by 

December 31, 2024, but not expended 

by December 31, 2026. A recipient must 

return funds obligated for a use 

identified in § 35.6 (h) by December 31, 

2024, but not expended by September 

30, 2026. 

§ 35.6 Eligible uses. 

(a) In general. Subject to §§ 35.7 and 

35.8, a recipient may use funds for one 

or more of the purposes described in 

paragraphs (b) through (h) of this 

section. 

(b) Responding to the public health 

emergency or its negative economic 

impacts. A recipient may use funds to 

respond to the public health emergency 

or its negative economic impacts if the 

use meets the criteria provided in 

paragraph (b)(1) of this section or is 

enumerated in paragraph (b)(3) of this 

section; provided that, in the case of a 

use of funds for a capital expenditure 

under paragraph (b)(1) or (b)(3) of this 

section, the use of funds must also meet 

the criteria provided in paragraph (b)(4) 

of this section. Treasury may also 

articulate additional eligible programs, 

services, or capital expenditures from 

time to time that satisfy the eligibility 

criteria of this paragraph (b), which 


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shall be eligible under this paragraph 

(b). 

(1) Identifying eligible responses to 

the public health emergency or its 

negative economic impacts. 

(i) A program, service, or capital 

expenditure is eligible under this 

paragraph (b)(1) if a recipient identifies 

a harm or impact to a beneficiary or 

class of beneficiaries caused or 

exacerbated by the public health 

emergency or its negative economic 

impacts and the program, service, or 

capital expenditure responds to such 

harm. 

(ii) A program, service, or capital 

expenditure responds to a harm or 

impact experienced by an identified 

beneficiary or class of beneficiaries if it 

is reasonably designed to benefit the 

beneficiary or class of beneficiaries that 

experienced the harm or impact and is 

related and reasonably proportional to 

the extent and type of harm or impact 

experienced. 

(2) Identified harms: presumptions of 

impacted and disproportionately 

impacted beneficiaries. A recipient may 

rely on the following presumptions to 

identify beneficiaries presumptively 

impacted or disproportionately 

impacted by the public health 

emergency or its negative economic 

impacts for the purpose of providing a 

response under paragraph (b)(1) or (b)(3) 

of this section: 

(i) Households or populations that 

experienced unemployment; 

experienced increased food or housing 

insecurity; qualify for the Children’s 

Health Insurance Program (42 U.S.C. 

1397aa et seq.), Childcare Subsidies 

through the Child Care and 

Development Fund Program (42 U.S.C. 

9857 et seq. and 42 U.S.C. 618), or 

Medicaid (42 U.S.C. 1396 et seq.); if 

funds are to be used for affordable 

housing programs, qualify for the 

National Housing Trust Fund (12 U.S.C. 

4568) or the Home Investment 

Partnerships Program (42 U.S.C. 12721 

et seq.); if funds are to be used to 

address impacts of lost instructional 

time for students in kindergarten 

through twelfth grade, any student who 

did not have access to in-person 

instruction for a significant period of 

time; and low- and moderate-income 

households and populations are 

presumed to be impacted by the public 

health emergency or its negative 

economic impacts; 

(ii) The general public is presumed to 

be impacted by the public health 

emergency for the purposes of providing 

the uses set forth in paragraphs 

(b)(3)(i)(A) and (b)(3)(i)(C) of this 

section; and 

(iii) The following households, 

communities, small businesses, and 

nonprofit organizations are presumed to 

be disproportionately impacted by the 

public health emergency or its negative 

economic impacts: 

(A) Households and populations 

residing in a qualified census tract; 

households and populations receiving 

services provided by Tribal 

governments; households and 

populations residing in the territories; 

households and populations receiving 

services provided by territorial 

governments; low-income households 

and populations; households that 

qualify for Temporary Assistance for 

Needy Families (42 U.S.C. 601 et seq.), 

the Supplemental Nutrition Assistance 

Program (7 U.S.C. 2011 et seq.), Free 

and Reduced Price School Lunch and/ 

or Breakfast programs (42 U.S.C. 1751 et 

seq. and 42 U.S.C. 1773), Medicare Part 

D Low-income Subsidies (42 U.S.C. 

1395w-114), Supplemental Security 

Income (42 U.S.C. 1381 et seq.), Head 

Start (42 U.S.C. 9831 et seq.), Early Head 

Start (42 U.S.C. 9831 et seq.), the 

Special Supplemental Nutrition 

Program for Women, Infants, and 

Children (42 U.S.C. 1786), Section 8 

Vouchers (42 U.S.C. 1437f), the LowIncome Home Energy Assistance 

Program (42 U.S.C. 8621 et seq.), Pell 

Grants (20 U.S.C. 1070a), and, if SLFRF 

funds are to be used for services to 

address educational disparities, Title I 

eligible schools; 

(B) Small businesses operating in a 

qualified census tract, operated by 

Tribal governments or on Tribal lands, 

or operating in the territories; and 

(C) Nonprofit organizations operating 

in a qualified census tract, operated by 

Tribal governments or on Tribal lands, 

or operating in the territories. 

(3) Enumerated eligible uses: 

responses presumed reasonably 

proportional. A recipient may use funds 

to respond to the public health 

emergency or its negative economic 

impacts on a beneficiary or class of 

beneficiaries for one or more of the 

following purposes unless such use is 

grossly disproportionate to the harm 

caused or exacerbated by the public 

health emergency or its negative 

economic impacts: 

(i) Responding to the public health 

impacts of the public health emergency 

for purposes including: 

(A) COVID–19 mitigation and 

prevention in a manner that is 

consistent with recommendations and 

guidance from the Centers for Disease 

Control and Prevention, including 

vaccination programs and incentives; 

testing programs; contact tracing; 

isolation and quarantine; mitigation and 

prevention practices in congregate 

settings; acquisition and distribution of 

medical equipment for prevention and 

treatment of COVID–19, including 

personal protective equipment; COVID– 

19 prevention and treatment expenses 

for public hospitals or health care 

facilities, including temporary medical 

facilities; establishing or enhancing 

public health data systems; installation 

and improvement of ventilation systems 

in congregate settings, health facilities, 

or other public facilities; and assistance 

to small businesses, nonprofits, or 

impacted industries to implement 

mitigation measures; 

