Dear USET/USET SPF Family,
Today the U.S. Department of the Treasury issued a Final Rule for the American Rescue Plan Act of 2021 (ARPA) Coronavirus Fiscal Recovery Fund program (FRF). ARPA became law on March 11, 2021 and provided $20 billion to Tribal governments to respond to the devasting effects of the COVID-19 public health emergency. To implement the FRF, Treasury issued an Interim Final Rule (IFR) on May 17, 2021.
The FRF Final Rule amends the IFR in response to over 1,500 comments received by Treasury and will become effective on April 1, 2022. The IFR will remain in effect and funds used consistently with the IFR will remain in compliance with the FRF program. However, FRF recipients can choose to immediately utilize the amendments made by the Final Rule ahead of the April 1, 2022 effective date regardless of when the FRF funds were used, as long as the use of funds are consistent with the terms of the Final Rule.
Treasury will be hosting a webinar for Tribal governments on the Final Rule to provide an overview and answer questions. Details regarding the webinar are as follows—
If you are unable to attend, or the webinar registration reaches capacity, a recording will be made available on Treasury’s website. For more information on the FRF Final Rule, please click on the links provided below—
USET SPF submitted comments to Treasury in response to the IFR on July 16, 2021. Our comments stressed that while the IFR recognized the disproportionate impact of COVID-19 on our Tribal Nations and citizens, it did not reflect a comprehensive understanding of the federal government’s trust and treaty obligations and obligations to uphold Tribal sovereignty and self-determination. In response to the FRF, USET SPF recommended streamlined reporting requirements, maximum deference to Tribal Nations to establish standards for expenditure of FRF funds, ability to support Tribal citizens residing outside our jurisdictional boundaries, additional language to support public facilities construction, and addition of Tribal enterprises to the definition of eligible workers for premium pay. Our comments also recommended that Tribal Nations should determine our own water, sewer, and broadband infrastructure priorities and that Tribal Nations should be empowered to use FRF expenditures to support economic development initiatives.
USET SPF will continue to review the Final Rule and provide updates on the below preliminary analysis as necessary.
Key Amendments and Clarifications of the FRF Final Rule
The Final Rule aims at providing broader flexibility and greater simplicity for the FRF program. Key amendments to the IFR are provided below.
Replacing Lost Public Sector Revenue
The Final Rule provides a standard allowance for revenue loss of $10 million, which allows FRF recipients to select between a standard amount of revenue loss of complete a full revenue loss calculation. Recipients opting for the standard allowance may use that amount, which may be their full FRF award, for government services and will have streamlined reporting requirements.
Public Health and Economic Impacts
The Final Rule clarifies that recipients can use funds for capital expenditures that support an eligible COVID-19 public health or economic response. As examples, Treasury has stated that FRF recipients can use funds to build certain affordable housing, childcare facilities, schools, hospitals, and other projects consistent with the Final Rule. Tribal governments are exempt from the requirement to complete a written justification for capital expenditures.
The Final Rule also expanded the set of households and communities that are presumed to be “impacted” and “disproportionally impacted” by COVID-19, which allows FRF recipients to provide response to a broad set of households and entities without requiring additional analysis. Households and communities served by Tribal governments are presumed to be disproportionally impacted communities, which allows Tribal governments to provide them with a wide range of services without requiring additional analysis. Examples of eligible uses of FRF funds include, but are not limited to the following—
- Cash and food assistance;
- Health insurance coverage expansion and paid sick and family leave;
- Financial services for the unbanked and underbanked;
- Affordable housing development and permanent supportive housing;
- Early learning services;
- Addressing learning loss for K-12 students; and
- Improvements to vacant or abandoned property.
Small businesses operated by Tribal governments, or on Tribal Lands, are also presumed to be disproportionally impacted by the COVID-19 public health crisis. Therefore, the Final Rule states that Tribal businesses may receive loans or grants to mitigate financial hardships, technical assistance and other business planning assistance, and access to a broader set of capital expenditures and support services. Treasury has also included Tribal Development Districts (e.g., commercial centers for Tribal hospitality, gaming tourism, and entertainment industries) in the list of impacted industries eligible to receive aid that responds to those impacts.
The Final Rule also allows FRF recipients to cover payroll and covered benefits for public safety, public health, and human services staff for the portion of time spent responding to COVID-19. It also provides a broader array of options for FRF recipients to restore and support their Tribal public sector workforce, which includes the following—
- Hiring public sector staff, up to 7.5% above their pre-pandemic workforce levels to make up for underinvestment since the Great Recession;
- Provide funds to employees that experienced pay cuts or furloughs;
- Avoiding layoffs; and
- Providing retention incentives.
The Final Rule delivers more streamlined options to provide premium pay, by broadening the share of eligible workers who can receive premium pay without a written justification while maintaining a focus on lower-income and frontline workers performing essential work. Additionally, Tribal government workforces have been identified as eligible workers in critical infrastructure sectors.
Water, Sewer, and Broadband Infrastructure
The Final Rule has broadened eligible broadband infrastructure investments to address challenges with broadband access, affordability, and reliability, and adds additional eligible water and sewer infrastructure investments. Under the Final Rule, Treasury has determined that a necessary investment in water, sewer, and broadband infrastructure to be one that is—
- Responsive to an identified need to achieve or maintain an adequate minimum level of service, which may include a reasonable projection of increased need, whether due to population growth or otherwise; and
- A cost-effective means for meeting that need, while considering available alternatives.
For more information, please contact Brian Howard, USET SPF Senior Policy Analyst, at firstname.lastname@example.org.