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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4433
<br /> placing additional conditions or beginning March 3, 2021 and ending period of performance be extended for
<br /> requirements on distributions to NEUs. December 31, 2024."The interim final at least two additional years beyond the
<br /> This prohibition restricts states and rule also provides that the period of expenditure deadline set forth in the
<br /> territories from imposing limitations on performance will run until December interim final rule,i.e.,until December
<br /> NEUs'use of SLFRF funds based on an 31, 2026,which will provide recipients 31, 2028. One commenter wrote that the
<br /> NEU's proposed spending plan or other an additional two years during which final rule should allow for extended
<br /> policies, offsetting any debt owed by an they may expend funds for costs projects (e.g.,over a time horizon of
<br /> NEU against the NEU's distribution, or incurred(i.e., obligated). more than ten years) for recipients
<br /> providing funding on a reimbursement As explained in more detail below,in working to develop long-term water
<br /> model.In particular,the commenter the final rule Treasury is maintaining supplies to prepare for extreme drought.
<br /> noted that a reimbursement model these time periods. Treasury will retain Treasury Response.In the final rule,
<br /> would lead to inequities in accessing March 3, 2021 as the first date when Treasury is maintaining March 3, 2021
<br /> SLFRF funds. costs may be incurred,to provide for as the date when recipients may begin
<br /> Treasury Response:The final rule forward-looking or prospective use of to incur costs using SLFRF funds.As
<br /> maintains and finalizes the prohibition funds and to align with the start date of described in the interim final rule,use
<br /> on states and territories placing the "covered period" as such term is of SLFRF funds is forward looking and
<br /> additional conditions or requirements used in section 602(c)(2)(A). The the eligible use categories provided by
<br /> on distributions to NEUs as well as to deadline for costs to be incurred— statute are all prospective in nature.
<br /> any UGLGs within counties that are which the final rule clarifies means While recipients may identify and
<br /> non-UGLGs. Such conditions or obligated—December 31, 2024, is respond to negative economic impacts
<br /> requirements may contravene the specified in the ARPA statute, and that occurred during 2020,the costs
<br /> statutory requirement that states and Treasury will retain December 31, 2026 incurred to respond to these impacts
<br /> territories make distributions based on as the end of the period of performance remain prospective. Further,Treasury
<br /> population and within the statutorily to provide a reasonable amount of time considers the beginning of the covered
<br /> defined timeframe. for recipients to liquidate obligations period for purposes of determining
<br /> Other Provisions incurred by the statutory deadline. compliance with section 602(c)(2)(A)to
<br /> Public Comments. Some commenters be a relevant reference point for this
<br /> Treasury did not receive substantive expressed concerns about costs incurred purpose that provides some flexibility
<br /> comments on the requirement that states before March 3, 2021 not being covered for recipients that began incurring costs
<br /> and territories permit NEUs without and recommended the "start date"be in the anticipation of enactment of the
<br /> formal budgets as of January 27, 2020 to changed to January 2020 to coincide ARPA or in advance of the issuance of
<br /> self-certify their most recent annual with the declaration of the public health the interim final rule and receipt of
<br /> expenditures as of January 27, 2020 for emergency. These commenters argued payment.
<br /> the purpose of calculating the 75 that recipient governments began Finally,establishing an earlier start
<br /> percent budget cap, or Treasury's incurring costs to respond to COVID-19 date would permit governments to use
<br /> interpretation of the 75 percent budget and its economic impacts in January funds received in 2021 to satisfy
<br /> cap applying only to a consolidated 2020 and that prior federal fiscal relief, obligations incurred in 2020. This use
<br /> government's NEU allocation under such as relief provided in the raises a substantial risk of SLFRF funds
<br /> section 603(b)(2)but not to a Coronavirus Aid,Relief,and Economic being used to supplant other recipient
<br /> consolidated government's county Security Act, did not fully compensate funds previously used to pay for such
<br /> allocation under section 603(b)(3). recipient governments for these costs. 2020 obligations,freeing funds for
<br /> Further,Treasury did not receive These commenters recommended that recipients to use for any purpose rather
<br /> substantive comments on the interim costs incurred before March 3, 2021 that than eligible uses of SLFRF funds under
<br /> final rule's allowance that states and otherwise fit within eligible use the ARPA. Permitting such usage would
<br /> territories be able to use SLFRF funds categories for SLFRF should be undermine the provisions setting forth
<br /> under section 602(c)(1)(A)to fund permissible uses of funds. permissible and impermissible uses in
<br /> expenses related to administering Some commenters asked Treasury to the statute. Therefore,a reading of the
<br /> payments to NEUs and units of general clarify whether local governments are statute permitting use of funds prior to
<br /> local government. As such,the final rule subject to the same covered period as March 3, 2021 would be inconsistent
<br /> maintains these provisions as written in states and territories beginning March 3, with the statutory structure.
<br /> the interim final rule without 2021. Commenters noted that section In the final rule,Treasury is also
<br /> modification. 603(g) of the Social Security Act does maintaining the deadlines by which
<br /> Treasury received some comments not contain the same definition of funds must be obligated(i.e.,December
<br /> that are not addressed because they are "covered period" as section 602(g)(1) of 31, 2024) and by which such obligations
<br /> beyond the scope of the NEU provision the Social Security Act,which must be liquidated (i.e.,December 31,
<br /> of the interim final rule or not references a statutory provision that 2026). The December 31, 2024 deadline
<br /> authorized by the statute,including only applies to states and territories. by which eligible costs must be incurred
<br /> comments related to state accounting Many commenters requested that the is established by statute.Treasury is
<br /> practices,re-allocations of NEU deadline for costs to be incurred and the finalizing its interpretation of
<br /> allocations that exceed the 75 percent period of performance be extended due "incurred"to be equivalent to the
<br /> budget cap,and concerns around to the longer timeline for completing definition of"obligation,"based on the
<br /> eligible uses under SLFRF that small water and sewer projects. One definition used for purposes of the
<br /> local governments may find particularly commenter requested that recipients be Uniform Guidance. Treasury is also
<br /> salient. able to split projects into different maintaining the period of performance,
<br /> phases so that funds could be expended which will run through December 31,
<br /> C. Timeline for Use of SLFRF Funds on larger,longer term projects (e.g.,by 2026,and provides the deadline by
<br /> The interim final rule provided that obligating funds on one portion of the which recipients must expend obligated
<br /> "[a] recipient may only use funds to project by the statutory deadline). One funds.Most recipients received SLFRF
<br /> cover costs incurred during the period commenter recommended that the funds in the spring and summer of 2021,
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