(B) Medical expenses related to 

testing and treating COVID–19 that are 

provided in a manner consistent with 

recommendations and guidance from 

the Centers for Disease Control and 

Prevention, including emergency 

medical response expenses, treatment of 

long-term symptoms or effects of 

COVID–19, and costs to medical 

providers or to individuals for testing or 

treating COVID–19; 

(C) Behavioral health care, including 

prevention, treatment, emergency or 

first-responder programs, harm 

reduction, supports for long-term 

recovery, and behavioral health 

facilities and equipment; and 

(D) Preventing and responding to 

increased violence resulting from the 

public health emergency, including 

community violence intervention 

programs, or responding to increased 

gun violence resulting from the public 

health emergency, including payroll and 

covered benefits associated with 

community policing strategies; 

enforcement efforts to reduce gun 

violence; and investing in technology 

and equipment; 

(ii) Responding to the negative 

economic impacts of the public health 

emergency for purposes including: 

(A) Assistance to households and 

individuals, including: 

(1) Assistance for food; emergency 

housing needs; burials, home repairs, or 

weatherization; internet access or digital 

literacy; cash assistance; and assistance 

accessing public benefits; 

(2) Paid sick, medical, or family leave 

programs, or assistance to expand access 

to health insurance; 

(3) Childcare, early learning services, 

home visiting, or assistance for child 

welfare-involved families or foster 

youth; 

(4) Programs to address the impacts of 

lost instructional time for students in 

kindergarten through twelfth grade; 

(5) Development, repair, and 

operation of affordable housing and 

services or programs to increase longterm housing security; 


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(6) Financial services that facilitate 

the delivery of Federal, State, or local 

benefits for unbanked and underbanked 

individuals; 

(7) Benefits for the surviving family 

members of individuals who have died 

from COVID–19, including cash 

assistance to surviving spouses or 

dependents of individuals who died of 

COVID–19; 

(8) Assistance for individuals who 

want and are available for work, 

including those who are unemployed, 

have looked for work sometime in the 

past 12 months, who are employed part 

time but who want and are available for 

full-time work, or who are employed but 

seeking a position with greater 

opportunities for economic 

advancement; 

(9) Facilities and equipment related to 

the provision of services to households 

provided in paragraphs (b)(3)(ii)(A)(1) 

through(8) of this section; 

(10) The following expenses related to 

Unemployment Trust Funds: 

(i) Contributions to a recipient 

Unemployment Trust Fund and 

repayment of principal amounts due on 

advances received under Title XII of the 

Social Security Act (42 U.S.C. 1321) up 

to an amount equal to (a) the difference 

between the balance in the recipient’s 

Unemployment Trust Fund as of 

January 27, 2020, and the balance of 

such account as of May 17, 2021, plus 

(b) the principal amount outstanding as 

of May 17, 2021, on any advances 

received under Title XII of the Social 

Security Act between January 27, 2020, 

and May 17, 2021; provided that if a 

recipient repays principal on Title XII 

advances or makes a contribution to an 

Unemployment Trust Fund after April 

1, 2022, such recipient shall not reduce 

average weekly benefit amounts or 

maximum benefit entitlements prior to 

December 31, 2024; and 

(ii) Any interest due on such advances 

received under Title XII of the Social 

Security Act (42 U.S.C. 1321); and 

(11) A program, service, capital 

expenditure, or other assistance that is 

provided to a disproportionately 

impacted household, population, or 

community, including: 

(i) Services to address health 

disparities of the disproportionately 

impacted household, population, or 

community; 

(ii) Housing vouchers and relocation 

assistance; 

(iii) Investments in communities to 

promote improved health outcomes and 

public safety such as parks, recreation 

facilities, and programs that increase 

access to healthy foods; 

(iv) Capital expenditures and other 

services to address vacant or abandoned 

properties; 

(v) Services to address educational 

disparities; and 

(vi) Facilities and equipment related 

to the provision of these services to the 

disproportionately impacted household, 

population, or community. 

(B) Assistance to small businesses, 

including: 

(1) Programs, services, or capital 

expenditures that respond to the 

negative economic impacts of the 

COVID–19 public health emergency, 

including loans or grants to mitigate 

financial hardship such as declines in 

revenues or impacts of periods of 

business closure, or providing technical 

assistance; and 

(2) A program, service, capital 

expenditure, or other assistance that 

responds to disproportionately 

impacted small businesses, including 

rehabilitation of commercial properties; 

storefront and fac ̧ade improvements; 

technical assistance, business 

incubators, and grants for start-ups or 

expansion costs for small businesses; 

and programs or services to support 

micro-businesses; 

(C) Assistance to nonprofit 

organizations including programs, 

services, or capital expenditures, 

including loans or grants to mitigate 

financial hardship such as declines in 

revenues or increased costs, or technical 

assistance; 

(D) Assistance to tourism, travel, 

hospitality, and other impacted 

industries for programs, services, or 

capital expenditures, including support 

for payroll costs and covered benefits 

for employees, compensating returning 

employees, support for operations and 

maintenance of existing equipment and 

facilities, and technical assistance; and 

(E) Expenses to support public sector 

capacity and workforce, including: 

(1) Payroll and covered benefit 

expenses for public safety, public 

health, health care, human services, and 

similar employees to the extent that the 

employee’s time is spent mitigating or 

responding to the COVID–19 public 

health emergency; 

(2) Payroll, covered benefit, and other 

costs associated with programs or 

services to support the public sector 

workforce and with the recipient: 

(i) Hiring or rehiring staff to fill 

budgeted full-time equivalent positions 

that existed on January 27, 2020, but 

that were unfilled or eliminated as of 

March 3, 2021; or 

(ii) Increasing the number of its 

budgeted full-time equivalent 

employees by up to the difference 

between the number of its budgeted fulltime equivalent employees on January 

27, 2020, multiplied by 1.075, and the 

number of its budgeted full-time 

equivalent employees on March 3, 2021, 

provided that funds shall only be used 

for additional budgeted full-time 

equivalent employees above the 

recipient’s number of budgeted full-time 

equivalent employees as of March 3, 

2021; 

(3) Costs to improve the design and 

execution of programs responding to the 

COVID–19 pandemic and to administer 

or improve the efficacy of programs 

addressing the public health emergency 

or its negative economic impacts; and 

(4) Costs associated with addressing 

administrative needs of recipient 

governments that were caused or 

exacerbated by the pandemic. 

