Title: Special Districts Provide Essential Services Act
Policy area: Government Operations and Politics

Summary:
Special Districts Provide Essential Services Act
This bill makes special districts eligible for the Coronavirus Relief Fund and the Municipal Liquidity Facility program.
Specifically, the bill makes special districts eligible for payments from amounts paid to states from any new appropriations to the fund. A special district must submit a request for payment to the state with information demonstrating that the special district has experienced or is likely to experience during the COVID-19 (i.e., coronavirus disease 2019) emergency
The Board of Governors of the Federal Reserve System shall include special districts as eligible issuers in the Municipal Liquidity Facility program, which was created in response to the COVID-19 emergency to buy municipal securities.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 535 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 535

 To amend the Social Security Act to include special districts in the 
  coronavirus relief fund, to direct the Secretary to include special 
districts as an eligible issuer under the Municipal Liquidity Facility, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 28, 2021

   Mr. Garamendi (for himself, Mrs. Demings, Mr. Kilmer, Ms. Lee of 
 California, Mrs. Napolitano, Mr. Rush, Mr. Panetta, Ms. Brownley, Mr. 
 Bera, Ms. Kelly of Illinois, Mr. DeFazio, Mr. Crist, Mr. Doggett, Ms. 
Eshoo, Mr. Costa, Mr. Takano, Mr. Carbajal, Mr. Peters, Mr. DeSaulnier, 
Mr. McNerney, Mr. Lowenthal, and Mr. Thompson of California) introduced 
 the following bill; which was referred to the Committee on Oversight 
and Reform, and in addition to the Committee on Financial Services, for 
a period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
 To amend the Social Security Act to include special districts in the 
  coronavirus relief fund, to direct the Secretary to include special 
districts as an eligible issuer under the Municipal Liquidity Facility, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Special Districts Provide Essential 
Services Act''.

SEC. 2. INCLUSION OF SPECIAL DISTRICTS IN THE CORONAVIRUS RELIEF FUND.

