Oxnard City Council
March 29, 2022

Treasury Response: Treasury is
clarifying that when assessing whether
a program or service is an eligible use
to respond to the public health impacts
of the COVID–19 public health
emergency, the Department will
consider the two eligibility
requirements discussed below. These
standards apply to all proposed public
health uses.

First, there must be a negative public
health impact or harm experienced by
an individual or a class. For ease of
administration, the interim final rule
allowed, and the final rule maintains
the ability for, recipients to identify a
public health impact on a population or
group of individuals, referred to as a
‘‘class,’’ and to provide assistance to
that class. In determining whether an
individual is eligible for a program
designed to address a harm experienced
by a class, the recipient need only
document that the individual is within
the class that experienced a public
health impact, see section Standards:

Designating Other Impacted Classes. In
the case of some impacts, for example
impacts of COVID–19 itself that are
addressed by providing prevention and
mitigation services, such a class could
reasonably include the general public.

Second, the program, service, or other
intervention must address or respond to
the identified impact or harm. The final
rule maintains the interim final rule
requirement that eligible uses under this
category must be in response to the
disease itself or other public health
harms that it caused.
19 Responses must be reasonably
designed to benefit the individual or
class that experienced the public health
impact or harm. Uses of funds should be
assessed based on their responsiveness
to their intended beneficiaries and the
ability of the response to address the
impact or harm experienced by those
beneficiaries.

Responses must also be related and
reasonably proportional to the extent
and type of public health impact or
harm experienced. Uses that bear no
relation or are grossly disproportionate
to the type or extent of harm
experienced would not be eligible uses.

Reasonably proportional refers to the
scale of the response compared to the
scale of the harm. It also refers to the
targeting of the response to beneficiaries
compared to the amount of harm they
experienced. In evaluating whether a
use is reasonably proportional,
recipients should consider relevant
factors about the harm identified and
the response. For example, recipients
may consider the size of the population
impacted and the severity, type, and
duration of the impact. Recipients may
also consider the efficacy, cost, cost-
effectiveness, and time to delivery of the
response.

If a recipient intends to fund capital
expenditures in response to the public
health impacts of the pandemic,
recipients should refer to the section
Capital Expenditures for details about
the eligibility of capital expenditures.

Standards: Designating a Negative
Economic Impact
Public Comment: Many commenters
expressed uncertainty about how to
determine whether uses of funds,
beyond those specifically enumerated as
eligible, might be eligible responses to
negative economic impacts. For
example, many commenters submitted
questions asking whether specific uses
of funds would be eligible. Others
described what they considered to be
impacts of the pandemic and argued
that uses of funds to respond to these
issues should be eligible. Some
commenters requested that Treasury
provide additional detail to guide their
assessments of eligible uses of funds.

These comments ranged in their
specificity and covered the full range of
eligible uses to respond to negative
economic impacts. Several commenters
asked for clarification about what types
of food assistance would be considered
eligible. Another commenter requested
that the establishment of outdoor dining
be eligible. Many commenters inquired
about homeless shelters as an eligible
use of SLFRF funds.

Commenters also expressed
uncertainty about the ability to establish
classes, including geographic areas, that
experienced a negative economic impact
or disagreed with the requirement that
an individual entity be impacted by the
pandemic in order to receive assistance.

For example, a commenter argued that
interventions should not be limited to
individuals or businesses that
experienced an economic impact and
should instead be used broadly to
support economic growth. These
commenters argued that an expenditure
that supports a more robust economy
may help combat the pandemic’s
negative economic impacts, and it can
do so even if funding is provided to
individuals or entities that did not
themselves experience a negative
economic impact during the pandemic.

Treasury Response: The final rule
maintains the standard articulated in
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4344 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 20 For example, expenses such as excessive
compensation to employees or expenses which
have already been reimbursed through another
federal program, are not reasonably designed to
address a negative economic impact to a
beneficiary.
21 For example, a program or service that imposes
conditions on participation in or acceptance of the
service that would undermine efforts to stop the
spread of COVID–19 or discourage compliance with
practices in line with CDC guidance for stopping
the spread of COVID–19 is not a permissible use of
funds.
the interim final rule. For clarity, the
final rule re-articulates that when
assessing whether a program or service
is an eligible use to respond to the
negative economic impacts of the
COVID–19 public health emergency,
Treasury will consider the two
eligibility requirements discussed
below.

First, there must be a negative
economic impact, or an economic harm,
experienced by an individual or a class.

The recipient should assess whether,
and the extent to which, there has been
an economic harm, such as loss of
earnings or revenue, that resulted from
the COVID–19 public health emergency.

A recipient should first consider
whether an economic harm exists and
then whether this harm was caused or
made worse by the COVID–19 public
health emergency. This approach is
consistent with the text of the statute,
which provides that funds in this
category must be used to ‘‘respond to
the public health emergency with
respect to . . . its negative economic
impacts.’’
While economic impacts may either
be immediate or delayed, individuals or
classes that did not experience a
negative economic impact from the
public health emergency would not be
eligible beneficiaries under this
category. As noted above, the interim
final rule permitted recipients to
presume that households that
experienced unemployment, increased
food or housing insecurity, or are low-
or moderate-income experienced a
negative economic impact from the
pandemic. For discussion of the final
rule’s approach to this presumption, see
section Populations Presumed Eligible.

The final rule also maintains several
provisions included in the interim final
rule and subsequent guidance that are
intended to ease administration of
identifying that the beneficiary
experienced a negative economic impact
or harm. For example, the interim final
rule allowed, and the final rule
maintains the ability for, recipients to
demonstrate a negative economic
impact on a population or group,
referred to as a ‘‘class,’’ and to provide
assistance to households, small
businesses, or nonprofits that fall within
that class. In such cases, the recipient
need only demonstrate that the
household, small business, or nonprofit
is within the class that experienced a
negative economic impact, see section
Standards: Designating Other Impacted
Classes. This would allow, for example,
an internet access assistance program
for all households with children to
support those households’ ability to
participate in healthcare, work, and
educational activities like extending
learning opportunities, among other
critical activities. In that case, the
recipient would only need to identify a
negative economic impact to the class of
‘‘households with children’’ and would
not need to document or otherwise
demonstrate that each individual
household served experienced a
negative economic impact.

Second, the response must be
designed to address the identified
economic harm or impact resulting from
or exacerbated by the public health
emergency. In selecting responses, the
recipient must assess whether, and the
extent to which, the use would respond
to or address this harm or impact. This
approach is consistent with the text of
the statute, which provides that funds
may be used to ‘‘respond to’’ the
‘‘negative economic impacts’’ of the
public health emergency ‘‘including
assistance to households, small
businesses, and nonprofits, or aid to
impacted industries such as tourism,
travel, and hospitality.’’ The list of
potential responses (‘‘assistance’’ or
‘‘aid’’) suggests that responses should
address the ‘‘negative economic
impacts’’ of particular types of
beneficiaries (e.g., households or small
businesses).

Responses must be reasonably
designed to benefit the individual or
class that experienced the negative
economic impact or harm. Uses of funds
should be assessed based on their
responsiveness to their intended
beneficiary and the ability of the
response to address the impact or harm
experienced by that beneficiary.
20 Responses must also be related and
reasonably proportional to the extent
and type of harm experienced; uses that
bear no relation or are grossly
disproportionate to the type or extent of
harm experienced would not be eligible
uses.
21 Reasonably proportional refers
to the scale of the response compared to
the scale of the harm. It also refers to the
targeting of the response to beneficiaries
compared to the amount of harm they
experienced; for example, it may not be
reasonably proportional for a cash
assistance program to provide assistance
in a very small amount to a group that
experienced severe harm and in a much
larger amount to a group that
experienced relatively little harm. In
evaluating whether a use is reasonably
proportional, recipients should consider
relevant factors about the harm
identified and the response. For
example, recipients may consider the
size of the population impacted and the
severity, type, and duration of the
impact. Recipients may also consider
the efficacy, cost, cost-effectiveness, and
time to delivery of the response.

Finally, recipients should be aware of
the distinction between beneficiaries of
funds and subrecipients; a recipient
may provide services to beneficiaries
through subrecipients that did not
experience a negative economic impact,
see section Distinguishing Subrecipients
versus Beneficiaries. That is, a recipient
may award SLFRF funds to an entity
that did not experience a negative
economic impact in order to implement
a program or provide a service to
beneficiaries on its behalf. Such
transfers, when implementing a public
health or negative economic impact
response, should be responsive to and
designed to benefit individuals,
households, small businesses,
nonprofits, or impacted industries that
did experience a public health or
negative economic impact.

Determining the Appropriate Eligible
Use Category
Public Comment: Some commenters
expressed uncertainty about how to
analyze negative economic impacts to
different entities (e.g., households, small
businesses, nonprofits). For example,
commenters asked whether a nonprofit,
which did not experience a negative
economic impact itself, could be granted
funds to provide services to individuals
experiencing homelessness, who did
experience negative economic impacts.

Other commenters proposed providing
assistance to support the expansion of
small businesses, under the theory that
this would create more job
opportunities for unemployed workers
who experienced negative economic
impacts.

Treasury Response: In the final rule,
Treasury is clarifying that recipients
should assess a potential use of funds
based on which beneficiary experienced
the negative economic impact, in other
words, the households, small
businesses, nonprofits, or impacted
industries that experienced the negative
economic impact.

Treasury notes that recipients may
award SLFRF funds to many different
types of organizations to carry out
eligible uses of funds and serve
beneficiaries on behalf of a recipient.

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4345 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 22 AMI is also often referred to as median family
income for the area. Since AMI is synonymous with
this term and used more generally, the final rule
refers to AMI.
23 For the six New England states of Connecticut,
Maine, Massachusetts, New Hampshire, Rhode
Island, and Vermont, HUD provides AMI for towns
rather than counties. Recipients in these states
should use the AMI corresponding to their town
when determining thresholds for both low and
moderate income.

When a recipient provides funds to
another entity to carry out eligible uses
of funds and serve beneficiaries the
entity becomes a subrecipient (see
section Distinguishing a Subrecipient
versus a Beneficiary). For example, a
recipient may grant funds to a nonprofit
organization to provide food assistance
(an eligible use) to low-income
households (the beneficiaries).

Recipients only need to assess whether
the beneficiaries experienced a negative
economic impact and whether the
eligible use responds to that impact,
consistent with the two-part framework
described above; the organization
carrying out the eligible use does not
need to have experienced a negative
economic impact if it is serving as the
vehicle for reaching the beneficiaries.

When making determinations about
how to implement a program, recipients
should consider whether that method of
program implementation is an effective
and efficient method to implement the
program and do so in accordance with
the Uniform Guidance provisions that
govern procurements and sub-granting
of federal funds, as applicable.

As noted above, recipients should
analyze eligible uses based on the
beneficiary of the assistance or the
entity that experienced a negative
economic impact. Assistance to a small
business or to an impacted industry
must respond to a negative economic
impact experienced by that small
business or industry. Recipients may
not provide assistance to small
businesses or impacted industries that
did not experience a negative economic
impact, although recipients can identify
negative economic impacts for classes,
rather than individual businesses, and
may also presume that small businesses
in certain areas experienced impacts;
see section General Provisions:

Structure and Standards and section
Assistance to Small Businesses for
details.

Several examples illustrate the
application of these concepts. For
example, a recipient could provide
assistance to households via a contract
with a business to create subsidized jobs
for the long-term unemployed; in this
case the business is a subrecipient and
need not have experienced a negative
economic impact, but the recipient
would need to identify a specific
connection between the assistance
provided and addressing the negative
economic impact experienced by the
unemployed households. The recipient
could, for instance, document the
subsidized jobs created under the
contract and their reservation for long-
term unemployed individuals.

Similarly, a recipient might provide
assistance to a small business that
experienced a pandemic-related loss of
revenue. This small business is a
beneficiary and may use those funds in
many ways, potentially including hiring
or retaining staff. However, general
assistance to a business that did not
experience a negative economic impact
under the theory that this assistance
generally grows the economy and
therefore enhances opportunities for
unemployed workers would not be an
eligible use, because such assistance is
not reasonably designed to impact the
individuals or classes that experienced
a negative economic impact. In other
words, there is not a reasonable
connection between the assistance
provided and an impact on the
beneficiaries. Such an activity would be
attenuated from and thus not reasonably
designed to benefit the households that
experienced the negative economic
impact.
b. Populations Presumed Eligible
Presumed Eligibility: Impacted and
Disproportionately Impacted
Households and Communities
Background: As noted above, the
interim final rule allowed recipients to
presume that certain households were
impacted or disproportionately
impacted by the pandemic and thus
eligible for responsive programs or
services. Specifically, under the interim
final rule, recipients could presume that
a household or population that
experienced unemployment,
experienced increased food or housing
insecurity, or is low- or moderate-
income experienced negative economic
impacts resulting from the pandemic,
and recipients may provide services that
respond to these impacts.

The interim final rule also recognized
that pre-existing health, economic, and
social disparities contributed to
disproportionate pandemic impacts in
certain communities and allowed for a
broader list of enumerated eligible uses
to respond to the pandemic in
disproportionately impacted
communities. Under the interim final
rule, recipients were allowed to
presume that families residing in QCTs
or receiving services provided by Tribal
governments were disproportionately
impacted by the pandemic.

Definition of Low- and Moderate-
Income
Public Comment: As noted earlier,
many commenters sought a definition
for ‘‘low- and moderate-income’’ to
provide recipients greater clarity on
which specific households could be
presumed to be impacted by the
pandemic.

Treasury Response: The final rule
maintains the presumptions identified
in the interim final rule and defines
low- and moderate-income for the
purposes of determining which
households and populations recipients
may presume to have been impacted. To
simplify the administration of this
presumption, the final rule adopts a
definition of low- and moderate-income
based on thresholds established and
used in other federal programs.

Definitions. The final rule defines a
household as low income if it has (i)
income at or below 185 percent of the
Federal Poverty Guidelines (FPG) for the
size of its household based on the most
recently published poverty guidelines
by the Department of Health and Human
Services (HHS) or (ii) income at or
below 40 percent of the Area Median
Income (AMI) for its county and size of
household based on the most recently
published data by the Department of
Housing and Urban Development
(HUD).
22 The final rule defines a household as
moderate income if it has (i) income at
or below 300 percent of the FPG for the
size of its household based on the most
recently published poverty guidelines
by HHS or (ii) income at or below 65
percent of the AMI for its county and
size of household based on the most
recently published data by HUD.
23 Recipients may determine whether to
measure income levels for specific
households or for a geographic area
based on the type of service to be
provided. For example, recipients
developing a program that serves
specific households (e.g., a subsidy for
internet access, a childcare program)
may measure income at the household
level. Recipients providing a service
that reaches a general geographic area
(e.g., a park) may measure median
income of that area.

Further, recipients should generally
use the income threshold for the size of
the household to be served (e.g., when
providing childcare to a household of
five, recipients should reference the
income threshold for a household of
five); however, recipients may use the
income threshold for a default
household size of three if providing
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4346 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 24 U.S. Department of Health and Human Service,
HHS Poverty Guidelines for 2021, available at
https://aspe.hhs.gov/topics/poverty-economic-
mobility/poverty-guidelines.
25 U.S. Department of Housing and Urban
Development, FY 2021 Section 8 Income Limits,
available at https://www.huduser.gov/portal/
datasets/il/il21/Section8-FY21.xlsx. Recipients may
refer to the list of counties (and New England
towns) identified by state and metropolitan area for
identifying the appropriate area. U.S. Department of
Housing and Urban Development, FY 2021 List of
Counties (and New England Towns) Identified by
State and Metropolitan Area, available at https://
www.huduser.gov/portal/datasets/il/il21/area-
definitions-FY21.pdf.
26 The U.S. Census Bureau provides an interactive
map: U.S. Census Bureau, Median Household
Income State Selection Map, available at https://
data.census.gov/cedsci/map?q=Median
%20Household%20Income&g=0100000US
%2404000%24001&tid=ACSST5Y2019.S1901&cid=
S1901_C01_012E&vintage=2019. The U.S. Census
Bureau also provides an interactive table: U.S.

Census Bureau, Median Household Income In The
Past 12 Months (In 2019 Inflation-Adjusted Dollars),
available at https://data.census.gov/cedsci/table?q=
b19013&tid=ACSDT5Y2019.B19013&hidePreview=
true.
27 See U.S. Bureau of Labor Statistics,
Occupational Employment and Wage Estimates,
https://www.bls.gov/oes/current/oes_nat.htm (last
visited December 7, 2021).
28 U.S. Census Bureau, Poverty Status by State,
https://www.census.gov/data/tables/time-series/
demo/income-poverty/cps-pov/pov-46.html (last
visited December 7, 2021).
services that reach a general geographic
area or if doing so would simplify
administration of the program to be
provided (e.g., when developing a park,
recipients should use the income
threshold for a household size of three
and compare it to median income of the
geographic area to be served).

Note that recipients can also identify
and serve other classes of households
that experienced negative economic
impacts or disproportionate impacts
from the pandemic; recipients can
identify these classes based on their
income levels, including above the
levels defined as low- and moderate-
income in the final rule. For example,
a recipient may identify that households
in their community with incomes above
the final rule threshold for low-income
nevertheless experienced
disproportionate impacts from the
pandemic and provide responsive
services. See section General Provisions:

Standards for Identifying Other Eligible
Populations for details on applicable
standards.

Applicable levels. For reference, the
FPG is commonly referred to as the
federal poverty level (FPL) and is
related to—although distinct from—the
U.S. Census Bureau’s poverty threshold.

The final rule uses the FPG when
referring specifically to the HHS
guidelines, as these are the quantitative
metrics used for determining low- and
moderate-income households.

The FPG by household size for 2021
is included in the table below.

Recipients should refer to HHS Poverty
Guidelines for this information, which
is updated annually and available on
the HHS website.
24 For calculating the
thresholds of 40 percent and 65 percent
of AMI, recipients should refer to the
annual HUD Section 8 50 percent
income limits by county and household
size published by HUD and available on
the HUD website; in particular,
recipients should calculate the 40
percent threshold as 0.8 times the 50
percent income limit, and recipients
should calculate the 65 percent
threshold as 1.3 times the 50 percent
income limit.
25 Finally, for median
income of Census Tracts and other
geographic areas, recipients should refer
to the most recent American
Community Survey 5-year estimates
available through the Census website.
26 2021 FEDERAL POVERTY GUIDELINES
Household size
48 contiguous
states and the
District of
Columbia
Alaska Hawaii
1 .............................................................................................................................. ..................... $12,880 $16,090 $14,820 2 .............................................................................................................................. ..................... 17,420 21,770 20,040 3 .............................................................................................................................. ..................... 21,960 27,450 25,260 4 .............................................................................................................................. ..................... 26,500 33,130 30,480 5 .............................................................................................................................. ..................... 31,040 38,810 35,700 6 .............................................................................................................................. ..................... 35,580 44,490 40.920 7 .............................................................................................................................. ..................... 40,120 50,170 46,140 8 .............................................................................................................................. ..................... 44,660 55,850 51,360 For families/households with more than 8 persons, add the following amounts for each additional person:
48 Contiguous States and the District of Columbia: $4,540.

Alaska: $5,680.

Hawaii: $5,220.

Source: ‘‘HHS Poverty Guidelines for 2021,’’ available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines.

Rationale. In defining low income, the
final rule uses both the FPG and AMI to
account for national trends and regional
differences. The metric of 185 percent of
FPG aligns with some other programs;
for instance, under the National School
Lunch Program, students with
household incomes under 185 percent
of FPG qualify for free or reduced-price
lunch, and schools often use eligibility
for free or reduced-price lunch as an
indicator of low-income status under
Title 1–A of the Elementary and
Secondary Education Act. Eligibility for
other programs, such as the Federal
Communications Commission’s e-Rate
program and the Special Supplemental
Nutrition Program for Women, Infants
and Children employ this metric as
well. In addition, 185 percent of the
FPG for a family of four is $49,025,
which is approximately the wage
earnings for a two-earner household in
which both earners receive the median
wage in occupations, such as waiters
and waitresses and hotel clerks, that
were heavily impacted by COVID–19.
27 This measure is targeted toward those at
the bottom of the income distribution
and thus helps to promote use of SLFRF
funds towards populations with the
greatest needs. At the same time, with
approximately one-quarter of Americans
below 185 percent of the poverty
threshold, this approach is broad
enough to facilitate use of SLFRF funds
across many jurisdictions.
28 Because
regions have different cost and income
levels, this definition also allows for
upward adjustment based on AMI for
those regions where 40 percent of AMI
exceeds 185 percent of FPG. The metric
of 40 percent of AMI is based on the
midpoint of values often used to
designate certain categories of low-
income households; specifically, it is
the midpoint of the 30 percent income
limit and the 50 percent income limit
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4347 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 29 For instance, Melissa Kearney et al. (2013) cap
the ‘‘struggling lower middle-income class’’ at 250
percent of the federal poverty level, while Isabel
Sawhill and Edward Rodrigue (2015) define the
‘‘middle class’’ as those with incomes of at least 300
percent of the poverty line. Melissa Kearney et al.,
‘‘A Dozen Facts about America’s Struggling Lower-
Middle Class,’’ The Hamilton Project (December
2013), https://www.hamiltonproject.org/assets/
legacy/files/downloads_and_links/THP_12Low
IncomeFacts_Final.pdf; Isabel Sawhill and Edward
Rodrigue, ‘‘An Agenda for Reducing Poverty and
Improving Opportunity,’’ Brookings Institution,
https://www.brookings.edu/wp-content/uploads/
2016/07/Sawhill_FINAL.pdf.
30 Data on median annual wages from: U.S.