(4) Capital expenditures. A recipient, 

other than a Tribal government, must 

prepare a written justification for certain 

capital expenditures according to Table 

1 of paragraph (b) of this section. Such 

written justification must include the 

following elements: 

(i) Describe the harm or need to be 

addressed; 

(ii) Explain why a capital expenditure 

is appropriate; and 

(iii) Compare the proposed capital 

expenditure to at least two alternative 

capital expenditures and demonstrate 

why the proposed capital expenditure is 

superior. 

TABLE 1 TO PARAGRAPH (b) 

If a project has total expected 

capital expenditures of and the use is enumerated in (b)(3), then and the use is not enumerated in (b)(3), then 

Less than $1 million ........................ No Written Justification required ............................... No Written Justification required. 

Greater than or equal to $1 million, 

but less than $10 million.

Written Justification required but recipients are not 

required to submit as part of regular reporting to 

Treasury.

Written Justification required and recipients must 

submit as part of regular reporting to Treasury. 


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TABLE 1 TO PARAGRAPH (b)—Continued 

If a project has total expected 

capital expenditures of and the use is enumerated in (b)(3), then and the use is not enumerated in (b)(3), then 

$10 million or more ......................... Written Justification required and recipients must 

submit as part of regular reporting to Treasury.

(c) Providing premium pay to eligible 

workers. A recipient may use funds to 

provide premium pay to eligible 

workers of the recipient who perform 

essential work or to provide grants to 

eligible employers that have eligible 

workers who perform essential work, 

provided that any premium pay or 

grants provided under this paragraph (c) 

must respond to eligible workers 

performing essential work during the 

COVID–19 public health emergency. A 

recipient uses premium pay or grants 

provided under this paragraph (c) to 

respond to eligible workers performing 

essential work during the COVID–19 

public health emergency if: 

(1) The eligible worker’s total wages 

and remuneration, including the 

premium pay, is less than or equal to 

150 percent of the greater of such 

eligible worker’s residing State’s or 

county’s average annual wage for all 

occupations as defined by the Bureau of 

Labor Statistics’ Occupational 

Employment and Wage Statistics; 

(2) The eligible worker is not exempt 

from the Fair Labor Standards Act 

overtime provisions (29 U.S.C. 207); or 

(3) The recipient has submitted to the 

Secretary a written justification that 

explains how providing premium pay to 

the eligible worker is responsive to the 

eligible worker performing essential 

work during the COVID–19 public 

health emergency (such as a description 

of the eligible workers’ duties, health, or 

financial risks faced due to COVID–19, 

and why the recipient determined that 

the premium pay was responsive 

despite the worker’s higher income). 

(d) Providing government services. A 

recipient may use funds for the 

provision of government services up to 

an amount equal to the greater of: 

(1) $10,000,000; or 

(2) the amount of the reduction in the 

recipient’s general revenue due to the 

COVID–19 public health emergency, 

which equals the sum of the reduction 

in revenue, calculated as of each date 

identified in paragraph (d)(2)(i) of this 

section and according to the formula in 

paragraph (d)(2)(ii) of this section: 

(i) A recipient must make a one-time 

election to calculate the reduction in its 

general revenue using information as of 

either: 

(A) December 31, 2020, December 31, 

2021, December 31, 2022, and December 

31, 2023; or 

(B) The last day of each of the 

recipient’s fiscal years ending in 2020, 

2021, 2022, and 2023. 

(ii) A reduction in a recipient’s 

general revenue for each date identified 

in paragraph (d)(2)(i) equals: 

Max {[Base Year Revenue* (1 + Growth 

Adjustment)∧(nt/12)]¥Actual 

General Revenue; 0} 

Where: 

(A) Base Year Revenue is the 

recipient’s general revenue for the most 

recent full fiscal year prior to the 

COVID–19 public health emergency; 

(B) Growth Adjustment is equal to the 

greater of 5.2 percent (or 0.052) and the 

recipient’s average annual revenue 

growth over the three full fiscal years 

prior to the COVID–19 public health 

emergency; 

(C) n equals the number of months 

elapsed from the end of the base year to 

the calculation date; 

(D) Subscript t denotes the specific 

calculation date; and 

(E) Actual General Revenue is a 

recipient’s actual general revenue 

collected during the 12-month period 

ending on each calculation date 

identified in paragraph (d)(2)(i) of this 

section, except: 

(1) For purposes of all calculation 

dates on or after April 1, 2022, in the 

case of any change made after January 

6, 2022, to any law, regulation, or 

administrative interpretation that 

reduces any tax (by providing for a 

reduction in a rate, a rebate, a 

deduction, a credit, or otherwise) or 

delays the imposition of any tax or tax 

increase and that the recipient assesses 

has had the effect of decreasing the 

amount of tax revenue collected during 

the 12-month period ending on the 

calculation date relative to the amount 

of tax revenue that would have been 

collected in the absence of such change, 

the recipient must add to actual general 

revenue the amount of such decrease in 

tax revenue; 

(2) For purposes of any calculation 

date on or after April 1, 2022, in the 

case of any change made after January 

6, 2022, to any law, regulation, or 

administrative interpretation that 

increases any tax (by providing for an 

increase in a rate, the reduction of a 

rebate, a deduction, or a credit, or 

otherwise) or accelerates the imposition 

of any tax or tax increase and that the 

recipient assesses has had the effect of 

increasing the amount of tax revenue 

collected during the 12-month period 

ending on the calculation date relative 

to the amount of tax revenue that would 

have been collected in the absence of 

such change, the recipient must subtract 

from actual general revenue the amount 

of such increase in tax revenue; and 

(3) If the recipient makes a one-time 

election to adjust general revenue to 

reflect tax changes made during the 

period beginning on January 27, 2020 

and ending on January 6, 2022, for 

purposes of each calculation date 

identified in paragraph (d)(2)(i) of this 

section: 

