Rule2023-17446
Coronavirus State and Local Fiscal Recovery Funds
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 20, 2023
Effective
September 20, 2023
Issuing agencies
Treasury Department
Abstract
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.
Full Text
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<title>Federal Register, Volume 88 Issue 181 (Wednesday, September 20, 2023)</title>
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[Federal Register Volume 88, Number 181 (Wednesday, September 20, 2023)]
[Rules and Regulations]
[Pages 64986-65037]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-17446]
[[Page 64985]]
Vol. 88
Wednesday,
No. 181
September 20, 2023
Part II
Department of the Treasury
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31 CFR Part 35
Coronavirus State and Local Fiscal Recovery Funds; Interim Final Rule
Federal Register / Vol. 88, No. 181 / Wednesday, September 20, 2023 /
Rules and Regulations
[[Page 64986]]
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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.
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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: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. 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 <a href="https://www.regulations.gov">https://www.regulations.gov</a> 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:
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\1\ Sec. 9901, Public Law 117-2, 135 Stat. 223.
\2\ Throughout 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.
\3\ The 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.
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(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.
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\4\ See 86 FR 26786 (May 17, 2021).
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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:
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\5\ See 87 FR 4338 (Jan. 27, 2022).
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<bullet> 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.
<bullet> Premium Pay: Recipients may provide premium pay to a broad
set of essential workers.
<bullet> 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.
<bullet> 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
[[Page 64987]]
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.
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\6\ U.S. Department of the Treasury, April 2023 Quarterly and
Annual Reporting Analysis, <a href="https://home.treasury.gov/system/files/136/April-2023-Reporting-Blog-Post.pdf">https://home.treasury.gov/system/files/136/April-2023-Reporting-Blog-Post.pdf</a>.
\7\ The 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 non-entitlement units of local
government allocated less than $10 million from April 1, 2022 to
March 31, 2023.
\8\ Press 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).
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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.
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\9\ Public Law 117-328 (Dec. 29, 2022).
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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:
<bullet> 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.
<bullet> 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.
<bullet> 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.
<bullet> 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.
<bullet> 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;
[[Page 64988]]
(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\
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\10\ See section 40909 of Public Law 117-58, 135 Stat. 429, 1126
(Nov. 15, 2021).
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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 non-exhaustive 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 Cost-Share 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
[[Page 64989]]
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.
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\11\ Billion-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. Billion-Dollar Weather and
Climate Disasters (2023), <a href="https://www.ncei.noaa.gov/access/billions/">https://www.ncei.noaa.gov/access/billions/</a>
, DOI: 10.25921/stkw-7w73.
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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 billion-dollar natural
disasters caused 1,460 deaths and resulted in damages valued at $434.6
billion.\17\
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\12\ See id.
\13\ U.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-affect-
natural-
disasters#:~:text=With%20increasing%20global%20surface%20temperatures
,more%20powerful%20storms%20to%20develop.
\14\ NOAA NCEI, U.S. Billion-Dollar Weather and Climate
Disasters (2023), <a href="https://www.ncei.noaa.gov/access/billions/">https://www.ncei.noaa.gov/access/billions/</a>, DOI:
10.25921/stkw-7w73.
\15\ In recent years, a larger percentage of precipitation has
come in the form of intense single-day 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). <a href="https://www.epa.gov/climate-indicators/climate-change-indicators-heavy-precipitation">https://www.epa.gov/climate-indicators/climate-change-indicators-heavy-precipitation</a>.
\16\ NOAA NCEI, U.S. Billion-Dollar Weather and Climate
Disasters (2023), <a href="https://www.ncei.noaa.gov/access/billions/">https://www.ncei.noaa.gov/access/billions/</a>, DOI:
10.25921/stkw-7w73.
\17\ See id.
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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.
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\18\ See id.
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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.
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\19\ U.S. Census Bureau. Household Pulse Survey: Displaced in
Last Year by Natural Disaster (2023). <a href="https://www.census.gov/data-tools/demo/hhp/#/?measures=DISPLACED">https://www.census.gov/data-tools/demo/hhp/#/?measures=DISPLACED</a>.
\20\ Harvard 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?, <a href="https://www.jchs.harvard.edu/blog/rebuilding-from-2017s-natural-disasters-when-for-what-and-how-much">https://www.jchs.harvard.edu/blog/rebuilding-from-2017s-natural-disasters-when-for-what-and-how-much</a>.