Bureau of Labor and Statistics, Occupational
Employment and Wage Statistics, available at
https://www.bls.gov/oes/current/oes_nat.htm (last
visited December 7, 2021).
31 For instance, households earning between 200
and 300 percent of the FPG have significantly
higher rates of food and housing insecurity than
those earning above 300 percent of the FPG. Table
1, Kyle J. Caswell and Stephen Zuckerman, Food
Insecurity, Housing Hardship, and Medical Care
Utilization, Urban Institute (June 2018), https://
www.urban.org/sites/default/files/publication/
98701/2001896_foodinsecurity_housinghardship_
medicalcareutilization_finalized.pdf.
used in programs such as the
Community Development Block Grant
(CDBG) Program.

In defining moderate income, the final
rule uses both the FPG and AMI to
account for national trends and regional
differences. While there are different
definitions of moderate income, 300
percent of FPG falls within the range
commonly used by researchers.
29 Analysis of median wages among a
sample of occupations likely impacted
by the pandemic also suggests that an
income cutoff of 300 percent of FPG
would include many households with
workers in such occupations.
30 Moreover, the metric of 300 percent of
FPG covers households that, while
above the poverty line, often lack
economic security.
31 Treasury
determined the AMI threshold for
moderate income by maintaining the
same ratio of FPG multiplier to AMI
multiplier as in the definition of low
income. This anchors the threshold to
the existing definitions of moderate
income from the literature while taking
into account geographical variation in
income and expenses in the same
manner as the definition of low income.

Eligibility Presumptions
Public Comment: Many commenters
believed that a broader range of groups
should be considered presumptively
impacted and disproportionately
impacted, arguing that many
households had been affected by the
pandemic and that broader presumed
eligibility would help recipients provide
assistance quickly and effectively.

Treasury also received many
comments on the presumption that
families living in QCTs or receiving
services from Tribal governments were
disproportionately impacted by the
pandemic. While many commenters
supported the interim final rule’s
recognition of disproportionate impacts
of the pandemic on low-income
communities, many commenters
disagreed with treating QCTs as the only
presumed eligible group of
disproportionately impacted
households, apart from households
served by Tribal governments. While
acknowledging a potential increase in
administrative burden, commenters
recommended that Treasury presume
other households or geographic areas, in
addition to QCTs, were
disproportionately impacted;
suggestions included all low- and
moderate-income households,
geographic areas designated as
Opportunity Zones, Difficult
Development Areas (DDAs), areas with
a certain amount of Real Estate
Advantage Program (REAP) recipients,
or use of eligibility criteria from the
Community Reinvestment Act. One
commenter generally recommended that
a clearer definition of
‘‘disproportionately impacted’’ should
be provided and that any definition
should include communities of color
and people of limited means. Another
recommended specific eligibility for
people that had recently interacted with
the criminal justice system. Many
commenters representing Tribal
governments and groups recommended
a presumption of eligibility for all Tribal
uses of funds, clarification that off
reservation members remained eligible,
and broad flexibility on use of funds.

Additionally, commenters noted that
some areas are technically eligible to be
QCTs but fall short because of the
aggregate population of eligible tracts.

One commenter noted that these areas
should be considered the same as QCTs
for the purpose of SLFRF funds. Some
commenters argued that rural counties
typically have few QCTs despite high
levels of poverty and disruption caused
by the COVID–19 pandemic. Other rural
commenters recommended that the
designation be by county rather than at
a more granular level, arguing that the
QCT designation is biased towards
urban areas and understates the harm
done to rural America. Many
commenters representing Tribal
governments supported the
presumption that services provided by
Tribal governments respond to
disproportionate impacts.

Treasury Response
Summary: While households residing
in QCTs or served by Tribal
governments were presumed to be
disproportionately impacted, Treasury
emphasizes that under the interim final
rule recipients could also identify other
households, populations, or geographic
areas that were disproportionately
impacted by the pandemic and provide
services to respond.

The final rule maintains the
presumptions identified in the interim
final rule, as well as recipients’ ability
to identify other impacted or
disproportionately impacted classes.

The final rule also allows recipients to
presume that low-income households
were disproportionately impacted, and
as discussed above, defines low- and
moderate-income. Finally, under the
final rule recipients may also presume
that households residing in the U.S.
territories or receiving services from
territorial governments were
disproportionately impacted.

Households presumed to be impacted:

Impacted households are those that
experienced a public health or negative
economic impact from the pandemic.

With regard to public health impacts,
recipients may presume that the general
public experienced public health
impacts from the pandemic for the
purposes of providing services for
COVID–19 mitigation and behavioral
health. In other words, recipients may
provide a wide range of enumerated
eligible uses in these categories to the
general public without further analysis.

As discussed in the introduction,
COVID–19 as a disease has directly
affected the health of tens of millions of
Americans, and efforts to prevent and
mitigate the spread of the disease are
needed and in use across the country.

Further, the stress of the pandemic and
resulting recession have affected nearly
all Americans. Accordingly, the final
rule presumes that the general public
are impacted by and eligible for services
to respond to COVID–19 mitigation and
prevention needs, as well as behavioral
health needs.

With regard to negative economic
impacts, as with the interim final rule,
under the final rule recipients may
presume that a household or population
that experienced unemployment,
experienced increased food or housing
insecurity, or is low- or moderate-
income experienced negative economic
impacts resulting from the pandemic.

The final rule’s definition of low- and
moderate-income, by providing
standard metrics based on widely
available data, is intended to simplify
administration for recipients.

Households presumed to be
disproportionately impacted:

Disproportionately impacted
households are those that experienced a
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4348 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 32 For instance, the American Community Survey
does not include all territories. U.S. Census Bureau,
Areas Published, https://www.census.gov/
programs-surveys/acs/geography-acs/areas-
published.html (last visited November 9, 2021).
33 U.S. Department of Health and Human
Services, supra note 24.
34 For instance, data from the American
Community Survey is based on geographical
location rather than Tribal membership. U.S.

Census Bureau, My Tribal Area, https://
www.census.gov/Tribal/Tribal_glossary.php.
35 Lina Stoylar et. al., Challenges in the U.S.

Territories: COVID–19 and the Medicaid Financing
Cliff, Kaiser Family Foundation (May 18, 2021),
https://www.kff.org/coronavirus-covid-19/issue-
brief/challenges-in-the-u-s-territories-covid-19-and-
the-medicaid-financing-cliff/.
disproportionate, or meaningfully more
severe, impact from the pandemic. As
discussed in the interim final rule, pre-
existing disparities in health and
economic outcomes magnified the
impact of the COVID–19 public health
emergency on certain households and
communities. As with the interim final
rule, under the final rule recipients may
presume that households residing in
QCTs or receiving services provided by
Tribal governments were
disproportionately impacted by the
pandemic. In addition, under the final
rule recipients may presume that low-
income households were
disproportionately impacted by the
pandemic. Finally, under the final rule
recipients may also presume that
households residing in the U.S.
territories or receiving services from
territorial governments were
disproportionately impacted.

Treasury notes that households
presumed to be disproportionately
impacted would also be presumptively
impacted, as these households have not
only experienced pandemic impacts but
have experienced disproportionate
pandemic impacts; as a result, these
households are presumptively eligible
for responsive services for both
impacted and disproportionately
impacted households.

Many different geographic, income-
based, or poverty-based presumptions
could be used to designate
disproportionately impacted
populations. The combination of
permitting recipients to use QCTs, low-
income households, and services
provided by Tribal or territorial
governments as presumptions balances
these varying methods. Specifically,
QCTs are a commonly used designation
of geographic areas based on low
incomes or high poverty rates of
households in the community; for
recipients providing geographically
targeted services, QCTs may provide a
simple metric with readily available
maps for use. However, Treasury
recognizes that QCTs do not capture all
underserved populations, including for
reasons noted by commenters. By
allowing recipients to also presume that
low-income households were
disproportionately impacted, the final
rule provides greater flexibility to serve
underserved households or
communities. Data on household
incomes is also readily available at
varying levels of geographic granularity
(e.g., Census Tracts, counties), again
permitting flexibility to adapt to local
circumstances and needs. Finally,
Treasury notes that, as discussed further
below, recipients may also identify
other households, populations, and
communities disproportionately
impacted by the pandemic, in addition
to those presumed to be
disproportionately impacted.

Additionally, Tribal and territorial
governments may face both
disproportionate impacts of the
pandemic and administrability
challenges with operationalizing the
income-based standard; therefore,
Treasury has presumed that services
provided by these governments respond
to disproportionate pandemic impacts.

Given a lack of regularly published data
on household incomes in most
territories,
32 as well as a lack of poverty
guidelines developed for these
jurisdictions,
33 it may be highly
challenging to assess disproportionate
impact in these communities according
to an income- or poverty-based
standard. Similarly, data on incomes in
Tribal communities are not readily
available.
34 Finally, as described in the
sections on Public Health and Negative
Economic Impacts, Tribal communities
have faced particularly severe health
and economic impacts of the pandemic.

Similarly, available research suggests
that preexisting health and economic
disparities in the territories amplified
the impact of the pandemic on these
communities.
35 Categorical Eligibility
Public Comment: Several commenters
suggested that the final rule permit
recipients to rely on a beneficiary’s
eligibility for other federal benefits
programs as an easily administrable
proxy for identifying a group or
population that experienced a negative
economic impact as a result of the
COVID–19 public health emergency
(i.e., categorical eligibility). In other
words, a recipient would determine that
individuals or households are eligible
for an SLFRF-funded program based on
the individual or household’s eligibility
in another program, typically another
federal benefit program. Commenters
noted that categorical eligibility is a
common policy in program
administration that can significantly
ease administrative burden on both
program administrators and
beneficiaries.

Treasury Response: Treasury agrees
that allowing recipients to identify
impacted and disproportionately
impacted beneficiaries based on their
eligibility for other programs with
similar income tests would ease
administrative burden. To the extent
that the other program’s eligibility
criteria align with a population or class
that experienced a negative economic
impact of the pandemic, this approach
is also consistent with the process
allowed under the final rule for
recipients to determine that a class has
experienced a negative economic
impact, and then document that an
individual receiving services is a
member of the class. For these reasons,
the final rule recognizes categorical
eligibility for the following programs
and populations:
• Impacted households. Treasury will
recognize a household as impacted if it
otherwise qualifies for any of the
following programs:

Æ Children’s Health Insurance
Program (CHIP)
Æ Childcare Subsidies through the
Child Care and Development Fund
(CCDF) Program
Æ Medicaid
Æ National Housing Trust Fund
(HTF), for affordable housing programs
only
Æ Home Investment Partnerships
Program (HOME), for affordable housing
programs only
• Disproportionately impacted
households. Treasury will recognize a
household as disproportionately
impacted if it otherwise qualifies for any
of the following programs:

Æ Temporary Assistance for Needy
Families (TANF)
Æ Supplemental Nutrition Assistance
Program (SNAP)
Æ Free and Reduced-Price Lunch
(NSLP) and/or School Breakfast (SBP)
programs
Æ Medicare Part D Low-income
Subsidies
Æ Supplemental Security Income
(SSI)
Æ Head Start and/or Early Head Start
Æ Special Supplemental Nutrition
Program for Women, Infants, and
Children (WIC)
Æ Section 8 Vouchers
Æ Low-Income Home Energy
Assistance Program (LIHEAP)
Æ Pell Grants
Æ For services to address educational
disparities, Treasury will recognize Title
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4349 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 36 Title I eligible schools means schools eligible to
receive services under section 1113 of Title I, Part
A of the Elementary and Secondary Education Act
of 1965, as amended (20 U.S.C. 6313), including
schools served under section 1113(b)(1)(C) of that
Act.

I eligible schools 36 as
disproportionately impacted and
responsive services that support the
school generally or support the whole
school as eligible
c. Standards for Identifying Other
Eligible Populations
Standards: Designating Other Impacted
Classes
Public Comment: Treasury received
multiple comments requesting
additional clarification about how
classes of impacted individuals may be
designated, as well as questions asking
whether recipients must demonstrate a
specific public health or negative
economic impact to each entity served
(e.g., each household receiving
assistance under a program). There were
several comments requesting that
specific geographic designations, like a
county or Impact Zone, be eligible to
use as a determining boundary.

Treasury Response: The interim final
rule allowed, and the final rule
maintains, the ability for recipients to
demonstrate a public health or negative
economic impact on a class and to
provide assistance to beneficiaries that
fall within that class. Consistent with
the scope of beneficiaries included in
sections 602(c)(1)(A) and 603(c)(1)(A) of
the Social Security Act, Treasury is
clarifying that a recipient may identify
such impacts for a class of households,
small businesses, or nonprofits. In such
cases, the recipient need only
demonstrate that the household, small
business, or nonprofit is within the
relevant class. For example, a recipient
could determine that restaurants in the
downtown area had generally
experienced a negative economic impact
and provide assistance to those small
businesses to respond. When providing
this assistance, the recipient would only
need to demonstrate that the small
businesses receiving assistance were
restaurants in the downtown area. The
recipient would not need to
demonstrate that each restaurant served
experienced its own negative economic
impact.

In identifying an impacted class and
responsive program, service, or capital
expenditure, recipients should consider
the relationship between the definition
of the class and proposed response.

Larger and less-specific classes are less
likely to have experienced similar
harms and thus the responses are less
likely to be responsive to the harms
identified. That is, as the group of
entities being served by a program has
a wider set of fact patterns, or the type
of entities, their circumstances, or their
pandemic experiences differ more
substantially, it may be more difficult to
determine that the class has actually
experienced the same or similar
negative economic impact and that the
response is appropriately tailored to
address that impact.

Standard: Designating Other
Disproportionately Impacted Classes
Summary of Interim Final Rule: As
noted above, the interim final rule
provided a broad set of enumerated
eligible uses of funds in
disproportionately impacted
communities, including to address pre-
existing disparities that contributed to
more severe pandemic impacts in these
communities. The interim final rule
presumed that these services are eligible
uses when provided in a QCT, to
families and individuals living in QCTs,
or when these services are provided by
Tribal governments. Recipients may also
provide these services to ‘‘other
populations, households, or geographic
areas disproportionately impacted by
the pandemic’’ and, in identifying these
disproportionately impacted
communities, should be able to support
their determination that the pandemic
resulted in disproportionate public
health or economic outcomes to the
group identified.

Public Comment: A significant
number of commenters expressed
uncertainty regarding the process for
determining eligibility for
disproportionately impacted
communities beyond QCTs. A
commenter noted that a clearer
definition of ‘‘disproportionately
impacted’’ should be delineated and
that any definition should include
communities of color and people of
limited means. Some commenters
suggested a template or checklist to see
if an area meets the standard for
disproportionately impacted
communities outside of QCTs. Some
commenters stated that QCT and non-
QCT beneficiaries should be treated the
same.

Treasury Response: Under the interim
final rule, presuming eligibility for
services in QCTs, for populations living
in QCTs, and for Tribal governments
was intended to ease administrative
burden, providing a simple path for
recipients to offer services in
underserved communities, and is not an
exhaustive list of disproportionately
impacted communities. To further
clarify, the final rule codifies the
interpretive framework discussed above,
including presumptions of groups
disproportionately impacted, as well as
the ability to identify other
disproportionately impacted
populations, households, or geographies
(referred to here as disproportionately
impacted classes).

As discussed in the interim final rule,
in identifying other disproportionately
impacted classes, recipients should be
able to support their determination that
the pandemic resulted in
disproportionate public health or
economic outcomes to the specific
populations, households, or geographic
areas to be served. For example, the
interim final rule considered data
regarding the rate of COVID–19
infections and deaths in low-income
and socially vulnerable communities,
noting that these communities have
experienced the most severe health
impacts, compared to national averages.

Similarly, the interim final rule
considered the high concentration of
low-income workers performing
essential work, the reduced ability to
socially distance, and other pre-existing
public health challenges, all of which
correlate with more severe COVID–19
outcomes. The interim final rule also
considered the disproportionate
economic impacts of the pandemic,
citing, for example, the rate of job losses
among low-income persons as compared
to the general population. The interim
final rule then identified QCTs, a
common, readily accessible, and
geographically granular method of
identifying communities with a large
proportion of low-income residents, as
presumed to be disproportionately
impacted by the pandemic.

In other words, the interim final rule
identified disproportionately impacted
populations by assessing the impacts of
the pandemic and finding that some
populations experienced meaningfully
more severe impacts than the general
public. Similarly, to identify
disproportionately impacted classes,
recipients should compare the impacts
experienced by that class to the typical
or average impacts of the pandemic in
their local area, state, or nationally.

Recipients may identify classes of
households, communities, small
businesses, nonprofits, or populations
that have experienced a
disproportionate impact based on
academic research or government
research publications, through analysis
of their own data, or through analysis of
other existing data sources. To augment
their analysis, or when quantitative data
is not readily available, recipients may
also consider qualitative research and
sources like resident interviews or
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4350 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 37 Press Release, Centers for Disease Control and
Prevention, First Travel-related Case of 2019 Novel
Coronavirus Detected in United States (Jan. 21,
2020), https://www.cdc.gov/media/releases/2020/
p0121-novel-coronavirus-travel-case.html.
38 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in Number of COVID–
19 Cases and Deaths in the US Reported to CDC,
by State/Territory, https://covid.cdc.gov/covid-data-
tracker/#trends_dailytrendscases (last visited
December 7, 2021).
39 Id.
40 Centers for Disease Control and Prevention,
COVID Data Tracker, http://www.covid.cdc.gov/
covid-data-tracker/#datatracker-home (last visited
December 31, 2021).
41 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID–19 Vaccinations in the
United States, https://covid.cdc.gov/covid-data-
tracker/#vaccinations (last visited December 7,
2021).
42 Id.
43 Columbus, Ohio Recovery Plan, https://
www.columbus.gov/recovery/.
44 Luzerne County, Pennsylvania Recovery Plan,
https://www.luzernecounty.org/DocumentCenter/
View/26304/Final-Interim-Recovery-Plan-
Performance-Report-83121.
45 This includes implementing mitigation
strategies consistent with the Centers for Disease
Control and Prevention’s (CDC) Guidance for
COVID–19 Prevention in K–12 Schools (November
5, 2021), available at https://www.cdc.gov/
coronavirus/2019-ncov/community/schools-
childcare/k-12-guidance.html.
feedback from relevant state and local
agencies, such as public health
departments or social services
departments. In both cases, recipients
should consider the quality of the
research, data, and applicability of
analysis to their determination.

In designing a program or service that
responds to a disproportionately
impacted class, a recipient must first
identify the impact and then identify an
appropriate response. To assess
disproportionate impact, recipients
should rely on data or research that
measures the public health or negative
economic impact. An assessment of the
effects of a response (e.g., survey data on
levels of resident support for various
potential responses) is not a substitute
for an assessment of the impact
experienced by a particular class. Data
about the appropriateness or desirability
of a response may be used to assess the
reasonableness of a response, once an
impact or disproportionate impact has
been identified but should not be the
basis for assessing impact.

2. Public Health
Background
On January 21, 2020, the Centers for
Disease Control and Prevention (CDC)
identified the first case of novel
coronavirus in the United States.
37 Since that time, and through present
day, the United States has faced
numerous waves of the virus that have
brought acute strain on health care and
public health systems. At various points
in the pandemic, hospitals and
emergency medical services have seen
significant influxes of patients; response
personnel have faced shortages of
personal protective equipment; testing
for the virus has been scarce; and
congregate living facilities like nursing
homes have seen rapid spread.

Since the initial wave of the COVID–
19 pandemic, the United States has
faced several additional major waves
that continued to impact communities
and stretch public health services. The
summer 2020 wave impacted
communities in the south and
southwest. As the weather turned colder
and people spent more time indoors, a
wave throughout fall and winter 2020
impacted communities in almost every
region of the country as the virus
reached a point of uncontrolled spread
and over 3,000 people died per day due
to COVID–19.
38 In December 2020, the Food and Drug
Administration (FDA) authorized
COVID–19 vaccines for emergency use,
and soon thereafter, mass vaccination in
the United States began. At the time of
the interim final rule publication in May
2021, the number of daily new
infections was steeply declining as
rapid vaccination campaigns progressed
across the country. By summer 2021,
COVID–19 cases had fallen to their
lowest level since early months of the
pandemic, when testing was scarce.

However, throughout late summer and
early fall, the Delta variant, a more
infectious and transmittable variant of
the SARS–CoV–2 virus, sparked yet
another surge. From June to early
September, the seven-day moving
average of reported cases rose from
12,000 to 165,000.
39 As of December 2021, COVID–19 in
total has infected over 50 million and
killed over 800,000 Americans.
40 Preventing and mitigating the spread of
COVID–19 continues to require a major
public health response from federal,
state, local, and Tribal governments.