    (a) In General.--Section 601(a) of the Social Security Act (42 
U.S.C. 801(a)) is amended by adding at the end the following new 
paragraph:
            ``(3) Funds for special districts.--If an amount in excess 
        of $150,000,000,000 is appropriated for payments made under 
        this section, special districts shall be eligible for payments 
        from the portion of such excess amount paid to States in 
        accordance with subsection (c)(6).''.
    (b) Amount for Special Districts.--Section 601(c) of the Social 
Security Act (42 U.S.C. 801(c)) is amended--
            (1) by redesignating paragraphs (6) through (8) as 
        paragraphs (8) through (10), respectively; and
            (2) by inserting after paragraph (5) the following new 
        paragraphs:
            ``(6) Special districts.--
                    ``(A) In general.--If a portion of any excess 
                amount described in subsection (a)(3) is paid to a 
                State, the State shall allocate at least 5 percent of 
                such portion for distributing payments to special 
                districts in the State that submit to the Governor of 
                the State or the entity designated by the Governor to 
                distribute such payments (referred to in this paragraph 
                as the `designated payment entity') a request for a 
                payment during the COVID-19 emergency and information 
                described in subparagraph (B) demonstrating the need 
                for the payment, which the Governor of the State or the 
                designated payment entity has determined, on the basis 
                of a good faith effort, is accurate.
                    ``(B) Information described.--Information described 
                in this subparagraph is written documentation 
                demonstrating with respect to a comparable period 
                before the COVID-19 emergency that the special district 
                has experienced or is likely to experience during the 
                COVID-19 emergency--
                            ``(i) reduced revenue or operational 
                        funding derived from provided services, taxes, 
                        fees, or other sources of revenue;
                            ``(ii) reduced indirect funding from the 
                        Federal Government, the State, or a unit of 
                        general government below the State level; or
                            ``(iii) as a result of the COVID-19 
                        emergency, increased expenditures necessary to 
                        continue operations.
                    ``(C) Amount of payment.--
                            ``(i) In general.--Subject to clauses (ii) 
                        and (iii), the amount of the payment for a 
                        special district shall be determined by the 
                        Governor or the State or the designated payment 
                        entity, taking into consideration the extent of 
                        a projected budget shortfall for the special 
                        district during the COVID-19 emergency and the 
                        need of the special district to supplement 
                        projected revenue.
                            ``(ii) Limitation.--Except as provided in 
                        clause (iii), the amount paid to a special 
                        district shall not exceed the amount of 
                        expenditures made by the special district for 
                        any quarter of calendar year 2019.
                            ``(iii) Exception for providers of 
                        essential critical infrastructure sector 
                        services.--If a special district provides 
                        essential critical infrastructure sector 
                        services (as defined by the Cybersecurity and 
                        Infrastructure Security Agency of the 
                        Department of Homeland Security), the amount 
                        paid to the special district may exceed the 
                        limit applicable under clause (ii).
                            ``(iv) Rule of construction.--Nothing in 
                        the preceding clauses of this subparagraph 
                        shall be construed as requiring payment of an 
                        amount sufficient to provide a special district 
                        with full operational funding during the COVID-
                        19 emergency.
                    ``(D) Responsible authority for recoupment.--If it 
                is determined that a payment made to a special district 
                did not comply with the requirements of the preceding 
                subparagraphs, or was otherwise fraudulent or improper, 
                the special district shall be liable for the debt owed 
                to the Federal Government under subsection (f), unless 
                all or a part of the basis for such determination is 
                that the determination required under subparagraph (A) 
                regarding the accuracy of the information demonstrating 
                the need for the payment was not made in good faith, in 
                which case the State shall be liable for all or a part 
                of such debt, as the Secretary determines appropriate.
                    ``(E) Deadline for distribution of funds.--Payments 
                to special districts in a State shall be distributed 
                not later than 60 days after the State receives a 
                payment from any excess amount described in subsection 
                (a)(3).
                    ``(F) COVID-19 emergency.--For purposes of this 
                paragraph, the term `COVID-19 emergency' means the 
                public health emergency declared by the Secretary of 
                Health and Human Services pursuant to section 319 of 
                the Public Health Service Act on January 31, 2020, 
                entitled `Determination that a Public Health Emergency 
                Exists Nationwide as the Result of the 2019 Novel 
                Coronavirus' and includes any renewal of such 
                declaration pursuant to such section 319.
            ``(7) Excess funds waiver.--
                    ``(A) In general.--If a State has allocated funds 
                from a payment to the State described in paragraph (6) 
                to special districts in that State, but has not met the 
                5 percent allocation requirement of that paragraph, the 
                Governor of the State may submit to the Secretary, in 
                writing, a request for an excess funds waiver to exempt 
                the State from having to make additional allocations 
                from such funds to make up the remainder of such 5 
                percent requirement, and to allow the State to use the 
                funds remaining in accordance with this section.
                    ``(B) Requirements.--A waiver request submitted 
                under subparagraph (A) shall provide--
                            ``(i) information regarding how funds from 
                        the payment to the State described in paragraph 
                        (6) were allocated to special districts in the 
                        State and otherwise used; and
                            ``(ii) an explanation why the requirement 
                        for the State to meet the 5 percent allocation 
                        requirement of paragraph (6) should be waived.
                    ``(C) Deadlines.--
                            ``(i) Waiver request.--A request for an 
                        excess funds waiver shall be submitted to the 
                        Secretary not later than 60 days after the 
                        State receives a payment described in paragraph 
                        (6).
                            ``(ii) Approval or disapproval.--The 
                        Secretary shall approve or disapprove a waiver 
                        request submitted under subparagraph (A), in 
                        writing, not later than 14 days after the 
                        Secretary receives the request.''.
    (c) Definition of Special District.--Section 601(g) of the Social 
Security Act (42 U.S.C. 801(g)) is amended--
            (1) by redesignating paragraphs (4) through (5) as 
        paragraphs (5) through (6), respectively; and
            (2) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) Special district.--The term `special district' means 
        a political subdivision of a State, formed pursuant to general 
        law or special act of the State, for the purpose of performing 
        one or more governmental or proprietary functions.''.
    (d) Treasury IG Oversight Authority.--Section 601(f)(2) of such Act 
(42 U.S.C. 801(f)(2)) is amended--
            (1) by inserting ``or that a special district or State has 
        not complied with the requirements of paragraph (6) or (7) of 
        subsection (c) (as applicable),'' after ``subsection (d),''; 
        and
            (2) by striking ``such subsection'' and inserting 
        ``subsection (d) or paragraph (6) or (7) of subsection (c) (as 
        applicable)''.
    (e) Update to Guidance.--The Secretary of the Treasury shall update 
any guidance issued with respect to the Coronavirus Relief Fund 
established under section 601 of the Social Security Act (42 U.S.C. 
801) to reflect the inclusion of special districts as eligible for 
payments from amounts appropriated under such section, to the extent 
such amounts exceed $150,000,000,000.

SEC. 3. INCLUDING SPECIAL DISTRICTS IN THE MUNICIPAL LIQUIDITY 
              FACILITY.

    The Board of Governors of the Federal Reserve System shall include 
special districts, as defined in section 601(g)(4) of the Social 
Security Act (42 U.S.C. 801(g)(4)) (as added by section 2(c)), as 
eligible issuers in the Municipal Liquidity Facility program authorized 
under section 13(3) of the Federal Reserve Act (12 U.S.C. 343(3)).
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