(i) In the case of any change made 

during such prior period to any law, 

regulation, or administrative 

interpretation that reduces any tax (by 

providing for a reduction in a rate, a 

rebate, a deduction, a credit, or 

otherwise) or delays the imposition of 

any tax or tax increase and that the 

recipient assesses has had the effect of 

decreasing the amount of tax revenue 

collected during the 12-month period 

ending on the calculation date relative 

to the amount of tax revenue that would 

have been collected in the absence of 

such change, the recipient must add to 

actual general revenue the amount of 

such decrease in tax revenue; and 

(ii) In the case of any change made 

during such prior period to any law, 

regulation, or administrative 

interpretation that increases any tax (by 

providing for an increase in a rate, the 

reduction of a rebate, a deduction, or a 

credit, or otherwise) or accelerates the 

imposition of any tax or tax increase 

and that the recipient assesses has had 

the effect of increasing the amount of 

tax revenue collected during the 12- 

month period ending on the calculation 

date relative to the amount of tax 

revenue that would have been collected 

in the absence of such change, the 

recipient must subtract from actual 

general revenue the amount of such 

increase in tax revenue; and 

(4) With respect to any calculation 

date during the period beginning on 

January 6, 2022, and ending on March 

31, 2022, if the recipient makes the 


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election in paragraph (d)(3) of this 

section, the recipient must also make 

the adjustments referenced in paragraph 

(d)(3) of this section with respect to any 

such changes in law, regulation, or 

administrative interpretation during the 

period beginning on January 6, 2022, 

and ending on such calculation date. 

(e) Making necessary investments in 

water, sewer, and broadband 

infrastructure. A recipient may use 

funds to make the following 

investments in water, sewer, and 

broadband infrastructure. 

(1) Water and sewer investments—(i) 

Clean Water State Revolving Fund 

projects. Projects or activities of the type 

that meet the eligibility requirements of 

section 603(c) of the Federal Water 

Pollution Control Act (33 U.S.C. 

1383(c)); 

(ii) Additional stormwater projects. 

Projects to manage, reduce, treat, or 

recapture stormwater or subsurface 

drainage water regardless of whether 

such projects would improve water 

quality if such projects would otherwise 

meet the eligibility requirements of 

section 603(c)(5) of the Federal Water 

Pollution Control Act (33 U.S.C. 

1383(c)(5)); 

(iii) Drinking Water State Revolving 

Fund projects. Projects or activities of 

the type that meet the eligibility 

requirements of section 1452 of the Safe 

Drinking Water Act (42 U.S.C. 300j–12) 

as implemented by the regulations 

adopted by the Environmental 

Protection Agency (EPA) under 40 CFR 

35.3520, provided that: 

(A) The recipient is not required to 

comply with the limitation under 40 

CFR 35.3520(c)(2) to acquisitions of 

land from willing sellers or the 

prohibition under 40 CFR 35.3520(e)(6) 

on uses of funds for certain Tribal 

projects; and 

(B) In the case of lead service line 

replacement projects, the recipient must 

replace the full length of the service line 

and may not replace only a partial 

portion of the service line. 

(iv) Additional lead remediation and 

household water quality testing. Projects 

or activities to address lead in drinking 

water or provide household water 

quality testing that are within the scope 

of the programs the EPA is authorized 

to establish under sections 1459A(b)(2), 

1459B(b)(1), 1464(d)(2), and 1465 of the 

Safe Drinking Water Act (42 U.S.C. 

300j–19a(b)(2), 300j–19b(b)(1), 300j– 

24(d)(2), and 300j–25), provided that: 

(A) In the case of lead service line 

replacement projects, the recipient must 

replace the full length of the service line 

and may not replace only a partial 

portion of the service line; and 

(B) In the case of projects within the 

scope of the program the EPA is 

authorized to establish under section 

1459B(b)(1) of the Safe Drinking Water 

Act, the recipient may determine the 

income eligibility of homeowners 

served by lead service line replacement 

projects in its discretion. 

(v) Drinking water projects to support 

increased population. Projects of the 

type that meet the eligibility 

requirements of 40 CFR 35.3520 other 

than the requirement of 40 CFR 

35.3520(b)(1) to address present or 

prevent future violations of health-based 

drinking water standards, if the 

following conditions are met: 

(A) The project is needed to support 

increased population, with need 

assessed as of the time the project is 

undertaken; 

(B) The project is designed to support 

no more than a reasonable level of 

projected increased need, whether due 

to population growth or otherwise; 

(C) The project is a cost-effective 

means for achieving the desired level of 

service; and 

(D) The project is projected to 

continue to provide an adequate level of 

drinking water over its estimated useful 

life. 

(vi) Dams and reservoirs. 

Rehabilitation of dams and reservoirs if 

the following conditions are met: 

(A) The project meets the 

requirements of 40 CFR 35.3520 other 

than the following requirements: 

(1) The prohibition on the 

rehabilitation of dams and reservoirs in 

paragraphs (e)(1) and (e)(3) of 40 CFR 

35.3520; and 

(2) The requirement in paragraph 

(b)(1) of 40 CFR 35.3520 that the project 

is needed to address present or prevent 

future violations of health-based 

drinking water standards, provided that 

if the dam or reservoir project does not 

meet this requirement, the project must 

be needed to support increased 

population, with need assessed as of the 

time the project is undertaken, and the 

project must be projected to continue to 

provide an adequate level of drinking 

water over its estimated useful life; 

(B) The primary purpose of the dam 

or reservoir is for drinking water supply; 

(C) The project is needed for the 

provision of drinking water supply, 

with need assessed as of the time the 

project is initiated; 

(D) The project is designed to support 

no more than a reasonable level of 

projected increased need, whether due 

to population growth or otherwise; and 

(E) The project is a cost-effective 

means for achieving the desired level of 

service. 

(vii) Private wells. Rehabilitation of 

private wells, testing initiatives to 

identify contaminants in private wells, 

and treatment activities and remediation 

projects that address contamination in 

private wells, if the project meets the 

requirements of 40 CFR 35.3520 other 

than the limitation to certain eligible 

systems under paragraph (a) of 40 CFR 

35.3520. 