First, state, local, and Tribal
governments across the country have
mobilized to support the national
vaccination campaign. As of December
2021, more than 80 percent of adults
have received at least one dose, with
more than 470 million total doses
administered.
41 Additionally, more than
15 million children over the age of 12
have received at least one dose of the
vaccine and over 47 million people have
received a booster dose.
42 Vaccines for
younger children, ages 5 through 11,
have been approved and are reaching
communities and families across the
country. As new variants continue to
emerge globally, the national effort to
administer vaccinations and other
COVID–19 mitigation strategies will be
a critical component of the public
health response.

In early reporting on uses of SLFRF
funds, recipients have indicated that
they plan to put funds to immediate use
to support continued vaccination
campaigns. For example, one recipient
has indicated that it plans to use SLFRF
funds to support a vaccine incentive
program, providing $100 gift cards to
residents at community vaccination
clinics. The program aimed to target
communities with high public health
needs.
43 Another recipient reported that
it is partnering with multiple agencies,
organizations, and providers to
distribute COVID–19 vaccinations to
homebound residents in assisted living
facilities.
44 State, local, and Tribal governments
have also continued to execute other
aspects of a wide-ranging public health
response, including increasing access to
COVID–19 testing and rapid at-home
tests, contact tracing, support for
individuals in isolation or quarantine,
enforcement of public health orders,
new public communication efforts,
public health surveillance (e.g.,
monitoring case trends and genomic
sequencing for variants), enhancement
to health care capacity through
alternative care facilities, and
enhancement of public health data
systems to meet new demands or scaling
needs.

State, local, and Tribal governments
have also supported major efforts to
prevent COVID–19 spread through
safety measures at key settings like
nursing homes, schools, congregate
living settings, dense worksites,
incarceration settings, and in other
public facilities. This has included, for
example, implementing infection
prevention measures or making
ventilation improvements.

In particular, state, local, and Tribal
governments have mounted significant
efforts to safely reopen schools. A key
factor in school reopening is the ability
to implement COVID–19 mitigation
strategies such as providing masks and
other hygiene resources, improving air-
quality and ventilation, increasing
outdoor learning and eating spaces,
testing and contact tracing protocols,
and a number of other measures.
45 For
example, one recipient described plans
to use SLFRF funds to further invest in
school health resources that were
critical components of school reopening
and reducing the spread of COVID–19 in
schools. Those investments include the
increasing school nurses and social
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4351 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 46 Nirmita Panchal et al., The Implications of
COVID–19 for Mental Health and Substance Abuse
(Feb. 10, 2021), https://www.kff.org/coronavirus
covid-19/issue-brief/the-implications-of-covid-19-
for-mental-health-and-substance-use/#:∼:text=
Older%20adults%20are%20also%20 more,
prior%20to%20the%20current%20crisis; Mark E´ .

Czeisler et al., Mental Health, Substance Abuse, and
Suicidal Ideation During COVID–19 Pandemic—
United States, June 24–30 2020, Morb. Mortal.

Wkly. Rep. 69(32):1049–57 (Aug. 14, 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6932a1.htm.
47 Id.
48 Rebecca T. Leeb et al., Mental Health-Related
Emergency Department Visits Among Children
Aged <18 Years During the COVID Pandemic—
United States, January 1–October 17, 2020, Morb.

Mortal. Wkly. Rep. 69(45):1675–80 (Nov. 13, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/
mm6945a3.htm.
49 Centers for Disease Prevention and Control,
National Center for Health Statistics, Provisional
Drug Overdose Death Counts, https://www.cdc.gov/
nchs/nvss/vsrr/drug-overdose-data.htm (last visited
May 8 December 6, 2021).
50 Panchal, supra note 46; Mark E´. Czeisler et al.,
supra note 46.
51 The White House, FACT SHEET: More Details
on the Biden-Harris Administration’s Investments
in Community Violence Interventions (April 7,
2021), https://www.whitehouse.gov/briefing-room/
statements-releases/2021/04/07/fact-sheet-more-
details-on-the-biden-harris-administrations-
investments-in-community-violence-interventions/.
52 Federal Bureau of Investigation, FBI Releases
2020 Crime Statistics (September 27, 2021) https://
www.fbi.gov/news/pressrel/press-releases/fbi-
releases-2020-crime-statistics.
53 Id.
54 Id.
55 The Educational Fund to Stop Gun Violence,
Community Gun Violence, https://efsgv.org/learn/
type-of-gun-violence/community-gun-violence/ (last
visited November 9, 2021).
56 Giffords Law Center, Healing Communities in
Crisis: Lifesaving Solutions to the Urban Gun
Violence Epidemic (March 2016), https://giffords.
org/wp-content/uploads/2019/01/Healing-
Communities-in-Crisis.pdf.
57 St. Louis, MO Recovery Plan, https://
www.stlouis-mo.gov/government/recovery/covid-19/
arpa/plan/.
58 Los Angeles County, CA Recovery Plan, http://
file.lacounty.gov/SDSInter/bos/supdocs/
160391.pdf.
59 Office of the White House, National Strategy for
the COVID–19 Response and Pandemic
Preparedness (Jan. 21, 2021), https://
www.whitehouse.gov/wp-content/uploads/2021/01/
National-Strategy-for-the-COVID-19-Response-and-
Pandemic-Preparedness.pdf.
60 In a study of 13 states from October to
December 2020, the CDC found that Hispanic or
Latino and Native American or Alaska Native
individuals were 1.7 times more likely to visit an
emergency room for COVID–19 than White
individuals, and Black individuals were 1.4 times
more likely to do so than White individuals. See
Sebastian D. Romano et al., Trends in Racial and
Ethnic Disparities in COVID–19 Hospitalizations,
by Region—United States, March–December 2020,
MMWR Morb Mortal Wkly Rep 2021, 70:560–565
(Apr. 16, 2021), https://www.cdc.gov/mmwr/
volumes/70/wr/mm7015e2.htm?s_cid=mm7015e2_
w.
61 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID–19 Cases
and Deaths in the United States, by County-level
Population Factors, https://covid.cdc.gov/covid-
data-tracker/#pop-factors_totaldeaths (last visited
December 7, 2021).
62 The CDC’s Social Vulnerability Index includes
fifteen variables measuring social vulnerability,
including unemployment, poverty, education
levels, single-parent households, disability status,
non-English speaking households, crowded
housing, and transportation access.

Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID–19 Cases
and Deaths in the United States, by Social
Continued
workers, improved ventilation systems,
and other health and safety measures.

The need for public health measures
to respond to COVID–19 will continue
moving forward. This includes the
continuation of vaccination campaigns
for the general public, booster doses,
and children. This also includes
monitoring the spread of COVID–19
variants, understanding the impact of
these variants, developing approaches to
respond, and monitoring global COVID–
19 trends. Finally, the long-term health
impacts of COVID–19 will continue to
require a public health response,
including medical services for
individuals with ‘‘long COVID,’’ and
research to understand how COVID–19
impacts future health needs and raises
risks for the tens of millions of
Americans who have been infected.

The COVID–19 pandemic also
negatively impacted other areas of
public health, particularly mental health
and substance use. In January 2021, over
40 percent of American adults reported
symptoms of depression or anxiety, up
from 11 percent in the first half of
2019.
46 The mental health impacts of
the pandemic have been particularly
acute for adults ages 18 to 24, racial and
ethnic minorities, caregivers for adults,
and essential workers, with all reporting
significantly higher rates of considering
suicide.
47 The proportion of children’s
emergency department visits related to
mental health has also risen
noticeably.
48 Similarly, rates of
substance use and overdose deaths have
spiked: Preliminary data from the CDC
show a nearly 30 percent increase in
drug overdose mortality from April 2020
to April 2021, bringing the estimated
overdose death toll for a 12-month
period over 100,000 for the first time
ever.
49 The CDC also found that 13
percent of adults started or increased
substance use to cope with stress related
to COVID–19 and 26 percent reported
having symptoms of trauma- and
stressor-related disorder (TRSD) related
to the pandemic.
50 Another public health challenge
exacerbated by the pandemic was
violent crime and gun violence, which
increased during the pandemic and has
disproportionately impacted low-
income communities.
51 According to
the Federal Bureau of Investigation
(FBI), although the property crime rate
fell 8 percent in 2020, the violent crime
rate increased 6 percent in 2020
compared to 2019 data.
52 In particular,
the estimated number of aggravated
assault offenses rose 12 percent, while
murder and manslaughter increased 30
percent from 2019 to 2020.
53 The
proportion of homicides committed
with firearms rose from 73 percent in
2019 to 76 percent in 2020.
54 Exposure
to violence can create serious short-term
and long-term harmful effects to health
and development, and repeated
exposure to violence may be connected
to negative health outcomes.
55 Addressing community violence as a
public health issue may help prevent
and even reduce additional harm to
individuals, households, and
communities.
56 Many communities are using SLFRF
funds to invest in holistic approaches in
violence prevention that are rooted in
targeted outreach and addressing root
causes. For example, the City of St.

Louis is planning to invest in expanding
a ‘‘community responder’’ model
designed to provide clinical help and to
divert non-violent calls away from the
police department. Additionally, the
city will expand access to mental health
services, allowing residents to seek
support at city recreation centers,
libraries, and other public spaces.
57 Similarly, Los Angeles County will
further invest in its ‘‘Care First, Jails
Last’’ program which seeks to replace
‘‘arrest and incarceration’’ responses
with health interventions.
58 While the pandemic affected
communities across the country, it
disproportionately impacted some
demographic groups and exacerbated
health inequities along racial, ethnic,
and socioeconomic lines.
59 The CDC
has found that racial and ethnic
minorities are at increased risk for
infection, hospitalization, and death
from COVID–19, with Hispanic or
Latino and Native American or Alaska
Native patients at highest risk.
60 Similarly, low-income and socially
vulnerable communities have seen the
most severe health impacts. For
example, counties with high poverty
rates also have the highest rates of
infections and deaths, with 308 deaths
per 100,000 compared to the U.S.
average of 238 deaths per 100,000, as of
December 2021.
61 Counties with high
social vulnerability, as measured by
factors such as poverty and educational
attainment, have also fared more poorly
than the national average, with 325
deaths per 100,000 as of December
2021.
62 Over the course of the
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4352 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations Vulnerability Index, https://covid.cdc.gov/covid-
data-tracker/#pop-factors_totaldeaths (last visited
December 7, 2021).
63 Centers for Disease Control and Prevention,
Risk for COVID–19 Infection, Hospitalization, and
Death By Race/Ethnicity, https://www.cdc.gov/
coronavirus/2019-ncov/covid-data/investigations-
discovery/hospitalization-death-by-race-
ethnicity.html (last visited December 7, 2021).
64 See, e.g., Centers for Disease Control and
Prevention, Risk of Severe Illness or Death from
COVID–19 (Dec. 10, 2020), https://www.cdc.gov/
coronavirus/2019-ncov/community/health-equity/
racial-ethnic-disparities/disparities-illness.html
(last visited December 7, 2021).
65 Milena Almagro et al., Racial Disparities in
Frontline Workers and Housing Crowding During
COVID–19: Evidence from Geolocation Data (Sept.
22, 2020), NYU Stern School of Business
(forthcoming), available at https://papers.ssrn.com/
sol3/papers.cfm?abstract_id=3695249; Grace
McCormack et al., Economic Vulnerability of
Households with Essential Workers, JAMA
324(4):388–90 (2020), available at https://jamanet
work.com/journals/jama/fullarticle/2767630.
66 See, e.g., Joseph G. Courtney et al., Decreases
in Young Children Who Received Blood Lead Level
Testing During COVID–19—34 Jurisdictions,
January–May 2020, Morb. Mort. Wkly. Rep.
70(5):155–61 (Feb. 5, 2021), https://www.cdc.gov/
mmwr/volumes/70/wr/mm7005a2.htm; Emily A.

Benfer & Lindsay F. Wiley, Health Justice Strategies
to Combat COVID–19: Protecting Vulnerable
Communities During a Pandemic, Health Affairs
Blog (Mar. 19, 2020), https://www.healthaffairs.org/
do/10.1377/hblog20200319.757883/full/.
67 See, e.g., Centers for Disease Control and
Prevention, supra note 62; Benfer & Wiley, supra
note 66; Nathaniel M. Lewis et al., Disparities in
COVID–19 Incidence, Hospitalizations, and Testing,
by Area-Level Deprivation—Utah, March 3–July 9,
2020, Morb. Mortal. Wkly. Rep. 69(38):1369–73
(Sept. 25, 2020), https://www.cdc.gov/mmwr/
volumes/69/wr/mm6938a4.htm.
68 Generally, funding uses eligible under CRF as
a response to the direct public health impacts of
COVID–19 will continue to be eligible under the
ARPA, including those not explicitly listed in the
final rule, with the following two exceptions: (1)
The standard for eligibility of public health and
safety payrolls has been updated (see section Public
Sector Capacity and Workforce in General
Provisions: Other) and (2) expenses related to the
issuance of tax-anticipation notes are no longer an
eligible funding use (see section Restrictions on
Use: Debt Service).
pandemic, Native Americans have
experienced more than one and a half
times the rate of COVID–19 infections,
more than triple the rate of
hospitalizations, and more than double
the death rate compared to White
Americans.
63 Low-income and minority
communities also exhibit higher rates of
pre-existing conditions that may
contribute to an increased risk of
COVID–19 mortality.
64 In addition,
individuals living in low-income
communities may have had more
limited ability to socially distance or to
self-isolate when ill, resulting in faster
spread of the virus, and were over-
represented among essential workers,
who face greater risk of exposure.
65 Social distancing measures in
response to the pandemic may have also
exacerbated pre-existing public health
challenges. For example, for children
living in homes with lead paint,
spending substantially more time at
home raises the risk of developing
elevated blood lead levels, while
screenings for elevated blood lead levels
declined during the pandemic.
66 The
combination of these underlying social
and health vulnerabilities may have
contributed to more severe public health
outcomes of the pandemic within these
communities, resulting in an
exacerbation of pre-existing disparities
in health outcomes.
67 Summary of the Interim Final Rule
Approach to Public Health
Summary: As discussed above, the
interim final rule provided flexibility for
recipients to pursue a wide range of
eligible uses to ‘‘respond to’’ the
COVID–19 public health emergency.

Uses of funds to ‘‘respond to’’ the public
health emergency address the SARS-
CoV–2 virus itself, support efforts to
prevent or decrease spread of the virus,
and address other impacts of the
pandemic on public health. The interim
final rule implemented these provisions
by identifying a non-exhaustive list of
programs or services that may be funded
as responding to COVID–19
(‘‘enumerated eligible uses’’), along with
considerations for evaluating other
potential uses of funds not explicitly
listed. Enumerated eligible uses are
discussed below. For guidance on how
to determine whether a particular use is
allowable, beyond those enumerated,
see section Standards: Identifying a
Public Health Impact.

Enumerated eligible uses under this
section built and expanded upon
permissible expenditures under the
Coronavirus Relief Fund; for clarity, the
interim final rule expressly listed as
eligible uses the uses permissible under
the Coronavirus Relief Fund, with
minor exceptions.
68 The interim final
rule also recognized that the nature of
the COVID–19 public health emergency,
and responsive policy measures,
programs, and services, had changed
over time and is expected to continue
evolving.

The interim final rule categorized
enumerated eligible uses to respond to
the public health emergency into several
categories: (1) COVID–19 mitigation and
prevention, (2) medical expenses, (3)
behavioral health care, (4) public health
and safety staff, (5) expenses to improve
the design and execution of health and
public health programs, and (6) eligible
uses to address disparities in public
health outcomes. For each category in
turn, this section describes public
comments received and Treasury’s
responses, as well as comments received
proposing additional enumerated
eligible uses.

Reorganizations and Cross-
References: In some cases, enumerated
eligible uses included in the interim
final rule under responding to the
public health emergency have been re-
categorized in the organization of the
final rule to enhance clarity. For
discussion of eligible uses for public
health and safety staff and to improve
the design and execution of public
health programs, please see section
Public Sector Capacity and Workforce in
General Provisions: Other. For
discussion of eligible uses to address
disparities in public health outcomes,
please see section Assistance to
Households in Negative Economic
Impacts.

Conversely, discussion of eligible
assistance to small businesses and
nonprofits to respond to public health
impacts has been moved from
Assistance to Small Businesses and
Assistance to Nonprofits in Negative
Economic Impacts to this section. This
change is consistent with the interim
final rule, which provides that
appropriate responses to address the
public health impacts of COVID–19 may
be provided to any type of entity.
a. COVID–19 Mitigation and Prevention
COVID–19 public health response and
mitigation tactics. Recognizing the
broad range of services and
programming needed to contain
COVID–19, the interim final rule
provided an extensive list of
enumerated eligible uses to prevent and
mitigate COVID–19 and made clear that
the public health response to the virus
is expected to continue to evolve over
time, necessitating different uses of
funds.

Enumerated eligible uses of funds in
this category included: Vaccination
programs; medical care; testing; contact
tracing; support for isolation or
quarantine; supports for vulnerable
populations to access medical or public
health services; public health
surveillance (e.g., monitoring case
trends, genomic sequencing for
variants); enforcement of public health
orders; public communication efforts;
enhancement to health care capacity,
including through alternative care
facilities; purchases of personal
protective equipment; support for
prevention, mitigation, or other services
in congregate living facilities (e.g.,
nursing homes, incarceration settings,
homeless shelters, group living
facilities) and other key settings like
schools; ventilation improvements in
congregate settings, health care settings,
or other key locations; enhancement of
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4353 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 69 See Centers for Disease Control and Prevention,
COVID Data Tracker, https://covid.cdc.gov/covid-
data-tracker/#trends_dailycases (last visited
December 7, 2021).
70 See Centers for Disease Control and Prevention,
COVID–19, https://www.cdc.gov/coronavirus/2019-
ncov/index.html (last visited November 8, 2021).
71 See § 35.6(b); Coronavirus State and Local
Fiscal Recovery Funds, 86 FR at 26786.
72 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID–19 Vaccinations in the
United States, https://covid.cdc.gov/covid-data-
tracker/#vaccinations (last visited October 18,
2021).
73 U.S. Food and Drug Administration,
Coronavirus (COVID–19) Update: FDA Takes
Additional Actions on the Use of a Booster Dose for
COVID–19 Vaccines, https://www.fda.gov/news-
events/press-announcements/fda-authorizes-pfizer-
biontech-covid-19-vaccine-emergency-use-children-
5-through-11-years-age (last visited November 8,
2021).
74 U.S. Food and Drug Administration, FDA
Authorizes Pfizer-BioNTech COVID–19 Vaccine for
Emergency Use in Children 5 through 11 Years of
Age, https://www.fda.gov/news-events/press-
announcements/fda-authorizes-pfizer-biontech-
covid-19-vaccine-emergency-use-children-5-
through-11-years-age (last visited November 8,
2021).
public health data systems; other public
health responses; and capital
investments in public facilities to meet
pandemic operational needs, such as
physical plant improvements to public
hospitals and health clinics or
adaptations to public buildings to
implement COVID–19 mitigation tactics.

These enumerated uses are consistent
with guidance from public health
authorities, including the CDC.

Public Comment: Many commenters
were supportive of expansive
enumerated eligible uses for mitigating
and preventing COVID–19, noting the
wide range of activities that
governments may undertake and the
continued changing landscape of
pandemic response. Some commenters
requested that Treasury engage in
ongoing consideration of and
consultation on evolving public health
needs and resulting eligible expenses.

Some commenters noted that their
jurisdiction does not have an official
public health program, for example
smaller jurisdictions or those that do not
have a health department, and requested
clarification on whether their public
health expenses would still be eligible
in compliance with program rules.

Treasury Response: In the final rule,
Treasury is maintaining an expansive
list of enumerated eligible uses to
mitigate and prevent COVID–19, given
the wide-ranging activities that
governments may take to further these
goals, including ‘‘other public health
responses.’’ Note that the final rule
discusses several of these enumerated
uses in more detail below.

Treasury is further clarifying that
when providing COVID–19 prevention
and mitigation services, recipients can
identify the impacted population as the
general public. Treasury presumes that
all enumerated eligible uses for
programs and services, including
COVID–19 mitigation and prevention
programs and services, are reasonably
proportional responses to the harm
identified unless a response is grossly
disproportionate to the type or extent of
harm experienced. Note that capital
expenditures are not considered
‘‘programs and services’’ and are not
presumed to be reasonably proportional
responses to an identified harm except
as provided in section Capital
Expenditures in General Provisions:

Other. In other words, recipients can
provide any COVID–19 prevention or
mitigation service to members of the
general public without any further
analysis of impacts of the pandemic on
those individuals and whether the
service is responsive.

This approach gives recipient
governments an extensive set of eligible
uses that can adapt to local needs, as
well as evolving response needs and
developments in understanding of
transmission of COVID–19. Treasury
emphasizes how the enumerated
eligible uses can adapt to changing
circumstances. For example, when the
interim final rule was released, national
daily COVID–19 cases were at relatively
low levels and declining;
69 as the Delta
variant spread and cases peaked in
many areas of the country, particularly
those with low vaccination rates,
government response needs and tactics
evolved, and the SLFRF funds provided
the ability to quickly and nimbly adapt
to new public health needs. Treasury
also notes that funds may be used to
support compliance with and
implementation of COVID–19 safety
requirements, including vaccination
requirements, testing programs, or other
required practices.