\21\ Centers 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, <a href="https://www2.census.gov/ces/wp/2015/CES-WP-15-21.pdf">https://www2.census.gov/ces/wp/2015/CES-WP-15-21.pdf</a>.
\23\ Linda Luther, Congressional Research Service, R44941,
Disaster Debris Management: Requirements, Challenges, and Federal
Agency Roles (2017).
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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,
[[Page 64990]]
limiting Tribal governments' access to disaster resources before,
during, or after the disaster strikes.\30\
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\24\ Federal Emergency Management Agency (FEMA), 2022-2026 FEMA
Strategic Plan (2023).
\25\ Substance 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).
\27\ Caroline Ratcliffe, et al., Urban Institute, Insult to
Injury Natural Disasters and Residents' Financial Health 7 (2019).
\28\ FEMA, 2022-2026 FEMA Strategic Plan (2023).
\29\ National Congress of American Indians, Indian Country FY
2022 Budget Request (2023), 47-54. <a href="https://www.ncai.org/resources/ncai-publications/NCAI_IndianCountry_FY2022_BudgetRequest.pdf">https://www.ncai.org/resources/ncai-publications/NCAI_IndianCountry_FY2022_BudgetRequest.pdf</a>.
\30\ See Id.
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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\
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\31\ See 42 U.S.C. 5195a(a)(2).
\32\ FEMA, Stafford Act, as Amended, P-592 vol. 1 (2021).
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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\
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\33\ See 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.'')
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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
[[Page 64991]]
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\
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\34\ See FEMA's National Risk Index available at <a href="https://hazards.fema.gov/nri/hurricane">https://hazards.fema.gov/nri/hurricane</a>.
\35\ Memorandum 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.
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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
non-exhaustive list of eligible emergency relief, which means that the
listed eligible uses include some, but not all, of the uses of funds
that could be eligible. 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 non-exhaustive
list provided below, recipients should first identify a natural
disaster and then identify emergency relief that responds to the
natural disaster's physical or negative economic impacts according to
the standards discussed 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 FEMA-
administered 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
[[Page 64992]]
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\
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\36\ See, 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.'').
\38\ See 5 U.S.C. 5155(a).
\39\ See 5 U.S.C. 5155(b)(1).
\40\ See 5 U.S.C. 5155(b)(3).
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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
disaster-assistance 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.
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\41\ 44 CFR 206.191(d).
\42\ As 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).
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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 non-exhaustive 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 non-
congregate 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\
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\43\ For more information on Treasury's Economic Impact Payments
provided in response to the COVID-19 public health emergency, see
<a href="https://home.treasury.gov/policy-issues/coronavirus/assistance-for-american-families-and-workers/economic-impact-payments">https://home.treasury.gov/policy-issues/coronavirus/assistance-for-american-families-and-workers/economic-impact-payments</a>.
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Recipients may provide financial assistance for lost wages by
providing supplemental benefits to individuals who are participating in
state unemployment insurance programs or
[[Page 64993]]
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.
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\44\ Memorandum from President Trump on Authorizing the Other
Needs Assistance Program for Major Disaster Declarations Related to
Coronavirus Disease 2019 (Aug. 8, 2020).
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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.
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\45\ FEMA, FP 104-009-02, Public Assistance Program and Policy
Guide Version 4 (2020).
\46\ See id.
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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.
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\47\ See id.
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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 pre-disaster 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
[[Page 64994]]
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.
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\48\ FEMA, A guide to the Disaster Declaration process and
Federal Disaster Assistance, <a href="https://www.fema.gov/pdf/rrr/dec_proc.pdf">https://www.fema.gov/pdf/rrr/dec_proc.pdf</a>.
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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 low-income
households impacted by a natural disaster is related and reasonably
proportional emergency relief to address the negative economic impacts
of natural disasters.
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\49\ Caroline Ratcliffe et al., Urban Institute, Insult to
Injury Natural Disasters and Residents' Financial Health 7 (2019).
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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 pre-approval from FEMA or
Treasury to use SLFRF funds for these eligible uses.
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\50\ FEMA, A Guide to the Disaster Declaration Process and
Federal Disaster Assistance, <a href="https://www.fema.gov/pdf/rrr/dec_proc.pdf">https://www.fema.gov/pdf/rrr/dec_proc.pdf</a>.