(2) Broadband investments—(i) 

General. Broadband infrastructure if the 

following conditions are met: 

(A) The broadband infrastructure is 

designed to provide service to 

households and businesses with an 

identified need, as determined by the 

recipient, for such infrastructure; 

(B) The broadband infrastructure is 

designed to, upon completion: 

(1) Reliably meet or exceed 

symmetrical 100 Mbps download speed 

and upload speeds; or 

(2) In cases where it is not practicable, 

because of the excessive cost of the 

project or geography or topography of 

the area to be served by the project, to 

provide service reliably meeting or 

exceeding symmetrical 100 Mbps 

download speed and upload speeds: 

(i) Reliably meet or exceed 100 Mbps 

download speed and between at least 20 

Mbps and 100 Mbps upload speed; and 

(ii) Be scalable to a minimum of 100 

Mbps download speed and 100 Mbps 

upload speed; and 

(C) The service provider for a 

completed broadband infrastructure 

investment project that provides service 

to households is required, for as long as 

the SLFRF-funded broadband 

infrastructure is in use, by the recipient 

to: 

(1) Participate in the Federal 

Communications Commission’s 

Affordable Connectivity Program (ACP) 

through the lifetime of the ACP; or (2) 

Otherwise provide access to a broadbased affordability program to lowincome consumers in the proposed 

service area of the broadband 

infrastructure that provides benefits to 

households commensurate with those 

provided under the ACP through the 

lifetime of the ACP. 

(ii) Cybersecurity infrastructure 

investments. Cybersecurity 

infrastructure investments that are 

designed to improve the reliability and 

resiliency of new and existing 

broadband infrastructure. Such 

investments may include the addition or 

modernization of network security 

hardware and software tools designed to 

strengthen cybersecurity for the endusers of these networks. 

(f) Meeting the non-Federal matching 

requirements for Bureau of Reclamation 

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 

requirements of any authorized Bureau 

of Reclamation project. 

(g) Natural Disaster Emergency Relief. 

Subject to paragraph (g)(3) of this 

section, a recipient may use funds to 

provide emergency relief from the 

physical impacts or negative economic 

impacts of a natural disaster, including 

the forms of emergency relief identified 

in paragraph (g)(2) of this section, if the 

use meets the criteria provided in 

paragraph (g)(1) of this section. 

(1) Identifying emergency relief from 

the physical or negative economic 

impacts of a natural disaster. A 

recipient provides emergency relief 

from the physical impacts or negative 

economic impacts of a natural disaster 

when the recipient: 

(i) Identifies either: 

(A) a natural disaster that has 

occurred or is expected to occur 

imminently and that has been the 

subject of an emergency declaration or 

designation applicable to the recipient’s 

geography and jurisdiction in the form 

of: 

(1) an emergency declaration pursuant 

to the Stafford Act; 

(2) an emergency declaration by the 

Governor of a state pursuant to state 

law; 

(3) an emergency declaration made by 

a Tribal government; or 

(4) a designation as a natural disaster 

by the chief executive (or equivalent) of 

the recipient, provided that the chief 

executive (or equivalent) documents 

that the event meets the definition of 

natural disaster; or 

(B) a natural disaster that is 

threatened to occur in the future, 

provided that the recipient documents 

evidence of historical patterns or 

predictions of natural disasters that 

would reasonably demonstrate the 

likelihood of the future occurrence of a 

natural disaster in the recipient’s 

jurisdiction; and 

(ii) Provides emergency relief that 

responds to and is related and 

reasonably proportional to: 

(A) the physical or negative economic 

impacts of the natural disaster identified 

in paragraph (g)(1)(i)(A) of this section, 

or 

(B) the potential physical or negative 

economic impacts of the natural disaster 

identified in paragraph (g)(1)(i)(B) of 

this section. 

(2) Enumerated eligible uses. A 

recipient may use funds to provide 

emergency relief from 

(i) the physical or negative economic 

impacts of natural disasters identified 

under paragraph (g)(1)(i)(A) of this 

section by engaging in one of the 

following activities, provided that the 

emergency relief is related and 

reasonably proportional to the physical 

or negative economic impacts of the 

natural disaster identified: 

(A) Temporary emergency housing, 

food assistance, and financial assistance 

for lost wages; 

(B) Emergency protective measures, 

including assistance for emergency 

access, medical care and transport, 

emergency operations center related 

costs, and other activities traditionally 

undertaken as part of emergency 

response; 

(C) Debris removal activities, 

including the clearance, removal, and 

disposal of vegetative debris, 

construction and demolition debris, 

sand, mud, silt, gravel, rocks, boulders, 

white goods, and vehicle and vessel 

wreckage; 

(D) Restoration of public 

infrastructure damaged by a natural 

disaster, including roads, bridges, and 

utilities; 

(E) Increased operational costs, 

including payroll costs and costs for 

government facilities and government 

services; 

(F) Cash assistance for uninsured or 

underinsured expenses, and cash 

assistance serving low-income 

households; or 

(G) Home repairs for uninhabitable 

primary residences; or 

(ii) the potential physical or negative 

economic impacts of natural disasters 

identified under paragraph (g)(1)(i)(B) of 

this section by using funds for 

mitigation activities, provided that the 

emergency relief is related and 

reasonably proportional to the potential 

physical or negative economic impacts 

of the natural disaster identified, and 

provided further that if funds are used 

for capital expenditures under this 

paragraph, a recipient, other than a 

Tribal government, must prepare a 

written justification for activities under 

this paragraph (g)(2)(ii) with total 

capital expenditures of $1 million or 

greater. Such written justification must 

include the following elements: 

(A) Describe the emergency relief 

provided by the mitigation activity and 

why it is needed to lessen or avert the 

potential impacts of the natural disaster 

that is threatened to occur in the future; 

(B) Explain why the capital 

expenditure is appropriate to address 

the need for emergency relief; and 

(C) Compare the proposed capital 

expenditure to at least two alternative 

capital expenditures and demonstrate 

why the proposed capital expenditure is 

superior. 

(3) Duplication of benefits. (A) A 

recipient may not provide financial 

assistance under this paragraph (g) to a 

person, business concern, or other entity 

with respect to disaster losses for which 

such beneficiary will receive financial 

assistance under any other program or 

from insurance or any other source. 

(B) A recipient may provide 

assistance with respect to disaster losses 

to a person, business concern, or other 

entity that is or may be entitled to 

receive assistance for those losses from 

another source, if such person, business 

concern, or other entity has not received 

the other benefits by the time of 

application for assistance and the 

person, business concern, or other entity 

agrees to repay any duplicative 

assistance to the recipient. A recipient 

providing assistance with respect to 

disaster losses shall coordinate with the 

relevant Regional Administrator of the 

Federal Emergency Management Agency 

and state disaster-assistance 

administrator. Recipients shall notify 

subrecipients and contractors that, 

when providing assistance with respect 

to disaster losses, those entities are 

responsible for ensuring that 

beneficiaries disclose any other 

assistance received for the same disaster 

losses prior to receiving assistance 

under this paragraph (g). 