Recipient governments do not need to
have an official health or public health
program in order to utilize these eligible
uses; any recipient can pursue these
eligible uses, though Treasury
recommends consulting with health and
public health professionals to support
effective implementation.

The CDC has provided
recommendations and guidelines to
help mitigate and prevent COVID–19.

The interim final rule and final rule
help support recipients in stopping the
spread of COVID–19 through these
recommendations and guidelines.
70 The
final rule reflects changing
circumstances of COVID–19 and
provides a broad range of permissible
uses for mitigating and preventing the
spread of the disease, in a manner
consistent with CDC guidelines and
recommendations.

The purpose of the SLFRF funds is to
mitigate the fiscal effects stemming from
the COVID–19 public health emergency,
including by supporting efforts to stop
the spread of the virus. The interim final
rule and final rule implement this
objective by, in part, providing that
recipients may use SLFRF funds for
COVID–19 mitigation and prevention.
71 A program or service that imposes
conditions on participation in or
acceptance of the service that would
undermine efforts to stop the spread of
COVID–19 or discourage compliance
with recommendations and guidelines
in CDC guidance for stopping the spread
of COVID–19 is not a permissible use of
funds. In other words, recipients may
not use funds for a program that
undermines practices included in the
CDC’s guidelines and recommendations
for stopping the spread of COVID–19.

This includes programs that impose a
condition to discourage compliance
with practices in line with CDC
guidance (e.g., paying off fines to
businesses incurred for violation of
COVID–19 vaccination or safety
requirements), as well as programs that
require households, businesses,
nonprofits, or other entities not to use
practices in line with CDC guidance as
a condition of receiving funds (e.g.,
requiring that businesses abstain from
requiring mask use or employee
vaccination as a condition of receiving
SLFRF funds).

Vaccination programs and vaccine
incentives. At the time of the interim
final rule release, many vaccination
programs were using mass vaccination
tactics to rapidly reach Americans en
masse for first vaccine doses.
72 Since
that time, the FDA has authorized
booster vaccine doses for certain groups
and certain vaccines and has also
authorized vaccines for youths
73 74 The
inclusion of ‘‘vaccination programs’’ as
an eligible use allows for adaptation as
the needs of programs change or new
groups become eligible for different
types of vaccinations.

Public Comment: Since the release of
the interim final rule, many recipient
governments have also requested
clarification on whether vaccine
incentives are a permissible use of
funds.

Treasury Response: Treasury issued
guidance clarifying that ‘‘[vaccine]
programs that provide incentives
reasonably expected to increase the
number of people who choose to get
vaccinated, or that motivate people to
get vaccinated sooner than they
otherwise would have, are an allowable
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4354 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 75 Coronavirus State and Local Fiscal Recovery
Funds, Frequently Asked Questions, as of July 19,
2021; https://home.treasury.gov/system/files/136/
SLFRPFAQ.pdf. Note that programs may provide
incentives to individuals who have already received
a vaccination if the incentive is reasonably expected
to increase the number of people who choose to get
vaccinated or motivate people to get vaccinated
sooner and the costs are reasonably proportional to
the expected public health benefit.
use of funds so long as such costs are
reasonably proportional to the expected
public health benefit.’’
75 This use of
funds remains permissible under the
final rule.

Capital Expenditures
Public Comment: Many commenters
requested clarification around the types
and scope of permissible capital
investments in public facilities to meet
pandemic operational needs; ventilation
improvements in congregate settings,
health care settings, or other key
locations; and whether support for
prevention and mitigation in congregate
facilities could include facilities
renovations, improvements, or
construction of new facilities, or if the
facilities must solely be used for
COVID–19 response.

Treasury Response: For clarity,
Treasury has addressed the eligibility
standard for capital expenditures, or
investments in property, facilities, or
equipment, in one section of this
Supplementary Information; see section
Capital Expenditures in General
Provisions: Other. In recognition of the
importance of capital expenditures in
the COVID–19 public health response,
Treasury enumerates that the following
projects are examples of eligible capital
expenditures, as long as they meet the
standards for capital expenditures in
section Capital Expenditures in General
Provisions: Other:
• Improvements or construction of
COVID–19 testing sites and laboratories,
and acquisition of related equipment;
• Improvements or construction of
COVID–19 vaccination sites;
• Improvements or construction of
medical facilities generally dedicated to
COVID–19 treatment and mitigation
(e.g., emergency rooms, intensive care
units, telemedicine capabilities for
COVID–19 related treatment);
• Expenses of establishing temporary
medical facilities and other measures to
increase COVID–19 treatment capacity,
including related construction costs;
• Acquisition of equipment for
COVID–19 prevention and treatment,
including ventilators, ambulances, and
other medical or emergency services
equipment;
• Improvements to or construction of
emergency operations centers and
acquisition of emergency response
equipment (e.g., emergency response
radio systems);
• Installation and improvements of
ventilation systems;
• Costs of establishing public health
data systems, including technology
infrastructure;
• Adaptations to congregate living
facilities, including skilled nursing
facilities, other long-term care facilities,
incarceration settings, homeless
shelters, residential foster care facilities,
residential behavioral health treatment,
and other group living facilities, as well
as public facilities and schools
(excluding construction of new facilities
for the purpose of mitigating spread of
COVID–19 in the facility); and
• Mitigation measures in small
businesses, nonprofits, and impacted
industries (e.g., developing outdoor
spaces).

Other clarifications on COVID–19
mitigation: Medical care, supports for
vulnerable populations, data systems,
carceral settings. Based on public
comments and questions received from
recipients following the interim final
rule, Treasury is making several further
clarifications on enumerated eligible
uses in this category.

Public Comment: Several commenters
requested clarification on eligible uses
of funds for medical care; Treasury
addresses those comments in the section
Medical Expenses below.

Public Comment: Recipients posed
questions on the type and scope of
activities eligible as ‘‘supports for
vulnerable populations to access
medical or public health services.’’
Treasury Response: Enumerated
eligible uses should be considered in
the context of the eligible use category
or section where they appear; in this
case, ‘‘supports for vulnerable
populations to access medical or public
health services’’ appears in the section
COVID–19 Mitigation and Prevention.

As such, these eligible uses should help
vulnerable or high-risk populations
access services that mitigate COVID–19,
for example, transportation assistance to
reach vaccination sites, mobile
vaccination or testing programs, or on-
site vaccination or testing services for
homebound individuals, those in group
homes, or similar settings.

Public Comment: Some commenters
asked whether ‘‘enhancement of public
health data systems’’ could include
investments in software, databases, and
other information technology resources
that support responses to the COVID–19
public health emergency but also
provide benefits for other use cases and
long-term capacity of public health
departments and systems.

Treasury Response: These are
permissible uses of funds under the
interim final rule and remain eligible
under the final rule.

Assistance to Businesses and Nonprofits
To Implement COVID–19 Mitigation
Strategies
Background: As detailed above,
Treasury received many public
comments describing uncertainty about
which eligible use category should be
used to assess different potential uses of
funds. As a result, Treasury has re-
categorized some uses of funds in the
final rule to provide greater clarity,
consistent with the principle that uses
of funds should be assessed based on
their intended beneficiary. For example,
COVID–19 mitigation and prevention
serves the general public or specific
populations within the public.

However, in the interim final rule,
assistance to small businesses,
nonprofits, and impacted industries to
implement COVID–19 mitigation and
prevention strategies was categorized in
the respective sections within Negative
Economic Impacts. The final rule
consolidates all COVID–19 mitigation
and prevention within Public Health.

Public Comment: Treasury has
received multiple comments and
questions about which eligible use
permits the recipient to provide
assistance to businesses and nonprofits
to address the public health impacts of
COVID–19.

Treasury Response: In the final rule,
these services have been re-categorized
under COVID–19 mitigation and
prevention to reflect the fact that this
assistance responds to public health
impacts of the pandemic rather than the
negative economic impacts to a small
business, nonprofit, or impacted
industry. When providing COVID–19
mitigation and prevention services,
recipients can identify the impacted
entity as small businesses, nonprofits, or
businesses in impacted industries in
general. As with all enumerated eligible
uses, recipients may presume that all
COVID–19 mitigation and prevention
programs and services are reasonably
proportional responses to the harm
identified unless a response is grossly
disproportionate to the type or extent of
harm experienced. Note that capital
expenditures are not considered
‘‘programs and services’’ and are not
presumed to be reasonably proportional
responses to an identified harm except
as provided in section Capital
Expenditures in General Provisions:

Other. In other words, recipients can
provide any COVID–19 prevention or
mitigation service to small businesses,
nonprofits, and businesses in impacted
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4355 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 76 See Centers for Disease Control and Prevention,
Participate in Outdoor and Indoor Activities,
https://www.cdc.gov/coronavirus/2019-ncov/daily-
life-coping/outdoor-activities.html (last visited
November 8, 2021).
77 Hotlines or warmlines, crisis intervention,
overdose prevention, infectious disease prevention,
and services or outreach to promote access to
physical or behavioral health primary care and
preventative medicine.
industries without any further analysis
of impacts of the pandemic on those
entities and whether the service is
responsive.

In some cases, this means that an
entity not otherwise eligible to receive
assistance to respond to negative
economic impacts of the pandemic, for
example an entity that did not
experience a negative economic impact,
may still be eligible to receive assistance
under this category for COVID–19
mitigation and prevention services.

Uses of funds can include loans,
grants, or in-kind assistance to small
businesses, nonprofits, or other entities
to implement COVID–19 prevention or
mitigation tactics, such as vaccination;
testing; contact tracing programs;
physical plant changes to enable greater
use of outdoor spaces or ventilation
improvements; enhanced cleaning
efforts; and barriers or partitions. For
example, this would include assistance
to a restaurant to establish an outdoor
patio, given evidence showing much
lower risk of COVID–19 transmission
outdoors.
76 Uses of funds can also
include aid to travel, tourism,
hospitality, and other impacted
industries to implement COVID–19
mitigation and prevention measures to
enable safe reopening, for example,
vaccination or testing programs,
improvements to ventilation, physical
barriers or partitions, signage to
facilitate social distancing, provision of
masks or personal protective equipment,
or consultation with infection
prevention professionals to develop safe
reopening plans.

Recipients providing assistance to
small businesses, nonprofits, or
impacted industries that includes
capital expenditures (i.e., expenditures
on property, facilities, or equipment)
should also review the section Capital
Expenditures in General Provisions:

Other, which describes eligibility
standards for these expenditures.

Recipients providing assistances in the
form of loans should review the section
Treatment of Loans Made with SLFRF
Funds in General Provisions: Other.

Recipients should also be aware of the
difference between beneficiaries of
assistance and subrecipients when
working with small businesses,
nonprofits, or impacted industries. As
noted above, Treasury presumes that the
general public, as well as small
businesses, nonprofits, and impacted
industries in general, has been impacted
by the COVID–19 disease itself and is
eligible for services that mitigate or
prevent COVID–19 spread. As such, a
small business, nonprofit, or impacted
industry receiving assistance to
implement COVID–19 mitigation
measures is a beneficiary of assistance
(e.g., granting funds to a small business
to develop an outdoor patio to reduce
transmission). In contrast, if a recipient
contracts with, or grants funds to, a
small business, nonprofit, or impacted
industry to carry out an eligible use for
COVID–19 mitigation on behalf of the
recipient, the entity is a subrecipient
(e.g., contracting with a small business
to operate COVID–19 vaccination sites).

For further information on
distinguishing between beneficiaries
and subrecipients, as well as the
impacts of the distinction on reporting
and other requirements, see section
Distinguishing Subrecipients versus
Beneficiaries.
b. Medical Expenses
Background: The interim final rule
also included as an enumerated eligible
use medical expenses, including
medical care and services to address the
near-term and potential longer-term
impacts of the disease on individuals
infected.

Public Comment: Some commenters
sought clarification on the types of
medical expenses eligible and for
whom, including whether funds could
be used under this category for
expanding health insurance coverage
(e.g., subsidies for premiums, expanding
a group health plan), improvements to
healthcare facilities or establishment of
new medical facilities, direct costs of
medical services, and costs to a self-
funded health insurance plan (e.g., a
county government health plan) for
COVID–19 medical care.

Treasury Response: In the final rule,
Treasury is maintaining this enumerated
eligible use category and clarifying that
it covers costs related to medical care
provided directly to an individual due
to COVID–19 infection (e.g., treatment)
or a potential infection (e.g., testing).

This can include medical costs to
uninsured individuals; deductibles, co-
pays, or other costs not covered by
insurance; costs for uncompensated care
at a health provider; emergency medical
response costs; and, for recipients with
a self-funded health insurance plan,
excess health insurance costs due to
COVID–19 medical care. These are
medical expenses due to COVID–19 and
distinguish this category of eligible uses
from other related eligible uses, like
COVID–19 mitigation and prevention
and health insurance expenses to
households, to provide greater clarity
for recipients in determining which
category of eligible uses they should
review to assess a potential use of funds.

For discussion of eligibility for
programs to expand health insurance
coverage, see section Assistance to
Households.
c. Behavioral Health Care
Background: Recognizing that the
public health emergency, necessary
mitigation measures like social
distancing, and the economic downturn
have exacerbated mental health and
substance use challenges for many
Americans, the interim final rule
included an enumerated eligible use for
mental health treatment, substance use
treatment, and other behavioral health
services, including a non-exhaustive list
of specific services that would be
eligible under this category.

Public Comment: Many commenters
expressed support for the interim final
rule’s recognition of behavioral health
impacts of the pandemic and eligible
uses under this category. Several
commenters requested clarification on
the types of eligible services under this
category, specifically whether both
acute and chronic care are included as
well as services that often do not
directly accept insurance payments, like
peer support groups. Some commenters
highlighted the importance of cultural
competence in providing effective
behavioral health services. Some
commenters suggested that funding
should be available broadly and quickly
for this purpose, recommending that
funding available for behavioral health
not be tied to the amount of revenue
loss experienced by the recipient.

Treasury Response: In the final rule,
Treasury is maintaining this enumerated
eligible use category and clarifying that
it covers an expansive array of services
for prevention, treatment, recovery, and
harm reduction for mental health,
substance use, and other behavioral
health challenges caused or exacerbated
by the public health emergency. The
specific services listed in the interim
final rule also remain eligible.
77 Treasury is further clarifying that
when providing behavioral health
services, recipients can identify the
impacted population as the general
public and, as with all enumerated
eligible uses, presume that all programs
and services are reasonably proportional
responses to the harm identified unless
a response is grossly disproportionate to
the type or extent of harm experienced.

In contrast, capital expenditures are not
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4356 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 78 However, SLFRF funds may not be used to
reimburse a service that was also billed to
insurance.
79 In line with the Department of Health and
Human Services, Overdose Prevention Strategy,
https://www.hhs.gov/overdose-prevention/, and the
Office of National Drug Control Policy,
Administration’s Statement on Drug Policy
Priorities for Year One (April 1, 2021), https://
www.whitehouse.gov/wp-content/uploads/2021/03/
BidenHarris-Statement-of-Drug-Policy-Priorities-
April-1.pdf.
considered ‘‘programs and services’’ and
are not presumed to be reasonably
proportional responses to an identified
harm except as provided in section
Capital Expenditures in General
Provisions: Other.

In other words, recipients can provide
behavioral health services to members
of the general public without any
further analysis of impacts of the
pandemic on those individuals and
whether the service is responsive.

Recipients may also use this eligible use
category to respond to increased rates of
behavioral health challenges at a
population level or, at an individual
level, new behavioral health challenges
or exacerbation of pre-existing
challenges, including new barriers to
accessing treatment.

Services that respond to these impacts
of the public health emergency may
include services across the continuum
of care, including both acute and
chronic care, such as prevention,
outpatient treatment, inpatient
treatment, crisis care, diversion
programs (e.g., from emergency
departments or criminal justice system
involvement), outreach to individuals
not yet engaged in treatment, harm
reduction, and supports for long-term
recovery (e.g., peer support or recovery
coaching, housing, transportation,
employment services).

Recipients may also provide services
for special populations, for example,
enhanced services in schools to address
increased rates of behavioral health
challenges for youths, mental health
first responder or law enforcement-
mental health co-responder programs to
divert individuals experiencing mental
illness from the criminal justice system,
or services for pregnant women with
substance use disorders or infants born
with neonatal abstinence syndrome.

Finally, recipients may use funds for
programs or services to support
equitable access to services and reduce
racial, ethnic, or socioeconomic
disparities in access to high-quality
treatment.

Eligible uses of funds may include
services typically billable to
insurance
78 or services not typically
billable to insurance, such as peer
support groups, costs for residence in
supportive housing or recovery housing,
and the 988 National Suicide Prevention
Lifeline or other hotline services.

Recipients may also use funds in
conjunction with other federal grants or
programs (see section Program
Administration Provisions), though
eligible services under SLFRF are not
limited to those eligible under existing
federal programs.

Given the public health emergency’s
exacerbation of the ongoing opioid and
overdose crisis, Treasury highlights
several ways that funds may be used to
respond to opioid use disorder and
prevent overdose mortality.
79 Specifically, eligible uses of funds
include programs to expand access to
evidence-based treatment like
medications to treat opioid use disorder
(e.g., direct costs or incentives for
emergency departments, prisons, jails,
and outpatient providers to offer
medications and low-barrier treatment),
naloxone distribution, syringe service
programs, outreach to individuals in
active use, post-overdose follow up
programs, programs for diversion from
the criminal justice system, and
contingency management interventions.

Finally, for clarity, Treasury has
addressed the eligibility standard for
capital expenditures, or investments in
property, facilities, or equipment, in one
section of this Supplementary
Information; see section Capital
Expenditures in General Provisions:

Other. Examples of capital expenditures
related to behavioral health that
Treasury recognizes as eligible include
behavioral health facilities and
equipment (e.g., inpatient or outpatient
mental health or substance use
treatment facilities, crisis centers,
diversion centers), as long as they
adhere to the standards detailed in the
Capital Expenditures section.
d. Preventing and Responding to
Violence
Background: The interim final rule
highlighted that some types of violence
had increased during the pandemic and
that the ability of victims to access
services had decreased, noting as an
example the challenges that individuals
affected by domestic violence face in
accessing services. Accordingly, the
interim final rule enumerated as an
eligible use, in disproportionately
impacted communities, evidence-based
community violence intervention
programs. Following the release of the
interim final rule, Treasury received
several recipient questions regarding
whether and how funds may be used to
respond to an increase in crime,
violence, or gun violence in some
communities during the pandemic.

Treasury released further guidance
identifying how enumerated eligible
uses and eligible use categories under
the interim final rule could support
violence reduction efforts, including
rehiring public sector staff, behavioral
health services, and services to address
negative economic impacts of the
pandemic that may aid victims of crime.

The guidance also identified an
expanded set of enumerated eligible
uses to address increased gun violence.

Public Comment: Several commenters
expressed support for this use of funds.

Treasury Response: In the final rule,
Treasury is maintaining enumerated
eligible uses in this area and clarifying
how to apply eligibility standards.

Throughout the final rule, enumerated
eligible uses should respond to an
identified impact of the COVID–19
public health emergency in a reasonably
proportional manner to the extent and
type of harm experienced. Many of the
enumerated eligible uses—like
behavioral health services, services to
improve employment opportunities, and
services to address educational
disparities in disproportionately
impacted communities—that respond to
the public health and negative economic
impacts of the pandemic may also have
benefits for reducing crime or aiding
victims of crime. For example, the
pandemic exacerbated the impact of
domestic violence, sexual assault, and
human trafficking; enumerated eligible
uses like emergency housing assistance,
cash assistance, or assistance with food,
childcare, and other needs could be
used to support survivors of domestic
violence, sexual assault, or human
trafficking who experienced public
health or economic impacts due to the
pandemic.

Public Comment: Several commenters
expressed support for community
violence intervention programs or
argued that traditional public safety
approaches had negatively impacted the
social determinants of health in their
communities. Several commenters
recommended inclusion of approaches
like mental health or substance use
diversion programs.