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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.
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\51\ FEMA, Hazard Mitigation Assistance Guide Hazard Mitigation
Grant Program, Pre-Disaster Mitigation Program, and Flood Mitigation
Assistance Program (2015), <a href="https://www.fema.gov/sites/default/files/2020-07/fy15_HMA_Guidance.pdf">https://www.fema.gov/sites/default/files/2020-07/fy15_HMA_Guidance.pdf</a>.
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Mitigation activities may be stand-alone 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
lead-times, 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
[[Page 64995]]
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 cost-effective
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
[[Page 64996]]
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 on-
time 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.
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\52\ See 42 U.S.C. 802(c)(5) and 803(c)(6).
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The 2023 CAA provides that the total amount of SLFRF funds that a
recipient
[[Page 64997]]
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.
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\53\ The 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.
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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
[[Page 64998]]
other Federal funds may be subject to additional requirements
associated with the other Federal funds.\54\
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\54\ For additional information about blending and braiding
SLFRF funds with other funding sources, refer to SLFRF Final Rule
FAQ 4.8, available at <a href="https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf">https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-FAQ.pdf</a>.
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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
conflicts-of-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.
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\55\ Applicable federal civil rights and non-discrimination 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.
\56\ As 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.
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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 non-supplant
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 non-Federal 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
[[Page 64999]]
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.
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\57\ See 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.
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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
[[Page 65000]]
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.
<bullet> 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\
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\58\ See 23 U.S.C. 117.
\59\ See the U.S. Department of Transportation's INFRA Grants
Program website at <a href="https://www.transportation.gov/grants/infra-grants-program">https://www.transportation.gov/grants/infra-grants-program</a>.
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<bullet> 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\
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\60\ See 23 U.S.C. 119.
\61\ U.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), <a href="https://www.fhwa.dot.gov/specialfunding/nhpp/bil_nhpp_implementation_guidance-05_25_22.pdf">https://www.fhwa.dot.gov/specialfunding/nhpp/bil_nhpp_implementation_guidance-05_25_22.pdf</a>.
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<bullet> 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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\62\ See 23 U.S.C. 124.
\63\ U.S. Department of Transportation, Federal Highway
Administration, Bridge Investment Program (BIP) Questions and
Answers (Q&As) (Aug. 18, 2022), <a href="https://www.fhwa.dot.gov/bridge/bip/qa.cfm">https://www.fhwa.dot.gov/bridge/bip/qa.cfm</a>.
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[[Page 65001]]
<bullet> 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\
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\64\ See 23 U.S.C. 133.
\65\ U.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), <a href="https://www.fhwa.dot.gov/specialfunding/stp/bil_stbg_implementation_guidance-05_25_22.pdf">https://www.fhwa.dot.gov/specialfunding/stp/bil_stbg_implementation_guidance-05_25_22.pdf</a>.
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<bullet> 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\
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\66\ See 23 U.S.C. 148.
\67\ U.S. Department of Transportation, Federal Highway
Administration, Highway Safety Improvement Program (HSIP)
Eligibility Guidance (Feb. 2, 2022), <a href="https://safety.fhwa.dot.gov/hsip/rulemaking/docs/BIL_HSIP_Eligibility_Guidance.pdf">https://safety.fhwa.dot.gov/hsip/rulemaking/docs/BIL_HSIP_Eligibility_Guidance.pdf</a>.
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<bullet> 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 micro-mobility,
traffic flow improvements, and demand management. For additional
information on CMAQ, see the Congestion Mitigation and Air Quality
(CMAQ) Improvement Program Fact Sheet.\69\
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\68\ See 23 U.S.C. 149.
\69\ U.S. Department of Transportation, Federal Highway
Administration, Congestion Mitigation and Air Quality (CMAQ)
Improvement Program Fact Sheet (Feb. 8, 2022), <a href="https://www.fhwa.dot.gov/bipartisan-infrastructure-law/cmaq.cfm">https://www.fhwa.dot.gov/bipartisan-infrastructure-law/cmaq.cfm</a>.
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<bullet> 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\
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\70\ See 23 U.S.C. 151(f).
\71\ U.S. Department of Transportation, Federal Highway
Administration, Charging and Fueling Infrastructure Grant Program
(Mar. 30, 2023), <a href="https://www.fhwa.dot.gov/environment/cfi/">https://www.fhwa.dot.gov/environment/cfi/</a>.