(C) Funds shall be used last in the 

delivery sequence unless the recipient, 

in consultation with the appropriate 

Regional Administrator of the Federal 

Emergency Management Agency or state 

disaster-assistance administrator, 

determines that another sequence is 

appropriate. 

(h) Certain infrastructure projects. A 

recipient may use funds for Surface 

Transportation projects as set forth in 

paragraph (h)(1) of this section and for 

Title I projects as set forth in paragraph 

(h)(2) of this section, subject to the 

requirements set forth in paragraph 

(h)(3) of this section. 

(1) Surface Transportation projects. A 

recipient may use funds for Surface 

Transportation projects in the manner 

set forth in paragraph (h)(1)(i) of this 

section, subject to the requirements and 

limitations set forth in paragraph 

(h)(1)(ii) of this section. 

(i)(A) A recipient may use funds to 

expand the scope of, to cover additional 

costs associated with, or to otherwise 

supplement funding for a project 

receiving funding from the Department 

of Transportation at the time that the 

funds are obligated and expended for 

the project. 

(B) A recipient may use funds for a 

Surface Transportation project that is 

not funded by the Department of 

Transportation at the time the funds are 

obligated and expended. 

(C) A recipient may use funds to 

satisfy non-Federal share requirements 


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for a project eligible under the 

provisions identified in paragraphs (1), 

(18), (21), and (27) of the definition of 

‘‘Surface Transportation project’’ in 

§ 35.3 or to repay a loan provided under 

the Transportation Infrastructure 

Finance and Innovation Act program 

under 23 U.S.C. chapter 6. 

(ii) The following limitations and 

requirements apply to funds used for 

Surface Transportation projects under 

paragraphs (h)(1)(i)(A) and (h)(1)(i)(B) of 

this section. 

(A) Funds used for Surface 

Transportation projects eligible under 

the provisions set forth in paragraphs 

(20) through (24) of the definition of 

‘‘Surface Transportation projects’’ in 

§ 35.3 shall not be used for operating 

expenses of such a project. 

(B) Except as otherwise determined by 

the Secretary or the head of the Federal 

agency to which the Secretary has 

delegated authority, the requirements of 

titles 23, 40, and 49 of the U.S. Code, 

and the associated implementing 

regulations, apply to Surface 

Transportation projects, including but 

not limited to the following: 

(1) Project eligibility requirements; 

(2) Project approval requirements, 

provided that such requirements shall 

not apply to Surface Transportation 

projects undertaken pursuant to 

paragraph (h)(1)(i)(B) of this section that 

meet the following criteria: 

(i) The project qualifies as an ‘‘eligible 

project’’ under the program described in 

paragraph (17) of the definition of 

Surface Transportation project set forth 

in § 35.3; 

(ii) The recipient does not use more 

than $10 million in funds for the 

project; and 

(iii) The entire project scope, 

including for avoidance of doubt any 

portion of the project funded through 

other sources, is limited to the actions 

or activities listed under 23 CFR 

771.116(c)(1) through(22), 23 CFR 

771.117(c)(1) through(30), and 23 CFR 

771.118(c)(1) through(16), provided that 

the actions or activities do not involve 

unusual circumstances, as described in 

23 CFR 771.116(b), 23 CFR 771.117(b), 

and 23 CFR 771.118(b). 

(3) Wage and employee protection 

requirements, including the 

requirements set forth at 23 U.S.C. 113 

and 49 U.S.C. 5333(a) and (b); 

(4) Domestic preference procurement 

requirements, including the 

requirements set forth at 23 U.S.C. 313, 

49 U.S.C. 5323(j), 49 CFR part 661, and 

23 CFR 635.410, provided that such 

requirements shall not apply to Surface 

Transportation projects undertaken 

pursuant to paragraph (h)(1)(i)(B) of this 

section that meet the criteria set forth in 

paragraph (h)(1)(ii)(B)(2)(i) through (iii) 

of this section; 

(5) Project design, planning, 

construction, operation, maintenance, 

vehicle weight limit, and toll 

requirements, provided that the 

requirement to include Surface 

Transportation projects in a state 

transportation improvement program or 

transportation improvement program 

shall not apply to Surface 

Transportation projects undertaken 

pursuant to paragraph (h)(1)(i)(B) of this 

section except in circumstances when 

the project is regionally significant and 

requires action by an office of the 

Department of Transportation pursuant 

to 23 CFR 450.218. 

(C) Except as otherwise determined by 

the Secretary or the head of the Federal 

agency to which the Secretary has 

delegated authority, the requirements of 

the National Environmental Policy Act 

of 1969 (42 U.S.C. 4321 et seq.), and the 

associated implementing regulations, 

apply to Surface Transportation 

projects. 

(D) When a State uses funds for a 

Surface Transportation project eligible 

under title 23 of the U.S. Code or that 

otherwise would be subject to the 

requirements of title 23, the project 

must either: 

(1) Demonstrate progress in achieving 

a state of good repair as required by the 

State’s asset management plan under 23 

U.S.C. 119(e), or 

(2) Support the achievement of one or 

more performance targets of the State 

established under 23 U.S.C. 150. 

(2) Title I projects. A recipient may 

use funds for Title I projects, subject to 

the following limitations and 

requirements: 

(i) Except as otherwise determined by 

the Secretary or the head of the Federal 

agency to which the Secretary has 

delegated authority, the requirements of 

Title I of the Housing and Community 

Development Act of 1974 (42 U.S.C. 

5301 et seq.), and the associated 

implementing regulations, apply to Title 

I projects, including: 

(A) At least 70 percent of funds used 

for such projects, in the aggregate, must 

be used for projects that principally 

benefit low- and moderate-income 

persons, in accordance with the 

definitions and requirements set forth at 

24 CFR 570.3, 24 CFR 570.200(a)(3), and 

24 CFR 570.208(a) for recipients that are 

not Tribal governments, and at 24 CFR 

1003.4 and 1003.208 for Tribal 

government recipients; provided, 

however, that Tribal governments may 

demonstrate that beneficiaries of Title I 

assistance are ‘‘low and moderate 

income beneficiaries,’’ as defined at 24 

CFR 1003.4, based on an attestation by 

the Tribal government that these 

beneficiaries are receiving or are eligible 

to receive services administered by the 

Tribal government on the basis of an 

individual’s income. 