Treasury Response: Treasury
recognizes the importance of
comprehensive approaches to
challenges like violence. The final rule
includes an enumerated eligible use for
community violence intervention
programs in all communities, not just
the disproportionately impacted
communities eligible under the interim
final rule. Given the increased rate of
violence during the pandemic, Treasury
has determined that this enumerated
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4357 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 80 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS], retrieved from FRED,
Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/PAYEMS (last visited
December 7, 2021).
81 Id.
82 U.S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://fred.
stlouisfed.org/series/UNRATE (last visited
December 7, 2021).
83 U.S. Bureau of Labor Statistics, supra note 80.
84 U.S. Bureau of Labor Statistics, supra note 82.
85 U.S. Bureau of Economic Analysis, Real Gross
Domestic Product [GDPC1], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://fred.
stlouisfed.org/series/GDPC1 (last visited December
7, 2021).
86 U.S. Department of the Treasury, Economy
Statement by Catherine Wolfram, Acting Assistant
Secretary for Economy Policy, for the Treasury
Borrowing Advisory Committee (November 1,
2021), available at https://home.treasury.gov/news/
press-releases/jy0453.
87 Yuka Hayashi, IMF Cuts Global Growth
Forecast Amid Supply-Chain Disruptions,
Pandemic Pressures, Wall Street Journal (October
12, 2021), available at https://www.wsj.com/
articles/imf-cuts-global-growth-forecast-amid-
supply-chain-disruptions-warns-of-inflation-risks-
11634043601.
88 U.S. Bureau of Labor Statistics, supra note 80.
89 U.S. Bureau of Labor Statistics, Civilian Labor
Force Level [CLF16OV], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://fred.
stlouisfed.org/series/CLF16OV (last visited
December 7, 2021).
90 U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:

Employment status of the civilian population by sex
and age (December 6, 2021), https://www.bls.gov/
news.release/empsit.t01.htm (last visited December
7, 2021); U.S. Bureau of Labor Statistics, Labor
Force Statistics from the Current Population
Survey: Employment status of the civilian
noninstitutional population by race, Hispanic or
Latino ethnicity, sex, and age (December 6, 2021),
https://www.bls.gov/web/empsit/cpseea04.htm (last
visited December 7, 2021); U.S. Bureau of Labor
Statistics, Labor Force Statistics from the Current
Population Survey: Employment status of the
civilian noninstitutional population 25 years and
over by educational attainment (December 6, 2021),
https://www.bls.gov/web/empsit/cpseea05.htm (last
visited December 7, 2021).
91 Elise Gould & Jori Kandra, Wages grew in 2020
because the bottom fell out of the low-wage labor
market, Economic Policy Institute (Feb. 24, 2021),
https://files.epi.org/pdf/219418.pdf. See also,
Michael Dalton et al., The K-Shaped Recovery:

Examining the Diverging Fortunes of Workers in the
Recovery from the COVID–19 Pandemic using
Business and Household Survey Microdata, U.S.

Bureau of Labor Statistics Working Paper Series
(July 2021), https://www.bls.gov/osmr/research-
papers/2021/pdf/ec210020.pdf.
92 Center on Budget and Policy Priorities,
Tracking the COVID–19 Recession’s Effects on
Food, Housing, and Employment Hardships,
https://www.cbpp.org/research/poverty-and-
inequality/tracking-the-covid-19-economys-effects-
on-food-housing-and (last visited December 17,
2021).
eligible use is responsive to the impacts
of the pandemic in all communities.

The final rule incorporates guidance
issued after the interim final rule on
specifically types of services eligible,
including:
• Evidence-based practices like
focused deterrence, street outreach,
violence interrupters, and hospital-
based violence intervention models,
complete with wraparound services
such as behavioral therapy, trauma
recovery, job training, education,
housing and relocation services, and
financial assistance; and
• Capacity-building efforts at
community violence intervention
programs like funding more
intervention workers, increasing their
pay, providing training and professional
development for intervention workers,
and hiring and training workers to
administer the programs.

Public Comment: Some commenters
sought further clarification on whether
some of the enumerated eligible uses are
considered responsive to all crime,
violent crime, or gun violence.

Treasury Response: Enumerated
eligible uses that respond to an increase
in gun violence may be pursued in
communities experiencing an increase
in gun violence associated with the
pandemic, specifically: (1) Hiring law
enforcement officials—even above pre-
pandemic levels—or paying overtime
where the funds are directly focused on
advancing community policing
strategies for gun violence, (2)
additional enforcement efforts to reduce
gun violence exacerbated by the
pandemic, including prosecuting gun
traffickers, dealers, and other parties
contributing to the supply of crime
guns, as well as collaborative federal,
state, and local efforts to identify and
address gun trafficking channels, and (3)
investing in technology and equipment
to allow law enforcement to more
efficiently and effectively respond to the
rise in gun violence resulting from the
pandemic, for example technology to
assist in the identification of guns
whose serial numbers have been
damaged.

3. Negative Economic Impacts
a. Assistance to Households
Background
While the U.S. economy is now on the
path to a strong recovery, the public
health emergency, including the
necessary measures taken to protect
public health, resulted in significant
economic and financial hardship for
many Americans. As businesses closed,
consumers stayed home, schools shifted
to remote education, and travel declined
precipitously, over 22 million jobs were
lost in March and April 2020.
80 One
year later, in April 2021, the economy
still remained over 8 million jobs below
its pre-pandemic peak,
81 and the
unemployment rate hovered around 6
percent.
82 In the months since Treasury issued
the interim final rule in May 2021, the
economy has made large strides in its
recovery. The economy gained over 4
million jobs in the seven months from
May to November 2021;
83 the
unemployment rate fell more than 1.5
percentage points to 4.2 percent, which
is the lowest rate since February 2020;
84 and the size of the nation’s economy
surpassed the pre-pandemic peak in the
second quarter of 2021.
85 While the economy has made
immense progress in its recovery since
May 2021, the economy has also faced
setbacks that illustrate the continued
risks to the recovery. As the Delta
variant spread across the country this
summer and fall, the United States faced
another severe wave of cases, deaths,
and strain on the healthcare system,
which contributed to a slowdown in the
pace of recovery in the third quarter.
86 Supply chain disruptions have also
demonstrated the difficulties of
restarting a global economy.
87 Moreover, although many Americans
have returned to work as of November
2021, the economy remains 3.9 million
jobs below its pre-pandemic peak,
88 and

2.4 million workers have dropped out of
the labor market altogether relative to
February 2020.
89 Thus, despite much
progress, there is a continued need to
respond to the pandemic’s economic
effects to ensure a full, broad-based, and
equitable recovery.

Indeed, the pandemic’s economic
impacts continue to affect some
demographic groups more than others.

Rates of unemployment remain
particularly severe among workers of
color and workers with lower levels of
educational attainment; for example, the
overall unemployment rate in the
United States was 4.2 percent in
November 2021, but certain groups saw
much higher rates: 6.7 percent for Black
workers, 5.2 percent for Hispanic or
Latino workers, and 5.7 percent for
workers without a high school
diploma.
90 Job losses have also been
particularly steep among low-wage
workers, with these workers remaining
furthest from recovery as of the end of
2020.
91 A severe recession, and its
concentrated impact among low-income
workers, has amplified food and
housing insecurity, with an estimated
nearly 20 million adults living in
households where there is sometimes or
often not enough food to eat and an
estimated 12 million adults living in
households that were not current on
rent.
92 While economic effects have been
seen across many communities, there
are additional disparities by race and
income. For example, approximately
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4358 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 93 Michael Karpman, Dulce Gonzalez, Genevieve
M. Kenney, Parents Are Struggling to Provide for
Their Families during the Pandemic, Urban
Institute (May 2020), https://www.urban.org/
research/publication/parents-are-struggling-
provide-their-families-during-pandemic?utm_
source=urban_researcher&utm_
medium=email&utm_campaign=covid_
parents&utm_term=lhp.
94 Women have carried a larger share of childcare
responsibilities than men during the COVID–19
crisis. See, e.g., Gema Zamarro & Marı´a J. Prados,
Gender differences in couples’ division of
childcare, work and mental health during COVID–
19, Rev. Econ. Household 19:11–40 (2021),
available at https://link.springer.com/article/

10.1007/s11150-020-09534-7; Titan Alon et al., The
Impact of COVID–19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
(April 2020), available at https://www.nber.org/
papers/w26947.
95 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate—20 Yrs. & Over, Black or African
American Women [LNS11300032], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300032 (last visited
December 7, 2021).
96 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate—20 Yrs. & Over, Black or African
American Men [LNS11300031], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300031 (last visited
December 7, 2021).
97 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate—20 Yrs. & Over, White Women
[LNS11300029], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://fred.stlouis
fed.org/series/LNS11300029 (last visited December
7, 2021).
98 See, e.g., Michael Greenstone & Adam Looney,
Unemployment and Earnings Losses: A Look at
Long-Term Impacts of the Great Recession on
American Workers, Brookings Institution (Nov. 4,
2011), https://www.brookings.edu/blog/jobs/2011/
11/04/unemployment-and-earnings-losses-a-look-
at-long-term-impacts-of-the-great-recession-on-
american-workers/.
99 Chi Chi Wu, Solving the Credit Conundrum:

Helping Consumers’ Credit Records Impaired by the
Foreclosure Crisis and Great Recession, National
Consumer Law Center (Dec. 2013), https://
www.nclc.org/images/pdf/credit_reports/report-
credit-conundrum-2013.pdf.
100 Irwin Garfinkel, Sara McLanahan, Christopher
Wimer, eds., Children of the Great Recession,
Russell Sage Foundation (Aug. 2016), available at
https://www.russellsage.org/publications/children-
great-recession.
101 Kyle J. Casewell and Stephen Zuckerman,
Food Insecurity, Housing Hardship, and Medical
Care Utilization, Urban Institute (June 2018),
available at https://www.urban.org/sites/default/
files/publication/98701/2001896_foodinsecurity_
housinghardship_medicalcareutilization_
finalized.pdf.
102 Housing insecurity is defined as not paying
the full amount of rent or mortgage and/or utility
bills (gas, oil, or electricity) sometime in the
previous 12 months.
103 Housing quality hardship is defined as an
affirmative response to one or more questions
related to problems with a respondent’s physical
dwelling: Pests and/or insects; leaking roof or
ceiling; windows that are broken or cannot shut;
exposed electrical wires; broken plumbing (toilet,
hot water, other); holes in walls, ceiling, or floor;
no appliances (refrigerator or stove); and no phone
(of any kind).
104 Id.
105 Elise Gould and Melat Kassa. Low-wage, low-
hours workers were hit hardest in the COVID–19
recession: The State of Working America 2020
employment report, Economic Policy Institute (May
2021), available at https://www.epi.org/publication/
swa-2020-employment-report/.
106 Id.
107 Id.
108 Id.
109 R. Chetty, J. Friedman, N. Hendren, M.

Stepner, & Team, T. O. I., The Economic Impacts
of COVID–19: Evidence from a New Public Database
Built Using Private Sector Data (No. w27431; p.
w27431) (2020), National Bureau of Economic
Research. https://doi.org/10.3386/w27431.
110 M. Despard, Michal Grinstein-Weiss, Yung
Chun, and Stephen Roll, COVID–19 job and income
loss leading to more hunger and financial hardship,
Brookings Institute (July 13, 2020), https://
www.brookings.edu/blog/upfront/2020/07/13/
covid-19-job-and-income-loss-leading-to-more-
hunger-and-financial-hardship/.
111 N. Panchal, R. Kamal, C. Mun˜ana, & P.

Chidambaram, The Implications of COVID–19 for
Mental Health and Substance Use, Kaiser Family
Foundation (February 10, 2021), https://
half of low-income, Black, and Hispanic
parents reported difficulty covering
costs related to food, housing, utility, or
medical care.
93 Over the course of the
pandemic, inequities also manifested
along gender lines, as schools closed to
in-person activities, leaving many
working families without childcare
during the day.
94 Women of color have
been hit especially hard: The labor force
participation rate for Black women has
fallen by 3.6 percentage points
95 during
the pandemic as compared to 1.3
percentage points for Black men
96 and

1.7 percentage points for White
women.
97 As the economy recovers, the effects
of the pandemic-related recession may
continue to impact households,
including a risk of longer-term effects on
earnings and economic potential. For
example, unemployed workers,
especially those who have experienced
longer periods of unemployment, earn
lower wages over the long term once
rehired.
98 In addition to the labor
market consequences for unemployed
workers, recessions can also cause
longer-term economic challenges
through, among other factors, damaged
consumer credit scores
99 and reduced
familial and childhood wellbeing.100
These potential long-term economic
consequences underscore the continued
need for robust policy support.

Low- and moderate-income
households, those with income levels at
or below 300 percent of the federal
poverty level (FPL), face particular
hardships and challenges. These
households report much higher rates of
food insecurity and housing hardships
than households with higher incomes.

For example, households with incomes
at or below 300 percent FPL are several
times more likely to have reported
struggling with food insecurity
compared to households with income
above 300 percent FPL.
101 Similarly,
low- and moderate-income households
reported being housing insecure
102 at
rates more than twice as high as higher-
income households, and low- and
moderate-income households reported
housing quality hardship
103 at rates
statistically significantly greater than
the rate for higher-income
households.
104 The economic crisis
caused by the pandemic worsened
economic outcomes for workers in many
low- and moderate-income households.

Industries that employed low-wage
workers experienced a disproportionate
level of job loss. For example, from
February 2020 to February 2021, the
hospitality and leisure industry lost
nearly 3.5 million jobs.
105 While the
entire industry was impacted, 72
percent of the job losses occurred in the
lowest wage service occupations
compared to only a 6 percent rate of job
loss in the highest wage management
and finance jobs.
106 Similar trends exist
in other heavily impacted industries. In
public education, the lowest wage
occupations, service and transportation
jobs, saw a job loss rate of 20 and 26
percent, respectively.
107 During that
same time period, the highest wage
occupations in public education,
management, actually saw jobs increase
by 7 percent.
108
While many households suffered
negative economic outcomes as a result
of the COVID–19 pandemic and
economic recession, households with
low incomes were impacted in
disproportionate and exceptional ways.

From January 2020 to March 2021, low-
wage workers experienced job loss at a
rate five times higher than middle-wage
workers, and high-wage workers
actually experienced an increase in job
opportunities.
109 Because workers in
low-income households were more
likely to lose their job or experience
reductions in pay, those same
households were also more likely to
experience economic hardships like
trouble paying utility bills, affording
rent or mortgage payments, purchasing
food, and paying for medical
expenses.
110 The disproportionate
negative impacts the pandemic has had
on low-income families extend beyond
financial insecurity. For example, low-
income families have reported higher
levels of social isolation, stress, and
other negative mental health outcomes
during the pandemic. While over half of
all U.S. adults report that their mental
health was negatively affected by the
pandemic, adults with low incomes
reported major negative mental health
impacts at a rate nearly twice that of
adults with high incomes.
111
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4359 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations www.kff.org/coronavirus-covid-19/issue-brief/the-
implications-of-covid-19-for-mental-health-and-
substance-use/.
112 For which recipients may presume that any
student who did not have access to in-person
instruction for a significant period of time was
impacted by the pandemic.

Summary of Interim Final Rule and
Final Rule Structure
Summary: The interim final rule
provided a non-exhaustive list of
enumerated eligible uses to respond to
the negative economic impacts of the
pandemic through assistance to
households, as well as a standard for
assessing whether uses of funds beyond
those enumerated are eligible.

The interim final rule described
enumerated eligible uses for assistance
to households in several categories: (1)
Assistance to unemployed workers, (2)
state Unemployment Insurance Trust
Funds, (3) assistance to households, and
(4) expenses to improve the efficacy of
economic relief. Note that the interim
final rule posed several questions to the
public on enumerated eligible uses for
assistance to households; comments on
these questions are addressed in the
relevant subject matter section below.

In addition, in recognition that pre-
existing health, economic, and social
disparities contributed to
disproportionate pandemic impacts in
certain communities, the interim final
rule also provided a broader list of
enumerated eligible uses to respond to
the pandemic in disproportionately
impacted communities, specifically: (1)
Building stronger communities through
investments in housing and
neighborhoods, (2) addressing
educational disparities, and (3)
promoting healthy childhood
environments. In the interim final rule,
under the Public Health section,
recipients could also provide services to
address health disparities and increase
access to health and social services;
these eligible uses have been re-
organized into the Assistance to
Households section to consolidate
responses in disproportionately
impacted communities and enhance
clarity.

This section addresses enumerated
eligible uses in the final rule to respond
to negative economic impacts to
households. As a reminder, recipients
may presume that a household or
population that experienced
unemployment, experienced increased
food or housing insecurity, or is low or
moderate income experienced negative
economic impacts resulting from the
pandemic, and recipients may provide
services to them that respond to these
impacts, including these enumerated
eligible uses.

For guidance on how to determine
whether a particular use, beyond those
enumerated, is eligible; further detail on
which households and communities are
presumed eligible for services; and how
to identify eligible households and
communities beyond those presumed
eligible, see section General Provisions:

Structure and Standards.

Reorganizations and Cross-
References: The final rule reorganizes
all enumerated eligible uses for
impacted and disproportionately
impacted households into the section
Assistance to Households, with the
exception that expenses to improve the
efficacy of economic relief has been re-
categorized into a different section of
the final rule for increased clarity; for
discussion of that use category, see
section General Provisions: Other.

Note that in conducting this
reorganization, and based on further
analysis and in response to comments,
Treasury has determined that several
enumerated uses included in the
interim final rule for disproportionately
impacted communities are directly
responsive to negative economic
impacts experienced by impacted
households. In the final rule, these uses
have been moved from
‘‘disproportionately impacted’’ to
‘‘impacted’’ households accordingly,
making these services available to both
disproportionately impacted and
impacted households. These uses
include assistance applying for public
benefits or services; programs or
services that address or mitigate the
impacts of the COVID–19 public health
emergency on childhood health or
welfare, including childcare, early
learning services, programs to provide
home visits, and services for families
involved in the child welfare system
and foster youth; programs to address
the impacts of lost instructional time for
students;
112 and programs or services
that address housing insecurity, lack of
affordable housing, or homelessness.

The following activities remain
enumerated eligible uses for
disproportionately impacted
households: Remediation of lead paint
or other lead hazards; housing vouchers
and assistance relocating to
neighborhoods with higher levels of
economic opportunity; and programs or
services that address educational
disparities, including assistance to high-
poverty school districts to advance
equitable funding across districts and
geographies and evidence-based
services to address the academic, social,
emotional, and mental health needs of
students.

Enumerated Eligible Uses for Impacted
Households
The interim final rule included
several enumerated eligible uses to
provide assistance to households or
populations facing negative economic
impacts due to COVID–19. Enumerated
eligible uses included: Food assistance;
rent, mortgage, or utility assistance;
counseling and legal aid to prevent
eviction or homelessness; emergency
assistance for burials, home repairs,
weatherization, or other needs; internet
access or digital literacy assistance; cash
assistance; or job training to address
negative economic or public health
impacts experienced due to a worker’s
occupation or level of training. It also
posed a question as to what other types
of services or costs Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVID–19.

This section addresses each of these
enumerated eligible uses in turn, with
the exception of job training, which has
been re-categorized for increased clarity
to the eligible use for ‘‘assistance to
unemployed and underemployed
workers.’’ In general, commenters
supported inclusion of these
enumerated eligible uses to address key
economic needs among households due
to the pandemic, and Treasury is
maintaining these eligible uses in the
final rule, in line with commenters’
recommendations.

1. Food assistance. The interim final
rule included an enumerated eligible
use for food assistance. Some
commenters expressed support for this
eligible use and emphasized the
importance of aid to address food
insecurity. Some commenters raised
questions as to whether food assistance
funds could be used to augment services
provided through organizations like
food banks, churches, and other food
delivery services, or generally be sub-
awarded to these organizations.

Treasury Response: Treasury is
maintaining this enumerated eligible
use without change. Recipients may, as
was the case under the interim final
rule, administer programs through a
wide range of entities, including
nonprofit and for-profit entities, to carry
out eligible uses on behalf of the
recipient government (see section
Distinguishing Subrecipients versus
Beneficiaries). Further, Treasury is
clarifying that capital expenditures
related to food banks and other facilities
primarily dedicated to addressing food
insecurity are eligible; recipients
seeking to use funds for capital
expenditures should refer to the section
Capital Expenditures in General
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4360 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 113 See FAQ 2.21. Coronavirus State and Local
Fiscal Recovery Funds, Frequently Asked
Questions, as of July 19, 2021; https://
home.treasury.gov/system/files/136/SLFRPFAQ.pdf.
114 Jung Hyun Choi, Laurie Goodman, and Daniel
Pang, The Pandemic Is Making It Difficult for Mom-
and-Pop Landlords to Maintain Their Properties,
Urban Institute (July 23, 2021), https://
www.urban.org/urban-wire/pandemic-making-it-
difficult-mom-and-pop-landlords-maintain-their-
properties.
115 U.S. Energy Information Administration,
Residential Energy Consumption Survey (2017),
Retrieved from https://www.eia.gov/consumption/
residential/data/2015/hc/php/hc11.1.php.

D. Herna´ndez, Understanding ‘energy insecurity’
and why it matters to health, Social Science &
Medicine, 167, 1–10 (2016), https://doi.org/

10.1016/j.socscimed.2016.08.029.
116 Herna´ndez, D. (2016). Understanding ‘energy
insecurity’ and why it matters to health. Social
Science & Medicine, 167, 1–10. https://doi.org/

10.1016/j.socscimed.2016.08.029.
117 U.S. Energy Information Administration,
Residential Energy Consumption Survey (RECS)
https://www.eia.gov/consumption/residential/data/
2015/hc/php/hc11.1.php. (last visited November 9,
2021)
Provisions: Other for additional
eligibility standards that apply to uses
of funds for capital expenditures.

2. Emergency housing assistance. The
interim final rule included an
enumerated eligible use for rent,
mortgage, or utility assistance and
counseling and legal aid to prevent
eviction or homelessness.

Public Comment: Several commenters
supported the inclusion of eviction
prevention activities as an eligible use
given the high number of households
behind on rent and potentially at risk of
eviction. Following release of the
interim final rule, Treasury had also
received requests for elaboration on the
types of eligible services in this
category. Some commenters also
recommended including assistance to
households for delinquent property
taxes, for example to prevent tax
foreclosures on homes, as an
enumerated eligible use.