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<bullet> 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 inter-island connectors. For additional
information on the Territorial and Puerto Rico Highway program, see the
Territorial and Puerto Rico Highway Program Fact Sheet.\73\
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\72\ See 23 U.S.C. 165
\73\ U.S. Department of Transportation, Federal Highway
Administration, Territorial and Puerto Rico Highway Program Fact
Sheet (Feb. 24. 2022), <a href="https://www.fhwa.dot.gov/bipartisan-infrastructure-law/territorial_puerto_rico_hp_fact_sheet.cfm">https://www.fhwa.dot.gov/bipartisan-infrastructure-law/territorial_puerto_rico_hp_fact_sheet.cfm</a>.
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<bullet> 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:
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\74\ See 23 U.S.C. 167.
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[cir] investing in infrastructure and operational improvements that
strengthen economic competitiveness, reduce congestion, reduce the cost
of freight transportation, improve reliability, and increase
productivity;
[cir] improving the safety, security, efficiency, and resiliency of
freight transportation in rural and urban areas;
[cir] improving the state of good repair of the NHFN;
[cir] using innovation and advanced technology to improve NHFN
safety, efficiency, and reliability;
[cir] improving the efficiency and productivity of the NHFN;
[cir] improving State flexibility to support multi-State corridor
planning and address highway freight connectivity; and
[cir] 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\
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\75\ U.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), <a href="https://ops.fhwa.dot.gov/freight/documents/NHFP_Implementation_Guidance.pdf">https://ops.fhwa.dot.gov/freight/documents/NHFP_Implementation_Guidance.pdf</a>.
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<bullet> 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 on-demand mobility services. For
additional information about the Rural Surface Transportation Grant
Program, see the Rural Surface Transportation Grant website.\77\
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\76\ See 23 U.S.C. 173.
\77\ See the U.S. Department of Transportation's Rural Surface
Transportation Grant website at <a href="https://www.transportation.gov/grants/rural-surface-transportation-grant">https://www.transportation.gov/grants/rural-surface-transportation-grant</a>.
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<bullet> 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 wide-range of projects
designed to reduce transportation emissions, defined as carbon dioxide
emissions from on-road highway sources. For additional
[[Page 65002]]
information on eligible projects under CRP, see the Carbon Reduction
Program (CRP) Implementation Guidance.\80\
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\78\ See 23 U.S.C. 175.
\79\ Public Law 117-58.
\80\ U.S. Department of Transportation, Federal Highway
Administration, Carbon Reduction Program (CRP) Implementation
Guidance (Apr. 21, 2022), <a href="https://www.fhwa.dot.gov/environment/sustainability/energy/policy/crp_guidance.pdf">https://www.fhwa.dot.gov/environment/sustainability/energy/policy/crp_guidance.pdf</a>.
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<bullet> Promoting Resilient Operations for Transformative,
Efficient, and Cost-Saving 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\
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\81\ See 23 U.S.C. 176.
\82\ U.S. Department of Transportation, Federal Highway
Administration, Promoting Resilient Operations for Transformative,
Efficient, and Cost-Saving Transportation (PROTECT) Formula Program
Implementation Guidance (Jul. 29, 2022), <a href="https://www.fhwa.dot.gov/environment/sustainability/resilience/policy_and_guidance/protect_formula.pdf">https://www.fhwa.dot.gov/environment/sustainability/resilience/policy_and_guidance/protect_formula.pdf</a>.
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<bullet> 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, self-determination, 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\
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\83\ See 23 U.S.C. 202.
\84\ U.S. Department of Transportation, Federal Highway
Administration, Tribal Transportation Program Fact Sheet (Oct. 26,
2022), <a href="https://www.fhwa.dot.gov/bipartisan-infrastructure-law/ttp.cfm">https://www.fhwa.dot.gov/bipartisan-infrastructure-law/ttp.cfm</a>.
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<bullet> 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\
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\85\ See 23 U.S.C. 203.
\86\ U.S. Department of Transportation, Federal Highway
Administration, Implementation Guidance for the Federal Lands
Transportation Program (Jun. 29, 2022), <a href="https://highways.dot.gov/sites/fhwa.dot.gov/files/docs/federal-lands/programs/federal-lands-transportation-program/8186/fltp-guidance-cleared.pdf">https://highways.dot.gov/sites/fhwa.dot.gov/files/docs/federal-lands/programs/federal-lands-transportation-program/8186/fltp-guidance-cleared.pdf</a>.
