What is the Treasury SLFRF 2023 Interim Final Rule (IFR)?

The 204-page Interim Final Rule (IFR) issued by U.S. Treasury on August 10, 2023, is to be published in the Federal Register and is available along with the IFR Overview on Treasury’s website. The IFR goes into effect as soon as it's published in the Federal Register, and people have 60 days from that publication date to share their thoughts on it.

The primary purpose of the IFR is to provide state, local, and tribal governments with increased flexibility in using the funds allocated through the American Rescue Plan Act's (ARPA) State and Local Fiscal Recovery Funds (SLFRF). These funds can now be utilized for a broader range of projects for surface transportation, natural disaster relief, and Community Development Block Grant (CDBG) Title I projects.

What you need to know about the IFR

1. No changes to existing uses: The IFR maintains the existing permissible uses of SLFRF funds, as established in the 2022 Final Rule. These established guidelines remain unchanged.
2. Enhancement, not replacement: The newly introduced eligible uses of SLFRF funds are designed to enhance and bolster ongoing projects and programs, rather than serving as substitutes. The objective is to elevate the effectiveness of these initiatives.
3. Avoiding duplication: Ensuring that there is no duplication of funding is crucial. You cannot use SLFRF funds for a project already funded from another source or duplicate funding. Funding should be used to support and enhance a project.
4. Effective date: These new eligible uses of SLFRF funds can be applied to expenses incurred after December 29, 2022.
5. Natural disaster mitigation: SLFRF funds can now be employed to mitigate the consequences of natural disasters and their adverse economic impacts on communities.
6. Use deadlines: You must obligate SLFRF funds, including those for these new eligible uses, by December 31, 2024. For natural disaster relief, funds must be spent by no later than December 31, 2026. Surface transportation and CDBG projects obligated funds must be spent by no later than September 30, 2026.
7. Matching funds: SLFRF funds can also be used to meet the non-federal matching requirement for FEMA projects and certain surface transportation initiatives. In addition, they can be used for non-federal match for the non-federal share requirements of a federal financial assistance program in support of activities eligible under the CDBG program.

Newly permissible uses

• Emergency relief from natural disasters: SLFRF funds can be allocated to address natural disasters or their economic repercussions. Specific guidelines governing this process are provided in the IFR.
• Surface transportation projects: These funds can now support projects under 26 distinct surface transportation programs, with three pathways for utilization, including projects funded by the U.S. Department of Transportation (USDOT).
• CDBG program Title I projects: SLFRF funds can be employed for activities falling under Title I of the Housing and Community Development Act of 1974, encompassing a wide spectrum of projects under the CDBG and Indian Community Development Block Grant (ICDBG) programs.

For comprehensive details and specific requirements, please consult the complete IFR or its summarized version in the IFR Overview.

If you require clarification or guidance regarding this IFR, please use the form to the page to to reach out to UHY for assistance.