Treasury Response: In response to
requests for elaboration on the types of
eligible services for eviction prevention,
Treasury has provided further guidance
that these services include ‘‘housing
stability services that enable eligible
households to maintain or obtain
housing, such as housing counseling,
fair housing counseling, case
management related to housing stability,
outreach to households at risk of
eviction or promotion of housing
support programs, housing related
services for survivors of domestic abuse
or human trafficking, and specialized
services for individuals with disabilities
or seniors that support their ability to
access or maintain housing,’’ as well as
‘‘legal aid such as legal services or
attorney’s fees related to eviction
proceedings and maintaining housing
stability, court-based eviction
prevention or eviction diversion
programs, and other legal services that
help households maintain or obtain
housing.’’
113 Treasury also emphasized
that recipients may work with court
systems, nonprofits, and a wide range of
other organizations to implement
strategies to support housing stability
and prevent evictions.

In the final rule, Treasury is
maintaining these enumerated eligible
uses, including those described in the
interim final rule and later guidance, in
line with commenters’
recommendations. To enhance clarity,
Treasury is also elaborating on some
types of services included under this
eligible use category; this remains a
non-exhaustive list of eligible services.

For example, eligible services under this
use category include: Rent, rental
arrears, utility costs or arrears (e.g.,
electricity, gas, water and sewer, trash
removal, and energy costs, such as fuel
oil), reasonable accrued late fees (if not
included in rental or utility arrears),
mortgage payment assistance, financial
assistance to allow a homeowner to
reinstate a mortgage or to pay other
housing-related costs related to a period
of forbearance, delinquency, or default,
mortgage principal reduction,
facilitating mortgage interest rate
reductions, counseling to prevent
foreclosure or displacement, relocation
expenses following eviction or
foreclosure (e.g., rental security
deposits, application or screening fees).

Treasury is clarifying that assistance to
households for delinquent property
taxes, for example to prevent tax
foreclosures on homes, was permissible
under the interim final rule and
continues to be so under the final rule.

In addition, Treasury is also clarifying
that recipients may administer utility
assistance or address arrears on behalf
of households through direct or bulk
payments to utility providers to
facilitate utility assistance to multiple
consumers at once, so long as the
payments offset customer balances and
therefore provide assistance to
households.

This eligible use category also
includes emergency assistance for
individuals experiencing homelessness,
either individual-level assistance (e.g.,
rapid rehousing services) or assistance
for groups of individuals (e.g., master
leases of hotels, motels, or similar
facilities to expand available shelter).

Further, Treasury is clarifying that
transitional shelters (e.g., temporary
residences for people experiencing
homelessness) are eligible capital
expenditures. Recipients seeking to use
funds for capital expenditures should
refer to the section Capital Expenditures
in General Provisions: Other for
additional eligibility standards that
apply to uses of funds for capital
expenditures.

Note that this enumerated eligible use
describes ‘‘emergency housing
assistance,’’ or assistance for responses
to the immediate or near-term negative
economic impacts of the pandemic. The
final rule also clarifies and expands the
ability of recipients to use SLFRF funds
to address the general lack of affordable
housing and housing challenges
underscored by the pandemic. For
discussion of affordable housing eligible
uses, including services that primarily
increase access to affordable, high-
quality housing and support stable
housing and homeownership over the
long term, see the eligible use for
‘‘promoting long-term housing security:

Affordable housing and homelessness.’’

3. Emergency assistance for pressing
needs: Burials, home repairs,
weatherization, or other needs. The
interim final rule included an
enumerated eligible use for emergency
assistance for burials, home repairs,
weatherization, and other needs; these
types of programs may provide
emergency assistance for pressing and
unavoidable household needs. Treasury
did not receive comments on this
eligible use and is maintaining it in the
final rule.

Background on Home Repairs and
Weatherization: The economic
downturn has meant fewer households
had the resources needed to make
necessary home repairs and
improvements. In May 2021, 28 percent
of landlords reported deferring
maintenance and 27 percent of tenants
reported maintenance requests going
unanswered.
114 While small and
cosmetic repairs can often wait,
deferring major repairs, such as
plumbing needs, can result in unsafe
and unhealthy living environments and,
eventually, the need for more expensive
repairs and fixes.

In addition to repairs, many homes
are in need of weatherization.

Weatherization assistance helps low-
and moderate-income Americans save
energy, reduce their utility bills, and
keeps them and their homes safe. One
in three households is energy
insecure,
115 meaning they do not have
the ability to meet their energy needs.116
Weatherization efforts are particularly
important for low- and moderate-
income households. Households of
color, renters, and households with low
or moderate incomes are all more likely
to report energy insecurity.
117 These
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4361 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 118 A. Drehobl, & L. Ross, Lifting the high energy
burden in America’s largest cities: How energy
efficiency can improve low income and
underserved communities, American Council for an
Energy Efficient Economy (2016), https://
www.aceee.org/sites/default/files/publications/
researchreports/u1602.pdf.
119 See, e.g., Nation Telecommunications and
Information Administration, More than Half of
American Households Used the Internet for Health-
Related Activities in 2019, NTIA Data Show
(December 7, 2020), https://www.ntia.gov/blog/
2020/more-half-american-households-used-
internet-health-related-activities-2019-ntia-data-
show; Nation Telecommunications and Information
Administration, Nearly a Third of American
Employees Worked Remotely in 2019, NTIA Data
Show (September 3, 2020) https://www.ntia.gov/
blog/2020/nearly-third-american-employees-
worked-remotely-2019-ntia-data-show; and
generally, Nation Telecommunications and
Information Administration, Digital Nation Data
Explorer (June 10, 2020), https://www.ntia.gov/
data/digital-nation-data-explorer.
120 BroadbandSearch Blog Post, How Do U.S.

Internet Costs Compare To The Rest Of The World?,
available at https://www.broadbandsearch.net/blog/
internet-costs-compared-worldwide.
121 Pew Research Center, Mobile Technology and
Home Broadband 2021 (June 3, 2021), https://
www.pewresearch.org/internet/2021/06/03/mobile-
technology-and-home-broadband-2021/.
122 Pew Research Center, 53% of Americans Say
the internet Has Been Essential During the COVID–
19 Outbreak (April 30, 2020), https://www.pew
research.org/internet/2020/04/30/53-of-americans-
say-the-internet-has-been-essential-during-the-
covid-19-outbreak/.
123 Id.
disparities are partially a result of
economic hardship but are also caused
by inequitable access to housing with
proper insulation, up to date heating,
cooling, and ventilation systems, and
functioning and up to date lighting and
appliances.
118 While programs that
address the effects of energy hardships,
like the Low-Income Home Energy
Assistance Program (LIHEAP), are
critical, weatherization attempts to
address root causes by addressing issues
that lead to energy insecurities.

4. Internet access or digital literacy
assistance. The interim final rule
included an enumerated eligible use for
assistance to households for internet
access or digital literacy assistance. This
enumerated eligible use, which
responds to the negative economic
impacts of the pandemic on a household
by providing assistance that helps them
secure internet access or increase their
ability to use computers and the
internet, is separate from the eligible use
category for investments in broadband
infrastructure, under Sections
602(c)(1)(D) and 603(c)(1)(D), which is
used to build new broadband networks
through infrastructure construction or
modernization. For discussion of
broadband infrastructure investment in
the final rule, see section Broadband
Infrastructure in Infrastructure.

Background: The COVID–19 public
health emergency has underscored the
importance of universally available,
high-speed, reliable, and affordable
broadband coverage as millions of
Americans rely on the internet to
participate in, among other critical
activities, school, healthcare, and work.

Recognizing the need for such
connectivity, SLFRF funds can be used
to make necessary investments in
broadband infrastructure that increase
access over the long term, as well as the
necessary supports to purchase internet
access or gain digital literacy skills
needed to complete activities of daily
living during the pandemic.

The National Telecommunications
and Information Administration (NTIA)
highlighted the growing necessity of
broadband in daily lives through its
analysis of NTIA internet Use Survey
data, noting that Americans turn to
broadband internet service for every
facet of daily life including work, study,
and healthcare.
119 With increased use of
technology for daily activities and the
movement by many businesses and
schools to operating remotely during the
pandemic, broadband has become even
more critical for people across the
country to carry out their daily lives.

However, even in areas where
broadband infrastructure exists,
broadband access may be out of reach
for millions of Americans because it is
unaffordable, as the United States has
some of the highest broadband prices in
the Organisation for Economic Co-
operation and Development (OECD).
120
According to a 2021 Pew Research
Center study, 20 percent of non-
broadband users say that the monthly
cost of home broadband is the primary
reason they do not have broadband at
home, and 40 percent say that cost is
one reason for their lack of home
broadband.
121 Further, according to
another survey, 22 percent of parents
with homebound schoolchildren during
the COVID–19 pandemic say that it is
very or somewhat likely that their
children will have to rely on public wi-
fi to finish their schoolwork because
there is no reliable internet connection
at home; this percentage nearly doubles
for lower-income parents, 40 percent of
whom noted that their children will
have to rely on public wi-fi.
122 The
same survey showed that 36 percent of
lower-income parents with homebound
children say their child will not be able
to complete their schoolwork because
they do not have access to a computer
at home.
123
Public Comment: Many commenters
highlighted the importance of
broadband access during the pandemic,
including for remote work and
education, and argued that affordability
presents a major barrier to broadband
adoption by households; in other words,
many households live in areas that have
broadband infrastructure and service
available but are unable to purchase
service for their household due to the
high cost. These commenters argued
that broadband must be affordable to be
accessible.

Commenters proposed several
potential responses to affordability
concerns. Some commenters
recommended that building ‘‘gap
networks,’’ or broadband networks built
at low cost to provide affordable service
in areas where it is lacking, be eligible
as assistance to households to respond
to the negative economic impacts of the
pandemic, even if they do not meet the
technical standards for eligibility under
the eligible use category of broadband
infrastructure investment, especially the
required speed standards for new
service. These commenters argued that
the networks have shown promise as a
timely means to expand access to
affordable broadband internet during
the pandemic, even if they may not
provide service speeds needed for more
intensive internet uses. Another
commenter requested eligible uses
include funding cellular towers to
decrease costs. One commenter
recommended that affordability should
be addressed through other programs
but not SLFRF given that affordability
and availability may require nuanced
solutions that would be complex to
combine.

Treasury Response: The interpretive
framework and enumerated eligible uses
allow recipients flexibility to address
identified pandemic impacts, including
through solutions that take into account
the particularized issues in their
community. Given extensive commenter
feedback on the importance of
affordability to achieving broadband
access, and the centrality of broadband
to participating in work, education,
healthcare, and other activities during
the pandemic, affordability programs
are an appropriate eligible use to
respond to the negative economic
impacts of the pandemic and Treasury
is maintaining the enumerated eligible
use for assistance to households for
internet access and digital literacy
programs in the final rule.

Building or constructing new
broadband networks is an infrastructure
investment and is governed by a
separate clause in the statute. Treasury
has addressed comments on ‘‘gap
networks’’ that require infrastructure
build-out in the section Broadband
Infrastructure in Infrastructure.

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4362 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 124 Amy Finkelstein & Matthew J Notowidigdo,
Take-Up and Targeting: Experimental Evidence
from SNAP, The Quarterly Journal of Economics,
vol 134(3), pages 1505–1556 (2019), https://
www.nber.org/papers/w24652.

Public Comment: Some commenters
also use the term ‘‘gap networks’’ to
refer to equipment installed as part of
wi-fi systems, such as routers, repeaters,
and access points; this equipment
provides consumer access to an existing
broadband network and does not require
new network build-out or construction.

These commenters recommended that
Treasury permit, as assistance to
households for internet access,
investments in public wi-fi networks,
free wi-fi in public housing
communities, and other equipment that
offers internet access to end users by
utilizing existing broadband networks.

Other commenters recommended that
eligible uses in this category include
providing devices and equipment
necessary to access the internet, like
computers and routers, directly to low-
income households.

Treasury Response: Treasury has
determined that these services, which
expand internet access without
constructing new networks, are an
appropriate enumerated eligible use as
assistance to households to respond to
a negative economic impact, and they
are permitted under the final rule.

Treasury is clarifying that eligible uses
under this category can also include a
wide range of programs and services to
expand internet access and digital
literacy, such as subsidies for the cost of
internet service, other programs that
support adoption of internet service
where available, digital literacy
programs, or programs that provide
devices and equipment to access the
internet (e.g., programs that provide
equipment like tablets, computers, or
routers) to households. Recipients
seeking to use funds for equipment
should refer to the section Capital
Expenditures in General Provisions:

Other for additional eligibility standards
that apply to uses of funds for capital
expenditures (e.g., equipment, property,
and facilities).

5. Cash assistance. The interim final
rule included as an enumerated eligible
use cash assistance and provided that
cash transfers must be ‘‘reasonably
proportional’’ to the negative economic
impact they address and may not be
‘‘grossly in excess of the amount needed
to address’’ the impact. In assessing
whether a transfer is reasonably
proportional, recipients may ‘‘consider
and take guidance from the per person
amounts previously provided by the
Federal Government in response to the
COVID–19 crisis,’’ and transfers
‘‘grossly in excess of such amounts’’ are
not eligible.

Public Comment: Several commenters
expressed support for this eligible use,
noting that this is a common policy tool
for some governments to support the
well-being of households and
individuals in their communities. Some
commenters requested that Treasury set
a specific dollar amount for permissible
cash transfers, and Treasury has also
received recipient questions on whether
specific types of transfers, such as those
to a substantial share of the population
in the jurisdiction, would be a
permissible use of funds.

Treasury Response: Treasury is
maintaining this enumerated eligible
use in the final rule, in line with
commenters’ recommendations. Because
the final rule is intended to provide
flexibility to recipients to respond to the
particularized pandemic impacts in
their communities, which may vary in
type and intensity, setting a specific
dollar threshold for eligible cash
transfers would fail to recognize the
particularized needs of communities
and limit recipients’ flexibility to tailor
their response to those needs.

To provide greater clarity, Treasury is
elaborating on the analysis that
recipients may undertake to assess the
eligibility of specific cash assistance
programs or transfers. Cash transfers,
like all eligible uses in this category,
must respond to the negative economic
impacts of the pandemic on a household
or class of households. For the reasons
discussed above, recipients may
presume that low- and moderate-income
households (as defined in the final rule),
as well as households that experienced
unemployment, food insecurity, or
housing insecurity, experienced a
negative economic impact due to the
pandemic.

Recipients may also identify other
households or classes of households
that experienced a negative economic
impact of the pandemic and provide
cash assistance that is reasonably
proportional to, and not grossly in
excess of, the amount needed to address
the negative economic impact. For
example, in the ARPA, Congress
authorized Economic Impact Payments
to households at certain income levels,
identifying and responding to a negative
economic impact of the pandemic on
these households.

Finally, Treasury has reiterated in the
final rule that responses to negative
economic impacts should be reasonably
proportional to the impact that they are
intended to address. Uses that bear no
relation or are grossly disproportionate
to the type or extent of harm
experienced would not be eligible uses.

Reasonably proportional refers to the
scale of the response compared to the
scale of the harm. It also refers to the
targeting of the response to beneficiaries
compared to the amount of harm they
experienced; for example, it may not be
reasonably proportional for a cash
assistance program to provide assistance
in a very small amount to a group that
experienced severe harm and in a much
larger amount to a group that
experienced relatively little harm.

6. Survivor’s benefits. The interim
final rule included an enumerated
eligible use for survivor’s benefits to
surviving family members of
individuals who have died from
COVID–19, including cash assistance to
widows, widowers, or dependents.

Public Comment: Treasury did not
receive any comments on the inclusion
of survivor’s benefits as an enumerated
use for impacted households in the
interim final rule.

Treasury Response: This use of funds
remains eligible under the final rule.

Consistent with the general
reorganization noted above, the final
rule organizes survivor’s benefits under
assistance to households to clarify that
households are the intended
beneficiaries of survivor’s benefits.

7. Assistance accessing or applying
for public benefits or services.

Recognizing that eligible households
often face barriers to accessing public
benefits or services that improve health
and economic outcomes, the interim
final rule included as an enumerated
eligible use in disproportionately
impacted communities, public benefits
navigators to assist community members
with navigating and applying for
available federal, state, and local public
benefits or services. Treasury also
clarified in subsequent guidance after
the interim final rule that this eligible
use category would include outreach
efforts to increase uptake of the Child
Tax Credit.

Background: The under-enrollment of
eligible households in social assistance
programs is a well-recognized and
persistent challenge. There are many
reasons why a household may not be
receiving a particular benefit even
though they are eligible. For many
federal programs, enrollment processes
vary from state-to-state. Sometimes,
households are simply unaware that
they are eligible for a particular
benefit.
124 For example, despite having
one of the highest rates of participation
of any benefits program, nearly 20
percent of eligible individuals do not
participate in the Supplementary
Nutritional Assistance Program
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4363 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 125 United States Department of Agriculture,
Trends in Supplemental Nutrition Assistance
Program Participation Rates: Fiscal Year 2016 to
Fiscal Year 2018 (May 2021), https://fns-prod.
azureedge.net/sites/default/files/resource-files/
Trends2016-2018.pdf.
126 Jeremy Barofsky et al., Spreading Fear: The
Announcement Of The Public Charge Rule Reduced
Enrollment In Child Safety-Net Programs, Health
Affairs (October 2020), https://www.health
affairs.org/doi/full/10.1377/hlthaff.2020.00763.
127 See, e.g., U.S. Department of the Treasury, By
ZIP Code: Number of Children under Age 18 with
a Social Security Number Who Are Not Found on
a Tax Year 2019 or 2020 Tax Return but who
Appear on a Tax Year 2019 Form 1095 and
Associated Number of Policy Holders (June 2021),
https://home.treasury.gov/system/files/131/
Estimated-Counts-of-Children-Unclaimed-for-CTC-
by-ZIP-Code-2019.pdf.
128 Women have carried a larger share of
childcare responsibilities than men during the
COVID–19 crisis. See, e.g., Gema Zamarro & Mar(´a
J. Prados, Gender differences in couples’ division of
childcare, work and mental health during COVID–
19, Rev. Econ. Household 19:11–40 (2021),
available at https://link.springer.com/article/

10.1007/s11150-020-09534-7; Titan Alon et al., The
Impact of COVID–19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
(April 2020), available at https://www.nber.org/
papers/w26947.
129 See, e.g., Center For The Study Of Child Care
Employment (CSCCE), Child Care Sector Jobs: BLS
Analysis (November 8, 2021), https://cscce.
berkeley.edu/child-care-sector-jobs-bls-analysis/;
Emma K. Lee, and Zachary Parolin. The Care
Burden during COVID–19: A National Database of
Child Care Closures in the United States, Socius
(January 2021), doi:10.1177/23780231211032028.
130 Jason Furman, Melissa Schettini Kearney, and
Wilson Powell, The Role of Childcare Challenges in
the US Jobs Market Recovery During the COVID–
19 Pandemic, NBER Working Paper No. 28934 (June
2021), https://www.nber.org/papers/w28934.
131 U.S. Census Bureau, Phase 3.2 Household
Pulse Survey: Table 2. Childcare Arrangements in
the Last 4 Weeks for Children Under 5 Years Old,
by Selected Characteristics, (Washington: 2021),
available at https://www.census.gov/programs-
surveys/household-pulse-survey/data.html.
132 Id.
133 N. Kalluri, C. Kelly, & A. Garg, Child Care
During the COVID–19 Pandemic: A Bad Situation
Made Worse. Pediatrics (2021), https://doi.org/

10.1542/peds.2020-041525.
134 National Association for the Education of
Young Children, Am I Next? Sacrificing to Stay
Open, Child Care Providers Face a Bleak Future
Without Relief (December 2020), https://
www.naeyc.org/sites/default/files/globally-shared/
downloads/PDF.
135 G. G. Weisenfeld, Impacts of Covid-19 on
Preschool Enrollment and Spending, New
Brunswick, NJ: National Institute for Early
Education Research (2021), https://nieer.org/wp-
content/uploads/2021/03/NIEER_Policy_Brief_
Impacts-of-Covid-19on_Preschool_Enrollment_and_
Spending_3_16_21.pdf.
136 Heather Long, ‘The pay is absolute crap’:

Child-care workers are quitting rapidly, a red flag
for the economy, Washington Post (September 19,
2021), https://www.washingtonpost.com/business/
2021/09/19/childcare-workers-quit/.
137 Monash University, The emotional toll of
COVID–19 among early childhood educators
(August 5, 2020) https://lens.monash.edu/@
education/2020/08/05/1381001/the-emotional-toll-
of-covid-19-among-early-childhood-educators.
138 Daphna Bassok and Anna Shapiro,
Understanding COVID–19-era enrollment drops
Continued
(SNAP).125 In other cases, policies like
public charge and asset testing can
discourage otherwise eligible
households.
126 While the gap between
households that need assistance and the
number of households participating in
public benefit programs has always
existed, narrowing that gap and
ensuring households receive the support
they need is critical in mitigating the
negative economic impacts of the
pandemic.

