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website.374 Because Treasury interpreted the definition of an NEU375 in accordance with the <br />statute and established an NEU distribution process in May 2021, the final rule does not <br />incorporate an appeals process regarding the definitions or the facts -and -circumstances test used <br />for eligibility determinations. <br />Prohibition on Additional Conditions or Requirements in the NEU Distribution Process <br />Public Comment: One commenter expressed support for Treasury's prohibition on states <br />and territories placing additional conditions or requirements on distributions to NEUs. This <br />prohibition restricts states and territories from imposing limitations on NEUs' use of SLFRF <br />funds based on an NEU's proposed spending plan or other policies, offsetting any debt owed by <br />an NEU against the NEU's distribution, or providing funding on a reimbursement model. In <br />particular, the commenter noted that a reimbursement model would lead to inequities in <br />accessing SLFRF funds. <br />Treasury Response: The final rule maintains and finalizes the prohibition on states and <br />territories placing additional conditions or requirements on distributions to NEUs as well as to <br />any UGLGs within counties that are non-UGLGs. Such conditions or requirements may <br />contravene the statutory requirement that states and territories make distributions based on <br />population and within the statutorily defined timeframe. <br />374 The Guidance on Distribution of Funds to Nonentitlement Units of Local Government can be found at this link: <br />https://home.treasury.gov/system/files/136/NEU_Guidance.pdf. The Nonentitlement Unit of Local Government <br />Definitional and Data Methodology can be found at this link: <br />https://home.treasury.gov/system/files/1 3 6/NEU_Methodology.pdf. <br />375 Treasury has interpreted NEU to generally include both incorporated places and MCDs with active functioning <br />governments, subject to the state determining, in the case of weak-MCD States, that a weak MCD has the legal and <br />operational capacity to accept SLFRF funds and provides a broad range of services that would constitute eligible <br />uses under ARPA. More details can be found in the Nonentitlement Unit of Local Government Definitional and <br />Data Methodology, available at https://home.treasury.gov/system/files/136/NEU_Methodology.pdf. <br />353 <br />