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<bullet> 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\
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\87\ See 23 U.S.C. 204.
\88\ U.S. Department of Transportation, Federal Highway
Administration, Implementation Guidance for the Federal Lands Access
Program (Aug. 6, 2018), <a href="https://highways.dot.gov/sites/fhwa.dot.gov/files/docs/federal-lands/programs/federal-lands-access-program/6971/flap-implem-guidance.pdf">https://highways.dot.gov/sites/fhwa.dot.gov/files/docs/federal-lands/programs/federal-lands-access-program/6971/flap-implem-guidance.pdf</a>.
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<bullet> 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 on-demand 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\
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\89\ U.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), <a href="https://www.transportation.gov/sites/dot.gov/files/2023-02/RAISE%202023%20NOFO%20Amendment2.pdf">https://www.transportation.gov/sites/dot.gov/files/2023-02/RAISE%202023%20NOFO%20Amendment2.pdf</a>.
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<bullet> 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\
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\90\ See 23 U.S.C. Chapter 6.
\91\ See the U.S. Department of Transportation's TIFIA Program
Overview website at <a href="https://www.transportation.gov/buildamerica/financing/tifia">https://www.transportation.gov/buildamerica/financing/tifia</a>.
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<bullet> 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\
[[Page 65003]]
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 bus-related 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\
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\92\ See 49 U.S.C. 5307.
\93\ While 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.
\94\ U.S. Department of Transportation, Federal Transit
Administration, Urbanized Area Formula Program Guidance, 79 FR 2930
(Feb. 27, 2020), <a href="https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/urbanized-area-formula-program-program-guidance-and">https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/urbanized-area-formula-program-program-guidance-and</a>.
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<bullet> 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\
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\95\ See 49 U.S.C. 5309.
\96\ U.S. Department of Transportation, Federal Transit
Administration, Capital Investment Grants Policy Guidance (Jan. 12,
2023), <a href="https://www.transit.dot.gov/sites/fta.dot.gov/files/2023-01/CIG-Policy-Guidance-January-2023.pdf">https://www.transit.dot.gov/sites/fta.dot.gov/files/2023-01/CIG-Policy-Guidance-January-2023.pdf</a>.
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<bullet> 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\
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\97\ See 49 U.S.C. 5311.
\98\ While 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.
\99\ U.S. Department of Transportation, Federal Transit
Administration, Formula Grants Rural Areas Program Guidance and
Application Instructions, 79 FR 63663 (Feb. 27, 2020), <a href="https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/formula-grants-rural-areas-program-guidance-and-application">https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/formula-grants-rural-areas-program-guidance-and-application</a>.
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<bullet> 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\
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\100\ See 49 U.S.C. 5337.
\101\ U.S. Department of Transportation, Federal Transit
Administration, State of Good Repair Grant Program Guidance and
Application Instructions (May 29, 2020), <a href="https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/state-good-repair-grant-program-guidance-and-application">https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/state-good-repair-grant-program-guidance-and-application</a>.
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<bullet> 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\
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\102\ See 49 U.S.C. 5339.
\103\ U.S. Department of Transportation, Federal Transit
Administration, Buses and Bus Facilities Program Guidance and
Application Instructions (Feb. 27, 2020), <a href="https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/bus-and-bus-facilities-program-guidance-and-application">https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/bus-and-bus-facilities-program-guidance-and-application</a>.
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<bullet> 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\
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\104\ See 49 U.S.C. 6703.
\105\ U.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), <a href="https://www.fhwa.dot.gov/engineering/hydraulics/culverthyd/aquatic/culvertaop.cfm">https://www.fhwa.dot.gov/engineering/hydraulics/culverthyd/aquatic/culvertaop.cfm</a>.
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<bullet> 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\
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\106\ See title VIII of division J of Public Law 117-58.
\107\ U.S. Department of Transportation, Federal Highway
Administration, Bridge Formula Program (BFP) Implementation Guidance
(Jan. 14, 2022), <a href="https://www.fhwa.dot.gov/bridge/bfp/20220114.cfm">https://www.fhwa.dot.gov/bridge/bfp/20220114.cfm</a>.
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<bullet> 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.
