The U.S. Department of the Treasury has released the 2023 American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF) interim final rule (IFR), which builds on the 2022 final rule by adding three additional eligibility categories. It is important to note that the 2023 IFR does not replace the 2022 final rule but simply adds three new eligible use categories. SLFRF recipient governments now have greater flexibility to address emergency relief from natural disasters, build surface transportation infrastructure, and support Title I projects for community development.
Each of the new eligibility categories has specific allowability rules but follows a similar framework to the 2022 final rule. The 2023 IFR overview identifies allowability basics in each of the three categories.
- Emergency Relief From Natural Disasters
The IFR discusses the standard for providing emergency relief from natural disasters, using a two-step process. Recipients must first identify a natural disaster that has occurred or is expected to occur imminently, or a natural disaster that is threatened to occur in the future, and then identify emergency relief that responds to the physical or negative economic impacts, or potential physical or negative economic impacts of the identified natural disaster. The emergency relief must be related and reasonably proportional to the impact identified (2023 IFR Overview, Page 2, Paragraph 5).
- Surface Transportation
This eligible use category is broken out into three pathways. Pathway One outlines how recipients may use SLFRF funds for projects receiving funding from the U.S. Department of Transportation (DOT). Pathway Two outlines how recipients may use SLFRF funds for projects that are not receiving funding from DOT. Pathway Three outlines how recipients may use SLFRF funds to satisfy non-federal share requirements for certain surface transportation projects or to repay a loan provided under the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. The requirements of Titles 23, 40, and 49 of the U.S. Code generally apply to this eligible use category (2023 IFR Overview, Page 2, Paragraph 6).
- Title I
The IFR outlines how recipients may use SLFRF funds for activities that are eligible under Section 105(a) of the Housing and Community Development Act of 1974 (Title I projects), which are the eligible activities under the Community Development Block Grant (CDBG) and Indian CDBG (ICDBG) programs. The eligible activities under the Title I projects eligible use category are broad and enable recipients to undertake a wide range of projects. The requirements of Title I of the Housing and Community Development Act of 1974 generally apply to this eligible use category (2023 IFR Overview, Page 2, Paragraph 7).
Recipient governments should note that costs for these eligible use categories must have been incurred after December 29, 2022. However, the funds still must be obligated by December 31, 2024. Any funds obligated under the emergency relief eligible use category must be expended by December 31, 2026. Funds obligated for the surface transportation and Title I eligible use categories must be expended by September 30, 2026.
Detailed guidance from Treasury is available on the SLFRF program website. If you have questions or need assistance, please contact National Grants Management Services Practice Leader Julie Murdock or fill out the Contact Us form below.