Public Comment: Treasury has also
received feedback from recipients and
stakeholders noting the need to increase
awareness and uptake of assistance
programs, including gaps that remain in
enrollment of eligible households in
programs to address the negative
economic impacts of the pandemic.
127
Treasury Response: Treasury has
determined that this impact of the
pandemic is widely experienced across
many jurisdictions and programs or
services to increase awareness and
uptake of assistance programs would
respond to the pandemic’s negative
economic impact in all communities. As
such, in the final rule, this use is eligible
for any impacted household or class of
households, not only in
disproportionately impacted
communities.

8. Promoting healthy childhood
environments. The interim final rule
included programs and services that
promote healthy childhood
environments as an enumerated eligible
use for disproportionately impacted
households. The interim final rule listed
three programs or services included
under this use: Childcare; programs to
provide home visits by health
professionals, parent educators, and
social service professionals to
individuals with young children to
provide education and assistance for
economic support, health needs, or
child development; and services for
child welfare-involved families and
foster youth to provide support and
education on child development,
positive parenting, coping skills, or
recovery for mental health and
substance use. The interim final rule
also included an enumerated eligible
use for early learning services in
disproportionately impacted
communities, to address disparities in
education.

Public Comment: Childcare and Early
Learning: Treasury received multiple
comments that were supportive of the
provision of childcare. Treasury has also
received multiple comments and
questions indicating that recipients have
identified a need for childcare for a
broader range of households and
communities, for example those that
may need childcare in order to return to
work, in addition to households and
communities disproportionately
impacted by the pandemic. Several
commenters expressed uncertainty
about how childcare facilities should
interact with the boundaries of a QCT.

Finally, one commenter recommended
that pre-K or early learning services
encompass care for infants and toddlers,
arguing that these types of care are often
more expensive or challenging to access
for families.

Background: Childcare and Early
Learning: As daycares and schools
closed in-person activities during the
pandemic, many working families were
left without childcare during the day.
128
Although daycare centers and schools
have since reopened in many
communities, there remains a persistent
childcare shortage as childcare
employment levels have not fully
rebounded since the sharp decline in
childcare employment at the beginning
of the pandemic.
129 As a result, working
parents in communities across the
country, and more specifically women,
may face challenges entering or
reentering the labor force.
130
Low-income households are also more
likely to lose access to quality
childcare.
131 The widespread closure of
childcare centers combined with a lack
of access to paid family leave means
parents in low-income households are
more likely to experience a reduction of
income or leave their jobs due to a lack
of childcare options.
132
Additionally, childcare providers
serving primarily low-income families
were less likely to remain open during
the pandemic because of tighter profit
margins and general community
financial insecurity, compared to
childcare providers serving primarily
high-income families.
133 134
In addition to disruptions to
childcare, early learning services were
also significantly impacted by the
pandemic, and the disruption of these
services had widespread ramifications
for learning loss, parental support, and
equity. Early learning centers have seen
declined enrollment across the board,
though there was a larger dip in
enrollment for low-income
households.
135 This lower enrollment
coincides with a diminishing workforce,
as similarly to childcare, early
childhood educators have been leaving
the profession due to long hours, low
pay,
136 and health and safety
concerns.137 As a result, children’s
school readiness has suffered, leading to
potential long-term impacts on life
outcomes.
138 The impact also extended
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4364 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations among early-grade public school students,
Brookings Institution (February 22, 2021), https://
www.brookings.edu/blog/brown-center-chalkboard/
2021/02/22/understanding-covid-19-era-
enrollment-drops-among-early-grade-public-school-
students/.
139 Centers for Disease Control and Prevention,
Pregnant and Recently Pregnant People, https://
www.cdc.gov/coronavirus/2019-ncov/need-extra-
precautions/pregnant-people.html (last visited
November 9, 2021).
140 Id.
141 Sarah Javaid, Sarah Barringer, Sarah D
Compton, Elizabeth Kaselitz, Maria Muzik, Cheryl
A. Moyer, The impact of COVID–19 on prenatal
care in the United States: Qualitative analysis from
a survey of 2519 pregnant women, Midwifery,
Volume 98, 2021, 102991, ISSN 0266–6138, https://
doi.org/10.1016/j.midw.2021.102991.
142 A Basu, HH Kim, R Basaldua, KW Choi, L
Charron, et al., A cross-national study of factors
associated with women’s perinatal mental health
and wellbeing during the COVID–19 pandemic,
PLOS ONE 16(4): e0249780, (2021), https://doi.org/

10.1371/journal.pone.0249780.
143 Amanda Taub, A New Covid-19 Crisis:

Domestic Abuse Rises Worldwide, New York Times
(April 6, 2020), https://www.nytimes.com/2020/04/
06/world/coronavirus-domestic-violence.html.
144 Xenia Shih Bion, Efforts to Reduce Black
Maternal Mortality Complicated by COVID–19,
California Health Care Foundation (April 20, 2020),
https://www.chcf.org/blog/efforts-reduce-black-
maternal-mortality-complicated-covid-19/.
145 U.S. Department of Health and Human
Services, Home Visiting Evidence of Effectiveness,
https://homvee.acf.hhs.gov/outcomes/maternal%20
health/In%20Brief.
146 National Conference of State Legislatures,
Criminal Justice System Responses to COVID–19
(November 16, 2020), https://www.ncsl.org/
research/civil-and-criminal-justice/criminal-justice-
and-covid-19.aspx.
147 John Burton Advocates for Youth, The
Cumulative Impact of the Pandemic on Youth Who
Have Been in Foster Care or Homeless (May 2020)
https://jbay.org/wp-content/uploads/2021/04/JBAY-
COVID-19-Impact.pdf.
148 John Kelly, Next Week, Thousands of Foster
Youth Will Age Out on the Same Day (September
21, 2021), https://imprintnews.org/subscriber-
content/thousands-of-foster-youth-will-age-out-on-
the-same-day/59006.
149 Conrad-Hiebner, Aislinn, and Elizabeth
Byram, The Temporal Impact of Economic
Insecurity on Child Maltreatment: A Systematic
Review. Trauma, Violence, & Abuse, vol. 21, no. 1,
Jan. 2020, pp. 157–178, doi:10.1177/
1524838018756122.
to parents. Parents, especially mothers,
may face challenges reentering or
remaining in the workforce if early
learning services are unavailable.

Treasury Response: Childcare and
Early Learning Services: Treasury agrees
with commenters’ analysis that
challenges accessing or affording
childcare have been widespread during
the pandemic, affecting many
jurisdictions and populations across the
country. Disruptions to early care and
learning services similarly have had
broad impact and likely result in
negative impacts for young children and
their parents. As such, these
enumerated eligible uses are generally
responsive to the negative economic
impacts of the pandemic in all
communities, not just in
disproportionately impacted
communities. Under the final rule,
childcare and early learning services are
available to impacted households or
classes of households, not just those
disproportionately impacted. These
eligible uses can include new or
expanded services, increasing access to
services, efforts to bolster, support, or
preserve existing providers and services,
and similar activities.

Further, Treasury is clarifying that
improvements to or new construction of
childcare, daycare, and early learning
facilities are eligible capital
expenditures. Recipients seeking to use
funds for capital expenditures should
refer to the section Capital Expenditures
in General Provisions: Other for
additional eligibility standards that
apply to uses of funds for capital
expenditures.

Public Comment: Home Visiting:

Treasury has also received questions
about whether the provision of home
visiting services would be responsive to
the health and mental health needs of
impacted new mothers, citing the
positive mental health impacts shown
on the mother as well as improved
outcomes for children.

Background: Home Visiting: Pregnant
and recently pregnant individuals are at
an increased risk for serious illness from
COVID–19.
139 Furthermore, pregnant
individuals with COVID–19 are more
likely to experience preterm birth
(delivering the baby earlier than 37
weeks).
140 In addition to heightened
health risks from COVID–19, pregnant
individuals may have experienced
significant changes to their prenatal care
during the pandemic
141 or may also
have experienced increased mental
health challenges, including high levels
of depression, anxiety, loneliness, and
post-traumatic stress during the
pandemic.
142
Home visiting services provided to
families, particularly new mothers and
newborns, feature regular home visits
from trained nurses, social workers,
and/or counselors who provide health
care, mental health resources, positive
parenting support, support in making
personal health decisions, and
awareness of other potentially helpful
services. These functions have become
even more essential at mitigating
negative factors associated with the
pandemic. Home visits give
professionals a chance to flag potential
domestic violence, which has risen
worldwide over the course of the
pandemic.
143 Racial health disparities
can also be driven down by home visits.

For example, Black women are more
likely to avoid hospitals during the
pandemic, and home visitors can help
either assuage concerns around
hospitals or give effective advice for
alternative methods of childbirth.
144
Given the disproportionate effect of the
pandemic on people of color, home
visits are an essential equity tool that
tackle major negative effects of the
pandemic. These are just a few
selections from the evidence that
suggests many home visiting models can
have a positive effect on maternal
physical and mental health.
145
Treasury Response: Home Visiting:

Given the widespread impact of
COVID–19 on pregnant and recently
pregnant individuals, Treasury is re-
categorizing home visiting services as an
eligible use for impacted communities,
not just disproportionately impacted
communities. Under the final rule, these
eligible uses are available to impacted
households or classes of households.

Public Comment: Child Welfare:

While the interim final rule noted that
certain types of assistance, particularly
around child development and
parenting, were eligible for child
welfare-involved families, Treasury has
received some recipient questions
asking whether financial, educational,
housing, or other supports and services
are eligible uses for foster youth,
including those aging out of the system,
and child welfare-involved families.

Other commenters asked about whether
funding for kinship care would be
eligible.

Background: Child Welfare: The
COVID–19 pandemic placed meaningful
strain on the child welfare and foster
care system. Court hearings were
delayed,
146 essential mental health care
was shifted to a virtual environment,
and attendance and performance in
school among foster children dropped
sharply.
147 Additionally, there was a
nationwide rise of new children
entering the foster care system and
many states placed temporary moratoria
on children aging out of the foster care
system.
148 As these temporary moratoria
expire, additional support will be
needed to assist children exiting the
system.

Additionally, financial and material
hardship are causal factors in the
increase of new children entering the
foster care system, whether through loss
of a caregiver, domestic violence,
149 or
other associated costs of the pandemic.

Therefore, support to decrease these
hardships will support families and
increase positive outcomes for youth
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4365 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 150 Verlenden JV, Pampati S, Rasberry CN, et al.

Association of Children’s Mode of School
Instruction with Child and Parent Experiences and
Well-Being During the COVID–19 Pandemic—
COVID Experiences Survey, United States, October
8–November 13, 2020. MMWR Morb Mortal Wkly
Rep 2021;70:369–376. DOI: http://dx.doi.org/

10.15585/mmwr.mm7011a1external icon.
151 U.S. Department of Education, Strategies for
Using American Rescue Plan Funding to Address
the Impact of Lost Instructional Time, August 2021.

Retrieved from https://www2.ed.gov/documents/
coronavirus/lost-instructional-time.pdf.
152 Consumer Financial Protection Bureau,
Housing insecurity and the COVID–19 pandemic
Continued
and families that may otherwise become
involved in the child welfare system.

Treasury Response: In the final rule,
Treasury is clarifying that services to
foster youth, including those aging out
of the system, and child welfare-
involved families may encompass a
wide array of financial, educational,
child development, or health supports,
or other supports necessary, including
supports for kinship care.

9. Addressing the impacts of lost
instructional time.

Public Comment: The interim final
rule included an enumerated eligible
use to address educational disparities in
disproportionately impacted
communities, recognizing that
underserved students have been more
severely impacted by the pandemic and
including responsive services for early
learning, enhance funding to high-
poverty districts, and providing
evidence-based services to address the
academic, social, emotional, and mental
health needs of students. Some
commenters expressed concerns that
learning loss or the negative impacts of
lost instructional time due to school
closures or remote education during the
pandemic had affected a significant
share of students in grades kindergarten
through twelve (K–12), including
students who may not fall within a
disproportionally impacted group.

Background: The COVID–19
pandemic resulted in the widespread
closure of schools across the nation.

While many schools and districts
reopened to in-person instruction or
implemented remote learning, the shift
was not immediate or without
consequence. Children who received
virtual only or combined remote and in-
person instruction were more likely to
report experiencing negative mental-
and physical health outcomes than
children who received in-person
instruction.
150
Treasury Response: Under the final
rule, addressing the impact of lost
instructional time and/or learning loss
is an enumerated eligible use for
impacted households. When providing
services to address lost instructional
time, recipients may presume that any
K–12 student who lost access to in-
person instruction for a significant
period of time has been impacted by the
pandemic and is thus eligible for
responsive services.

Interventions or services that address
the impact of lost instructional time
may include offering high-quality
tutoring and other extended learning
opportunities, providing differentiated
instruction, implementing activities to
meet the comprehensive needs of
students, expanding and improving
language access for parents and families,
providing information and assistance to
parents and families on how they can
effectively support students, including
in a distance learning environment,
improving student engagement in
distance education, and administering
and using high-quality assessments to
assess students’ academic progress,
among others. In designing services
under this eligible use, recipients may
wish to reference guidance from the
Department of Education on strategies
for addressing lost instructional time.
151
The final rule also maintains a
separate enumerated eligible use for
addressing educational disparities in
disproportionately impacted
communities. This eligible use includes
services to address disparities in
educational outcomes that predate the
pandemic and amplified its impact on
underserved students; these include, for
example, enhanced funding to high-
poverty districts and providing
evidence-based services to address the
academic, social, emotional, and mental
health needs of students.

Finally, as described in the section
Public Health, recipients can provide a
broad range of behavioral health
services, including services for children
and youth in schools, to respond to the
impacts of the pandemic on mental
health and other behavioral health
issues. When providing behavioral
health services, recipients may presume
that the general public was impacted by
the pandemic and provide behavioral
health services to members of the
general public, including children and
youth in schools, without any further
analysis of impacts of the pandemic on
those individuals and whether the
service is responsive.

10. Promoting long-term housing
security: affordable housing and
homelessness. Under the interim final
rule, recipients may use SLFRF funds to
provide a set of housing services to
communities that have been
disproportionately impacted by the
pandemic. Specifically, the interim final
rule provided that programs or services
that address housing insecurity, lack of
affordable housing, or homelessness,
were responsive to the negative
economic impacts of the pandemic
when provided to disproportionately
impacted households and communities.

The enumerated uses included
supportive housing or other programs or
services to improve access to stable,
affordable housing among individuals
who are homeless and development of
affordable housing to increase supply of
affordable and high-quality living units.

Many recipients have already
announced plans to use SLFRF funds
for affordable housing interventions in
all of these categories. Treasury received
many comments asking for additional
clarity or flexibility in these uses.

As detailed below, based on multiple
public comments and questions and
Treasury’s subsequent analysis,
Treasury has determined that
supportive housing or other programs or
services to improve access to stable,
affordable housing among individuals
who are homeless, and the development
of affordable housing to increase supply
of affordable and high-quality living
units are responsive to the needs of
impacted populations, not only
disproportionately impacted
populations. This final rule reflects this
clarification and builds on the
objectives stated in the interim final rule
to improve access to stable, affordable
housing, including through
interventions that increase the supply of
affordable and high-quality living units,
improve housing security, and support
durable and sustainable
homeownership.

Finally, note that ‘‘emergency housing
assistance,’’ or assistance for responses
to the immediate negative economic
impacts of the pandemic through
services like financial assistance for
rental arrears or mortgage payments, is
also an eligible use category for
assistance to households under the final
rule; see the eligible use for ‘‘emergency
housing assistance’’ above. The
provision of housing vouchers and
assistance relocating to neighborhoods
with higher levels of economic
opportunity remains an eligible use
under assistance to disproportionately
impacted households; for discussion,
see the eligible use for ‘‘housing
vouchers and assistance relocating’’
below.

Background: Affordable Housing: It is
clear that the ongoing pandemic and
resulting economic crisis are having a
profound, long-term negative effect on
the pre-existing affordable housing
crisis facing low-income households.
152
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4366 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations (March 2020), https://files.consumerfinance.gov/f/
documents/cfpb_Housing_insecurity_and_the_
COVID-19_pandemic.pdf.
153 Joint Center For Housing Studies Of Harvard
University, The State of the Nation’s Housing (June
2021), https://www.jchs.harvard.edu/sites/default/
files/reports/files/Harvard_JCHS_State_Nations_
Housing_2021.pdf.
154 Davin Reed and Eileen Divringi, Household
Rental Debt During COVID–19: Update for 2021,
Federal Reserve Bank of Philadelphia (2020),
available at: https://www.philadelphiafed.org/
community-development/housing-and-
neighborhoods/household-rental-debt-during-covid-
19-update-for-2021. Further, some research suggests
that liquidity may be a more important predictor of
default than other factors, including income or
equity. See Trading Equity for Liquidity (June
2019), available at https://www.jpmorganchase.
com/content/dam/jpmc/jpmorgan-chase-and-co/
institute/pdf/institute-trading-equity-for-
liquidity.pdf.

The combination of a large number of
higher-income households who have
weathered the pandemic without
significant income losses, low interest
rates, and housing supply constraints
exacerbated by the pandemic, have
driven a sharp increase in the sale price
of homes.
153 Meanwhile, many low-
income renters and homeowners are
struggling with lost employment and
income and are behind on their housing
payments.
154
Public Comment: Affordable Housing
Outside of Low-Income Geographies: A
major theme in comments was that
affordable housing interventions,
especially development of affordable
housing, should be allowed outside of
QCTs, as concentrating the supply of
affordable housing in low-income
geographies can have the effect of
increasing both concentrated poverty
and racial and economic segregation,
while locking lower-income households
in need of housing support out of high-
opportunity neighborhoods with access
to employment and amenities.

Treasury Response: Affordable
Housing Outside Low-Income
Geographies: As previously stated,
affordable housing is not confined to
low-income geographies under the
interim final rule. As discussed
elsewhere, the interim final rule
presumed that QCTs, as well as
communities served by Tribal
governments, were disproportionately
impacted for administrative
convenience, but recipients may
identify other populations, households,
or geographic areas with disparate
impacts of COVID–19 and provide
affordable housing services to them. For
example, under the interim final rule, a
city could determine that its low-
income residents faced disproportionate
impacts of COVID–19 and develop
affordable housing targeted to these
households. Such a scenario could
include, for example, affordable projects
in higher-income neighborhoods that
would allow residents to live closer to
jobs and well-resourced schools.

Additionally, as noted above,
Treasury is finalizing the rule with some
changes to the treatment of affordable
housing development designed to
clarify that permanent supportive
housing or other programs or services to
improve access to stable, affordable
housing among individuals who are
homeless, and the development of
affordable housing to increase supply of
affordable and high-quality living units,
are responsive to individuals and
households that were impacted by the
pandemic in addition to those that were
disproportionately impacted. This shift
is in line with commenters’
recommendations and consistent with
the facts described above, which
demonstrate that lack of supply of
affordable housing units contributed to
the pandemic’s impact on housing
insecurity and unsustainable housing
cost burdens and that these impacts
were experienced broadly across the
country.

Public Comment: Eligible Activities:

Many commenters asked for clarity on
what types of activities (e.g., land
acquisition, construction, pre-
construction costs, operating costs, etc.)
are eligible uses of SLFRF, and what
affordability criteria must be applied to
affordable housing development.

Commenters encouraged Treasury to
allow the full array of affordable
housing activities, including particular
requests for broad flexibility for Tribal
communities, and to specify that
‘‘development’’ should include
construction, preservation,
rehabilitation, and operation. Other
commenters requested clarification
about permissible program
administration approaches for
affordable housing, such as contracting
methods and distribution of funds.

Some commenters asked that
Treasury require SLFRF funds to be
focused on the lowest-income
households, who suffer the most severe
rent burdens and risks of housing
instability, and whose housing situation
has left them particularly vulnerable to
COVID–19. For example, one
commenter argued that SLFRF funds
should only be used to support
affordable housing for households
making 50 percent of AMI or less and
that recipients should be required to set
aside significant portions of any
developments for renters making 30
percent of AMI or less and persons with
physical and sensory disabilities. Other
commenters requested a more flexible
approach to affordable housing
definitions.

Treasury Response: Eligible Activities:

The final rule clarifies eligibility of
affordable housing development for
recipients; these uses were eligible
under the interim final rule, but
Treasury is providing further guidance
to enhance clarity and respond to
recipient and commenter questions.

As with all interventions to address
the negative economic impacts of the
pandemic, affordable housing projects
must be responsive and proportional to
the harm identified. This test may be
met by affordable housing development
projects—which may involve large
expenditures and capital investments—
if the developments increase the supply
of long-term affordable housing for low-
income households. While there may be
less costly (or non-capital) alternatives
to affordable housing development, a
comprehensive response to the
widespread housing challenges
underscored by the pandemic will
require the production of additional
affordable homes, and targeted
affordable housing development is a
cost-effective and proportional response
to this need.

For purposes of this test, Treasury
will presume that any projects that
would be eligible for funding under
either the National Housing Trust Fund
(HTF) or the Home Investment
Partnerships Program (HOME) are
eligible uses of SLFRF funds. Note that
these programs use different income
limits than the definition of low- and
moderate-income adopted by Treasury.