(B) In the case of recipients that are 

not Tribal governments, funds used for 

projects must satisfy at least one of the 

national objectives as set forth in 24 

CFR 570.208. 

(C) Not more than 15 percent of funds 

used for such projects, in the aggregate, 

may be used for public services 

activities and projects eligible under 42 

U.S.C. 5305(a)(8). 

(D) Not more than 20 percent of funds 

used for such projects, in the aggregate, 

may be used for planning and 

administrative costs, as described at 24 

CFR 570.200(g), 570.205, and 570.206 

with respect to recipients that are not 

Tribal governments, and as described at 

24 CFR 1003.205 and 1003.206 with 

respect to recipients that are Tribal 

governments. 

(E) In the case of recipients that are 

not Tribal governments, funds used for 

such projects must satisfy the 

requirements set forth at 42 U.S.C. 5310 

and 24 CFR 570.603. 

(F) Prior to commencing a Title I 

project, a recipient must comply with 

the environmental protection measures 

set forth at 42 U.S.C. 5304(g) and the 

implementing regulations set forth at 24 

CFR 570.604, 24 CFR 1003.605, and 24 

CFR part 58, provided that the 

certification contemplated by 42 U.S.C. 

5304(g) shall be submitted to the 

Secretary and not the Secretary of the 

Department of Housing and Urban 

Development. 

(ii) To the extent a Title I project 

relates to broadband infrastructure, the 

requirements of section 60102 of the 

Infrastructure Investment and Jobs Act 

shall apply. 

(3) Requirements applicable to 

Surface Transportation projects and 

Title I projects. (i) The total amount of 

funds that a recipient may use for costs 

incurred for projects set forth in 

paragraphs (h)(1) and (h)(2) of this 

section, taken together, shall not exceed 

the greater of $10,000,000 and 30 

percent of the recipient’s total award 

received pursuant to payment or 

transfer of funds made under section 

602 or 603 of the Social Security Act. 

(ii) Funds used for the projects set 

forth in paragraph (h) of this section 

must supplement, and not supplant, 

other Federal, State, territorial, Tribal, 

and local government funds (as 

applicable) that 

(A) in the case of non-Federal funds, 

have been obligated for activities or 

projects that are eligible as part of any 


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Surface Transportation project or Title I 

project, as applicable, or 

(B) in the case of Federal funds, a 

Federal agency has committed to a 

particular project pursuant to an award 

agreement or otherwise. 

§ 35.7 Pensions. 

A recipient (other than a Tribal 

government) may not use funds for 

deposit into any pension fund. 

§ 35.8 Tax. 

(a) Restriction. A State or Territory 

shall not use funds to either directly or 

indirectly offset a reduction in the net 

tax revenue of the State or Territory 

resulting from a covered change during 

the covered period. 

(b) Violation. Treasury will consider a 

State or Territory to have used funds to 

offset a reduction in net tax revenue if, 

during a reporting year: 

(1) Covered change. The State or 

Territory has made a covered change 

that, either based on a reasonable 

statistical methodology to isolate the 

impact of the covered change in actual 

revenue or based on projections that use 

reasonable assumptions and do not 

incorporate the effects of 

macroeconomic growth to reduce or 

increase the projected impact of the 

covered change, the State or Territory 

assesses has had or predicts to have the 

effect of reducing tax revenue relative to 

current law; 

(2) Exceeds the de minimis threshold. 

The aggregate amount of the measured 

or predicted reductions in tax revenue 

caused by covered changes identified 

under paragraph (b)(1) of this section, in 

the aggregate, exceeds 1 percent of the 

State’s or Territory’s baseline; 

(3) Reduction in net tax revenue. The 

State or Territory reports a reduction in 

net tax revenue, measured as the 

difference between actual tax revenue 

and the State’s or Territory’s baseline, 

each measured as of the end of the 

reporting year; and 

(4) Consideration of other changes. 

The aggregate amount of measured or 

predicted reductions in tax revenue 

caused by covered changes is greater 

than the sum of the following, in each 

case, as calculated for the reporting 

year: 

(i) The aggregate amount of the 

expected increases in tax revenue 

caused by one or more covered changes 

that, either based on a reasonable 

statistical methodology to isolate the 

impact of the covered change in actual 

revenue or based on projections that use 

reasonable assumptions and do not 

incorporate the effects of 

macroeconomic growth to reduce or 

increase the projected impact of the 

covered change, the State or Territory 

assesses has had or predicts to have the 

effect of increasing tax revenue; and 

(ii) Reductions in spending, up to the 

amount of the State’s or Territory’s net 

reduction in total spending, that are in: 

(A) Departments, agencies, or 

authorities in which the State or 

Territory is not using funds; and 

(B) Departments, agencies, or 

authorities in which the State or 

Territory is using funds, in an amount 

equal to the value of the spending cuts 

in those departments, agencies, or 

authorities, minus funds used. 

(c) Amount and revenue reduction 

cap. If a State or Territory is considered 

to be in violation pursuant to paragraph 

(b) of this section, the amount used in 

violation of paragraph (a) of this section 

is equal to the lesser of: 

(1) The reduction in net tax revenue 

of the State or Territory for the reporting 

year, measured as the difference 

between the State’s or Territory’s 

baseline and its actual tax revenue, each 

measured as of the end of the reporting 

year; and, 

(2) The aggregate amount of the 

reductions in tax revenues caused by 

covered changes identified in paragraph 

(b)(1) of this section, minus the sum of 

the amounts in identified in paragraphs 

(b)(4)(i) and (ii) of this section. 

§ 35.9 Compliance with applicable laws. 

A recipient must comply with all 

other applicable Federal statutes, 

regulations, and executive orders, and a 

recipient shall provide for compliance 

with the American Rescue Plan Act, this 

subpart, and any interpretive guidance 

by other parties in any agreements it 

enters into with other parties relating to 

these funds. 

§ 35.10 Recoupment. 

(a) Identification of violations—(1) In 

general. Any amount used in violation 

of §§ 35.5, 35.6, or 35.7 may be 

identified at any time prior to December 

31, 2026. 

(2) Annual reporting of amounts of 

violations. On an annual basis, a 

recipient that is a State or territory must 

calculate and report any amounts used 

in violation of § 35.8. 