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\108\ See section 602(c)(5)(B)(v) of the Social Security Act.
See also 23 U.S.C. 134 for more details.
\109\ See 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.
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b. Pathway One: Applicable Requirements
Recipients using SLFRF funds for Surface Transportation projects
under Pathway One must comply with certain
[[Page 65004]]
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 DOT-funded project in the absence of SLFRF funds. Immediately below,
this interim final rule summarizes some of the requirements that
generally apply:
<bullet> 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.
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\110\ 42 U.S.C. 4601 et seq.
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<bullet> 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 Davis-Bacon
prevailing wage protections for highway and transit projects,
respectively, receiving Federal financial assistance.
<bullet> 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.
<bullet> 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\
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\111\ See Public Law 97-424, 96 Stat. 2097 (Jan. 6, 1983).
\112\ See, 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).
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<bullet> 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
[[Page 65005]]
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.
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\113\ To 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 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).
\114\ As 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 Sec. 21:14 (7th
ed. 2010).
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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 Non-Federal Cost Share Requirements to
SLFRF Funds. Generally, the non-Federal 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 non-Federal
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.
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\115\ See section 7 of the SLFRF Award Terms and Conditions.
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Because SLFRF funds are Federal funds, using SLFRF funds under
Pathway One will still impact the cost-share requirements that apply to
certain Surface Transportation projects due to differences in
applicable non-Federal cost share requirements across DOT projects and
programs. In some cases, DOT programs are capped in the amount of
Federal funds that may be used in a project, regardless of whether
those funds are provided by DOT or another Federal source. This is
true, for example, of the State of Good Repair Grant Formula Program
(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 non-Federal 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
[[Page 65006]]
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\
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\116\ See 23 CFR part 625.
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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.
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\117\ U.S. Department of Transportation, FY 2023 RAISE Grants
Notice of Funding Opportunity, <a href="https://www.transportation.gov/sites/dot.gov/files/2023-02/RAISE%202023%20NOFO%20Amendment2.pdf">https://www.transportation.gov/sites/dot.gov/files/2023-02/RAISE%202023%20NOFO%20Amendment2.pdf</a>.
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For a RAISE-eligible project to qualify for the streamlined
approach, it must satisfy the following criteria:
<bullet> 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.
<bullet> 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.
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\118\ See 23 U.S.C. 138.
\119\ See 54 U.S.C. 306108.
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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
[[Page 65007]]
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.
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\120\ Although 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.
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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 cross-referenced 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.
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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.
\122\ See 23 CFR 771.116, 771.117, and 771.118.
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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 build-outs, 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.
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\123\ The 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.
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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
[[Page 65008]]
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 <a href="/cdn-cgi/l/email-protection#1f515056324c53594d595f4b6d7a7e6c6a6d6631787069"><span class="__cf_email__" data-cfemail="97d9d8debac4dbd1c5d1d7c3e5f2f6e4e2e5eeb9f0f8e1">[email protected]</span></a> and is due by December 20, 2023. Ideally, the notice
of intent will provide the following information:
<bullet> Project description, including description of how the
project meets the applicable requirements under the relevant Surface
Transportation program;
<bullet> 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;
<bullet> Total expected project cost;
<bullet> Presence of other Federal funding;
<bullet> Status of NEPA review;
<bullet> 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;
<bullet> 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
<bullet> 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:
<bullet> Title 23: All parts of title 23
<bullet> Title 40: Chapters 141 and 145
<bullet> Title 49: Chapters 53, 55, 67, 471, and subtitle V
More specifically, applicable provisions include those relating to
the following requirements:
<bullet> 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.
<bullet> 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.
<bullet> 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
[[Page 65009]]
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.
<bullet> 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.
<bullet> 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.
<bullet> Wage and labor requirements. For example, the requirements
of 23 U.S.C. 113, imposing Davis-Bacon prevailing wage protections for
highway projects, apply.
<bullet> 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.
<bullet> 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.
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\124\ For 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 <a href="https://www.transportation.gov/grants/raise/raise-fy2022-fhwa-exhibits-october-18-2022">https://www.transportation.gov/grants/raise/raise-fy2022-fhwa-exhibits-october-18-2022</a>.
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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\
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\125\ See 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).
\126\ The 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.
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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 Transportati
[…truncated; see source link]Indexed from Federal Register on September 20, 2023.
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