(b) Calculation of amounts subject to 

recoupment—(1) In general. Except as 

provided in paragraph (b)(2) of this 

section, the Secretary will calculate any 

amounts subject to recoupment 

resulting from a violation of §§ 35.5, 

35.6 or 35.7 as the amounts used in 

violation of such restrictions. 

(2) Violations of § 35.8. The Secretary 

will calculate any amounts subject to 

recoupment resulting from a violation of 

§ 35.8, equal to the lesser of: 

(i) The amount set forth in § 35.8(c); 

and, 

(ii) The amount of funds received by 

such recipient. 

(c) Initial notice. If the Secretary 

calculates an amount subject to 

recoupment under paragraph (b) of this 

section, Treasury will provide the 

recipient an initial written notice of the 

amount subject to recoupment along 

with an explanation of such amounts. 

(d) Request for reconsideration. 

Unless the Secretary extends or 

accelerates the time period, within 60 

calendar days of receipt of an initial 

notice of recoupment provided under 

paragraph (c) of this section, a recipient 

may submit a written request to the 

Secretary requesting reconsideration of 

any amounts subject to recoupment 

under paragraph (b) of this section. To 

request reconsideration of any amounts 

subject to recoupment, a recipient must 

submit to the Secretary a written request 

that includes: 

(1) An explanation of why the 

recipient believes all or some of the 

amount should not be subject to 

recoupment; and 

(2) A discussion of supporting 

reasons, along with any additional 

information. 

(e) Final amount subject to 

recoupment. Unless the Secretary 

extends or accelerates the time period, 

within 60 calendar days of receipt of the 

recipient’s request for reconsideration 

provided pursuant to paragraph (d) of 

this section or the expiration of the 

period for requesting reconsideration 

provided under paragraph (d) of this 

section, the recipient will be notified of 

the Secretary’s decision to affirm, 

withdraw, or modify the notice of 

recoupment. Such notification will 

include an explanation of the decision, 

including responses to the recipient’s 

supporting reasons and consideration of 

additional information provided. A 

recipient must invoke and exhaust the 

procedures available under this subpart 

prior to seeking judicial review of a 

decision under § 35.10. 

(f) Repayment of funds. Unless the 

Secretary extends or accelerates the time 

period, a recipient shall repay to the 

Secretary any amounts subject to 

recoupment in accordance with 

instructions provided by the Secretary: 

(1) Within 120 calendar days of 

receipt of the notice of recoupment 

provided under paragraph (c) of this 

section, in the case of a recipient that 

does not submit a request for 

reconsideration in accordance with the 

requirements of paragraph (d) of this 

section; or 

(2) Within 120 calendar days 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 

of a recipient that submits a request for 

reconsideration in accordance with the 

requirements of paragraph (d) of this 

section. 

(g) Other remedial actions. Prior to 

seeking recoupment or taking other 

appropriate action pursuant to 

paragraphs (c), (d), (e), or (f) of this 

section, the Secretary may notify the 

recipient of potential violations and 

provide the recipient an opportunity for 

informal consultation and remediation. 

§ 35.11 Payments to States. 

(a) In general. With respect to any 

State or Territory that has an 

unemployment rate as of the date that 

it submits an initial certification for 

payment of funds pursuant to section 

602(d)(1) of the Social Security Act that 

is less than two percentage points above 

its unemployment rate in February 

2020, the Secretary will withhold 50 

percent of the amount of funds allocated 

under section 602(b) of the Social 

Security Act to such State or territory 

until at least May 10, 2022 and not more 

than twelve months from the date such 

initial certification is provided to the 

Secretary. 

(b) Payment of withheld amount. In 

order to receive the amount withheld 

under paragraph (a) of this section, the 

State or Territory must submit to the 

Secretary the following information: 

(1) A certification, in the form 

provided by the Secretary, that such 

State or Territory requires the payment 

to carry out the activities specified in 

section 602(c) of the Social Security Act 

and will use the payment in compliance 

with section 602(c) of the Social 

Security Act; and 

(2) Any reports required to be filed by 

that date pursuant to this part that have 

not yet been filed. 

§ 35.12 Distributions to nonentitlement 

units of local government and units of 

general local government. 

(a) Nonentitlement units of local 

government. Each State or Territory that 

receives a payment from the Secretary 

pursuant to section 603(b)(2)(B) of the 

Social Security Act shall distribute the 

amount of the payment to 

nonentitlement units of local 

government in such State or Territory in 

accordance with the requirements set 

forth in section 603(b)(2)(C) of the 

Social Security Act and without 

offsetting any debt owed by such 

nonentitlement units of local 

governments against such payments. 

(b) Budget cap. A State or Territory 

may not make a payment to a 

nonentitlement unit of local government 

pursuant to section 603(b)(2)(C) of the 

Social Security Act and paragraph (a) of 

this section in excess of the amount 

equal to 75 percent of the most recent 

budget for the nonentitlement unit of 

local government as of January 27, 2020. 

For purposes of this section 35.12, a 

nonentitlement unit of local 

government’s most recent budget shall 

mean the nonentitlement unit of local 

government’s total annual budget, 

including both operating and capital 

expenditure budgets, in effect as of 

January 27, 2020. A State or Territory 

shall permit a nonentitlement unit of 

local government without a formal 

budget as of January 27, 2020, to 

provide a certification from an 

authorized officer of the nonentitlement 

unit of local government of its most 

recent annual expenditures as of 

January 27, 2020, and a State or 

Territory may rely on such certification 

for purposes of complying with this 

section 35.12. 

(c) Units of general local government. 

Each State or Territory that receives a 

payment from the Secretary pursuant to 

section 603(b)(3)(B)(ii) of the Social 

Security Act, in the case of an amount 

to be paid to a county that is not a unit 

of general local government, shall 

distribute the amount of the payment to 

units of general local government within 

such county in accordance with the 

requirements set forth in section 

603(b)(3)(B)(ii) of the Social Security 

Act and without offsetting any debt 

owed by such units of general local 

government against such payments. 

(d) Additional conditions. A State or 

Territory may not place additional 

conditions or requirements on 

distributions to nonentitlement units of 

local government or units of general 

local government beyond those required 

by section 603 of the Social Security Act 

or this subpart A. 

Kayla Arslanian, 

Executive Secretary. 

[FR Doc. 2023–17446 Filed 9–19–23; 8:45 am] 

BILLING CODE P 


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