Given the severity of the affordable
housing shortage, and the ways in
which the pandemic has exacerbated
the need for affordable, high-quality
dwelling units, Treasury has determined
that the households served by these
federal housing programs have been
impacted by the pandemic and its
negative economic impacts and that
development of affordable housing
consistent with these programs is a
related and reasonably proportional
response to those impacts. Additionally,
affordable housing projects provided by
a Tribal government are eligible uses of
SLFRF if they would be eligible for
funding under the Indian Housing Block
Grant program, the Indian Community
Development Block Grant program, or
the Bureau of Indian Affairs Housing
Improvement Program. Alignment with
these programs, which define
‘‘affordable housing’’ in a manner
consistent with a proportionate
response to the affordable housing
challenges faced by low- and moderate-
income households as a result of the
negative economic impacts of the
pandemic, is intended to give recipients
comfort and clarity as they design a
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4367 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 155 Stefan Pichler, Katherine Wen, and Nicolas R.

Ziebarth, COVID–19 Emergency Sick Leave Has
Helped Flatten The Curve In The United States:

Study examines the impact of emergency sick leave
on the spread of COVID–19, Health Affairs 39, no.
12 (2020): 2197–2204, https://www.health
affairs.org/doi/10.1377/hlthaff.2020.00863.
156 Scott Brown et al., Employee and Worksite
Perspectives of the Family and Medical Leave Act:

Results from the 2018 Surveys, Abt Associates (July
2020), https://www.dol.gov/sites/dolgov/files/
OASP/evaluation/pdf/WHD_FMLA2018Survey
Results_FinalReport_Aug2020.pdf.
157 Id.
158 Ann P. Bartel et al., Racial and ethnic
disparities in access to and use of paid family and
medical leave: evidence from four nationally
representative datasets, U.S. Bureau of Labor
Statistics (BLS) (January 2019), https://www.bls.gov/
opub/mlr/2019/article/racial-and-ethnic-
disparities-in-access-to-and-use-of-paid-family-
andmedical-leave.htm.

Continued
wide variety of affordable housing
interventions, including production,
rehabilitation, and preservation of
affordable rental housing and, in some
cases, affordable homeownership units.

These programs allow the financing of
a wide range of affordable housing
activities and set clear eligibility criteria
that many recipients are already familiar
with.

Finally, to further support sustainable
and durable homeownership, recipients
may consider offering down payment
assistance, such as through
contributions to a homeowner’s equity
at origination or that establish a post-
closing, mortgage reserve account on
behalf of the borrower that may be
utilized to make a missed or partial
mortgage payment at any point during
the life of the loan (e.g., if the borrower
faces financial stress). Homeownership
assistance that would be eligible under
the Community Development Block
Grant (at 24 CFR 507.201(n)) is also an
eligible use of SLFRF funds.

Public Comment: Permanent
Supportive Housing: Treasury has
received comments encouraging the use
of SLFRF funds for permanent
supportive housing. This is an eligible
use under the interim final rule: Both
the development of affordable housing
(including operating subsidies) and
wraparound services such as behavioral
health services, employment services,
and other supportive services, are
eligible responses to the public health
crisis or its negative economic impacts.

Treasury Response: The final rule
maintains the eligibility of permanent
supportive housing as an enumerated
use. Treasury is also clarifying that
other affordable housing developments
targeted to specialized populations are
also eligible, for example recovery
housing for individuals in recovery from
substance use.

Public Comment: Operating Expenses:

Commenters specifically asked that
Treasury allow the use of SLFRF funds
for operating expenses of affordable
housing units, as operating subsidies are
typically required to reach extremely
low-income households, whose
affordable rents may be lower than the
ongoing cost of operating their unit.

Treasury Response: Operating
expenses for eligible affordable housing
were an eligible use of funds under the
interim final rule and the final rule
maintains this treatment. This may
include capitalized operating reserves.

Rehabilitation and repair of public
housing will also be considered an
eligible use of SLFRF funds.

Public Comment: Affordable Housing
Loans and Revolving Loan Funds: Some
commenters requested that loans with
maturities beyond the period of
performance or revolving loan funds
that revolve beyond the period of
performance be eligible uses of SLFRF
funds if used for affordable housing.

Some commenters pointed out that for-
profit developers of low-income housing
through the Low-Income Housing Tax
Credit (LIHTC) may be deterred from
accepting grants to bridge funding gaps
in current LIHTC deals by the treatment
of grants to for-profit entities in the
calculation of eligible basis for the
LIHTC.

Treasury Response: The final rule
does not change the treatment of loans
from the interim final rule. For more
details see section Treatment of Loans
in Program Administration Provisions.

Similarly, the final rule does not change
the treatment of grants to support
affordable housing development,
including developments supported by
the LIHTC: such grants are an eligible
use of funds.

Additional enumerated eligible uses
for assistance to impacted households.

As noted above, the interim final rule
posed a question on what other types of
services or costs Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVID–19. In response, commenters
proposed a wide variety of additional
recommended enumerated eligible uses
to assist households, ranging from
general categories of services (e.g., legal
and social services) to services that
respond to needs widely experienced
across the country (e.g., access to and
affordability of health insurance) to
services that are most applicable to the
particularized needs of certain
populations or geographic areas of the
United States (e.g., senior citizens,
SNAP recipients, immigrants, formerly-
incarcerated individuals, responding to
environmental issues in certain
geographic regions). Other commenters
generally requested a high degree of
flexibility to respond to the particular
needs of their communities.

Treasury Response: Given the large
number and diversity of SLFRF
recipients, Treasury’s approach to
assistance to households in the final
rule aims to clarify additional
enumerated eligible uses that respond to
negative economic impacts of the
pandemic experienced widely in many
jurisdictions across the country, making
it clear and simple for recipients to
pursue these enumerated eligible uses
under the final rule. In the final rule,
Treasury is clarifying several additional
uses, which generally respond to
pandemic impacts experienced broadly
across jurisdictions and populations, are
eligible under the interim final rule as
assistance to households and continue
to be so under the final rule, as outlined
below.

11. Paid sick, medical, or family
leave.

Public Comment: Some commenters
argued that the pandemic increased the
need for paid sick or medical leave, as
staying home when ill is recommended
by the CDC to prevent spread of the
virus but lack of access to paid sick
leave often prevents workers from
staying home. Other commenters
recommended paid family leave as an
eligible use, arguing that shortages in
access to childcare or home health
assistance, as well as school closures,
may increase the need for family
members to serve as caretakers.

Background: The COVID–19
pandemic highlighted the importance of
paid leave as well as the number of
workers who do not have access to paid
sick and/or family leave. When workers
have access to paid leave, they are less
likely to report to work sick, and
therefore less likely to spread illnesses
in the workplace: One study
demonstrates that the emergency sick
leave provision of the Families First
Coronavirus Response Act (FFCRA)
reduced the spread of COVID–19.
155
The lack of paid leave exacerbates
financial hardships experienced as a
result of the public health emergency. A
2018 survey by the Department of Labor
found that two-thirds of employees that
took unpaid or partial-paid leave
experienced financial hardship.
156
Furthermore, because the Family and
Medical Leave Act (FMLA) excludes
small employers, part-time workers, and
workers who have been with their
employer for less than a year, 44 percent
of workers do not have access to even
unpaid leave.
157 Workers of color and
workers with lower incomes are less
likely to have access to paid leave.
158 159
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4368 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 159 U.S. Bureau of Labor Statistics, Employee
Benefits in the United States (March 2019), https://
www.bls.gov/ncs/ebs/benefits/2019/ownership/
civilian/table31a.pdf.
160 Maya Rossin-Slater et al., Local exposure to
school shootings and youth antidepressant use,
Proceedings of the National Academy of Sciences,
vol 117(38), pages 23484–23489 (2020), https://
www.pnas.org/content/117/38/23484; Ariel Marek
Pihl and Gaetano Basso, Did California Paid Family
Leave Impact Infant Health?, Journal of Policy
Analysis and Management, https://onlinelibrary.
wiley.com/doi/abs/10.1002/pam.2210.
161 J.C. Jacobs, A. Laporte, C.H. Van Houtven, P.C.

Coyte, Caregiving intensity and retirement status in
Canada. Social Science & Medicine, 102, 74–82
(2014), https://www.sciencedirect.com/science/
article/abs/pii/S0277953613006631.
162 E. Lightfoot, R.P. Moone, Caregiving in times
of uncertainty: Helping adult children of aging
parents find support during the COVID–19
outbreak, Journal of Gerontological Social Work,
63(6–7), 542–552 (2020), https://www.tandfon
line.com/doi/abs/10.1080/01634372.2020.1769793.
163 Note: ‘‘Caregiving intensity’’ is defined as the
amount and type of care provided by informal
caregivers; ‘‘Caregiving burden’’ is defined as the
impacts on physical and mental health, and health-
related quality of life of informal caregivers.
164 SA Cohen, ZJ Kunicki, MM Drohan, ML
Greaney, Exploring Changes in Caregiver Burden
and Caregiving Intensity due to COVID–19,
Gerontology and Geriatric Medicine (January 2021),
doi:10.1177/2333721421999279.
165 Id.
166 Jennifer Tolbert et al., Key Facts about the
Uninsured Population, Kaiser Family Foundation
(November 6, 2020), https://www.kff.org/uninsured/
issue-brief/key-facts-about-the-uninsured-
population/.
167 Joshua Aarons et. al., As the COVID–19
Recession Extended into the Summer of 2020, More
Than 3 Million Adults Lost Employer-Sponsored
Health Insurance Coverage and 2 Million Became
Uninsured, Urban Institute (September 18, 2020),
https://www.urban.org/research/publication/covid-
19-recession-extended-summer-2020-more-3-
million-adults-lost-employer-sponsored-health-
insurance-coverage-and-2-million-became-
uninsured.
168 Centers for Medicare and Medicaid Services,
Medicaid and CHIP Enrollment Trends Snapshot
through September 2020 (Washington: 2021),
available at https://www.medicaid.gov/sites/
default/files/2021-01/september-medicaid-chip-
enrollment-trend-snapshot.pdf.
169 Centers for Medicare and Medicaid Services,
2021 Federal Health Insurance Exchange Weekly
Enrollment Snapshot: Final Snapshot (January 12,
2021) available at https://www.cms.gov/newsroom/
fact-sheets/2021-federal-health-insurance-
exchange-weekly-enrollment-snapshot-final-
snapshot.
170 Sara R. Collins, Munira Z. Gunja, and
Gabriella N. Aboulafia, U.S. Health Insurance
Coverage in 2020: A Looming Crisis in Affordability
(New York: Commonwealth Fund, 2020), available
at https://www.commonwealthfund.org/
publications/issue-briefs/2020/aug/looming-crisis-
health-coverage-2020-biennial.
171 Id.
172 Federal Deposit Insurance Corporation, FDIC
National Survey of Unbanked and Underbanked
Households (2015), https://www.fdic.gov/household
survey/2015/2015execsumm.pdf.
173 Federal Deposit Insurance Corporation, How
America Banks: Household Use of Banking and
Financial Services 2019 FDIC Survey, https://
www.fdic.gov/analysis/household-survey/
2019report.pdf.

For workers that are also caregivers
for children, seniors, or other family
members, there may be a similar need
for—and benefits of—paid family leave.

For example, some workers may have
struggled during the pandemic to
balance caring for children, as schools
and daycares closed, and working. For
new parents, paid parental leave results
in fewer infant hospitalizations,
lowering parental stress, increasing
parental involvement, and improving
the overall health of parent and child.
160
COVID–19 has also increased the levels
of ‘‘caregiving intensity’’
161 and
‘‘caregiving burden’’162 for those
providing care to seniors or older family
members.
163 164 When surveyed, more
than half of caregivers reported that
COVID–19 increased both the amount of
caregiving responsibilities they had as
well as the negative physical and mental
impacts their caregiving responsibilities
had on themselves.
165
Treasury Response: Treasury agrees
that these constitute impacts of the
pandemic, and accordingly, under the
final rule, creating, expanding, or
financially supporting paid sick,
medical, or family leave programs is an
enumerated eligible use of funds to
respond to the negative economic
impacts of the pandemic.

12. Health insurance.

Public Comment: Several commenters
recommended that uses of funds to
expand access to health insurance be
enumerated eligible uses; commenters
believed that the heightened risk of
illness or hospitalization due to COVID–
19 had increased the negative economic
impacts of lacking health insurance.

Background: In 2019, prior to the
pandemic, it was estimated that 11
percent of nonelderly adults lacked
health insurance.
166 By mid-2020, job
loss had resulted in an estimated 3.3
million people losing their employer
sponsored insurance, resulting in an
additional 2 million uninsured
adults.
167 Participation in Medicaid, the
Children’s Health Insurance Program
(CHIP), and the Affordable Care Act
(ACA) marketplace played an important
role in minimizing the number of
people who completely lost health
insurance during the early phases of the
pandemic; Medicaid and CHIP
enrollment increased by 9 percent from
February to September 2020
168 and 8.3
million people enrolled in insurance
through the ACA marketplace.
169
Although the ACA, CHIP, and
Medicaid have significantly reduced the
number of uninsured Americans
through the pandemic and the economic
downturn, adequate coverage and
affordability still remains an issue for
many. In 2020, 21 percent of working-
age adults were inadequately insured,
meaning even if they had insurance,
they incurred a significant amount of
out-of-pocket costs.
170 Additionally, 37
percent of adults reported struggling
with medical bills or medical debt and
71 percent of adults who did not
purchase insurance cited affordability as
the main factor.
171
Treasury Response: Treasury agrees
that loss of health insurance, increased
financial risk from lacking health
insurance, or excessive out-of-pocket
healthcare costs constitute negative
economic impacts of the pandemic.

Under the final rule, programs or
services to expand access to health
insurance coverage are an enumerated
eligible use as assistance to households,
for example, subsidies for health
insurance premiums or expansion of a
recipient’s health insurance plan to
cover additional employees who
currently lack coverage.

13. Services for the unbanked and
underbanked.

Public Comment: One commenter
expressed support for the inclusion of
services to increase banking access as an
allowable expense under SLFRF. The
commenter recommended that states be
encouraged to offer opportunities for
consumers to open safe and affordable
accounts capable of receiving direct
payments. The commenter emphasized
that allowing unbanked and
underbanked households to receive
funds securely through no-fee, direct
deposit will help connect or reconnect
consumers to the mainstream financial
system.

Background: Banking inequities can
make it difficult for unbanked or
underbanked households to access
housing, jobs, and other important
economic opportunities. Being
unbanked or underbanked can also
make it challenging for households to
apply for and receive financial
assistance, including services like
pandemic emergency housing
assistance.

Safe, affordable, and accessible
financial services play a critical role in
assisting households in the United
States in managing income volatility
and cash flow shortages.
172 Currently,
over 5 percent of families, or 7 million
households are ‘‘unbanked,’’ meaning
they do not have a bank account.
173
Low-income households, non-white
households, and households with
individuals with disabilities were even
more likely to be unbanked. In 2019, 16
percent of Native American households,
14 percent of Black households, and 12
percent of Hispanic households were
unbanked, compared to 2.5 percent of
white households. Additionally,
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4369 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 174 Board of the Governors of the Federal Reserve
System, Report on the Economic Well-Being of U.S.

Households in 2018–May 2019, https://www.federal
reserve.gov/publications/2019-economic-well-being-
of-us-households-in-2018-banking-and-credit.htm.
175 Zaheer Allam, The Forceful Reevaluation of
Cash-Based Transactions by COVID–19 and Its
Opportunities to Transition to Cashless Systems in
Digital Urban Networks. Surveying the Covid-19
Pandemic and its Implications (2020): 107–117.
doi:10.1016/B978–0–12–824313–8.00008–5.
176 Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:

Concepts and Definitions, https://www.bls.gov/cps/
definitions.htm (last visited November 9, 2021).
177 Id.
underbanked households—those that
have a bank account but rely on
alternative financial services, such as
money orders, payday loans, and check
cashing services— account for 16
percent of all households in the United
States.
174 As a result of the COVID–19
pandemic, new social distancing
protocols have, in some instances, made
it more difficult to perform financial
transactions with paper instruments,
like banknotes, coinage, paper checks,
or money orders. Households
constrained to these payment methods
may face challenges receiving
government assistance. Additionally,
businesses have transitioned to cashless
payments systems to promote
contactless payments.
175 As a result,
unbanked individuals may face
additional challenges conducting
financial transactions.

Treasury Response: Recognizing these
challenges, Treasury is clarifying that
recipients may use SLFRF funds to
provide financial services that facilitate
the delivery of federal, state, or local
benefits (e.g., Child Tax Credit, Earned
Income Tax Credit, tax refunds, or
emergency housing or food assistance
funds). The following includes a non-
exhaustive list of uses to provide
financial services to unbanked and
underbanked households:
• Provide low or no cost financial
services, including in conjunction with
administration of benefits, such as pre-
paid debit cards, e.g., via Economic
Impact Payment or General Purpose
Reloadable pre-paid cards or for the
development of public banking
infrastructure that can support benefit
delivery.
• Provide transitional services to
facilitate long-term access to banking
and financial services.
• Provide financial literacy programs
and conduct community outreach and
deploy engagement resources to
increase awareness about low-cost, no-
overdraft fee accounts, pilot new
strategies and approaches that help
overcome barriers to banking access and
support the gathering and sharing of
information in ways that improve
equity, such as community meetings,
partnerships with community-based
organizations, online surveys, focus
groups, human-centered design
activities, and other community
engagement activities.

Assistance to Unemployed and
Underemployed Workers
The interim final rule included
assistance to unemployed workers as an
enumerated eligible use, including
‘‘services like job training to accelerate
rehiring of unemployed workers.’’
Treasury provided further guidance,
based on recipient questions after the
interim final rule, that eligible uses
under this section also include ‘‘other
efforts to accelerate rehiring and thus
reduce unemployment, such as
childcare assistance, assistance with
transportation to and from a jobsite or
interview, and incentives for newly
employed workers[,]’’ as well as
assistance to unemployed workers
seeking to start small businesses.

Finally, further guidance also provided
that ‘‘public jobs programs, subsidized
employment, combined education and
on-the-job training programs, or job
training to accelerate rehiring or address
negative economic or public health
impacts experienced due to a worker’s
occupation or level of training’’ are all
enumerated eligible uses as assistance to
unemployed or underemployed
workers.

The interim final rule defined eligible
beneficiaries of assistance as
‘‘individuals who want and are
available for work, including those who
have looked for work sometime in the
past 12 months or who are employed
part time but who want and are
available for full-time work.’’ This
definition is based on definitions used
by the Bureau of Labor Statistics to
define individuals currently
unemployed, as well as persons
marginally attached to the labor force
and working part-time for economic
reasons.
176 The latter two classifications
are types of labor underutilization, or
‘‘underemployed’’ workers.
177 Finally,
the interim final rule specified that
assistance to unemployed workers
included both workers who lost their
job during the pandemic and resulting
recession and workers unemployed
when the pandemic began who saw
further deterioration of their economic
prospects due to the pandemic.

Public Comment: Commenters
generally supported the inclusion of this
enumerated eligible use. One
commenter recommended including
assistance for underemployed workers
who took jobs due to the pandemic that
did not fully utilize their skillset or did
not provide the hours, wages, or job
quality desired. Treasury has also
received recipient questions on whether
job fairs or grants to businesses to hire
underserved workers are eligible uses
under this category. Another commenter
recommended flexibility in eligible
workforce development programs,
arguing that rural areas may face
particular challenges.

Treasury Response: Treasury is
maintaining this eligible use in the final
rule, including the enumerated eligible
services in the interim final rule and
subsequent guidance. Treasury is also
confirming that job fairs or grants to
businesses to hire underserved workers
are eligible uses under this section.

Treasury is also enumerating that job
and workforce training centers are
eligible capital expenditures, so long as
they adhere to the standards and
presumptions detailed in the section
Capital Expenditures in General
Provisions: Other.

The final rule maintains the definition
of eligible beneficiaries, which is
aligned with the Bureau of Labor
Statistics’ definitions of unemployed
workers and other labor
underutilization, using a common,
widely known definition that
incorporates a broad group of
individuals both unemployed or whose
skills are otherwise underutilized in the
labor market.

In addition, recognizing that the
pandemic has generated broad
workforce disruption, in the final rule,
Treasury is making clear that recipients
may provide job training or other
enumerated types of assistance to
individuals that are currently employed
but are seeking to move to a job that
provides better opportunities for
economic advancement, such as higher
wages or more opportunities for career
advancement.

Recipient Unemployment Insurance
Trust Funds and Related Expenses
Under the interim final rule, a
recipient may use funds to make
deposits into its account of the
Unemployment Trust Fund established
under section 904 of the Social Security
Act (42 U.S.C. 1104) up to the level
needed to restore the pre-pandemic
balance of such account as of January
27, 2020 or to pay back advances
received under Title XII of the Social
Security Act (42 U.S.C. 1321) for the
payment of benefits between January 27,
2020 and May 17, 2021. These costs
support the solvency of the
unemployment insurance system and,
ultimately, unemployment insurance
benefits provided to unemployed
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4370 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 178 Note that, while the economic harm being
addressed accrued before March 3, 2021, the cost
incurred to address the harm occurs after March 3,
2021 and provides assistance to unemployed
workers, an eligible use of SLFRF funds.
179 See, e.g., U.S. Department of the Treasury,
More Information on the Conclusion of the Public
Comment Period and the Interim Final Rule on the
Coronavirus State and Local Fiscal Recovery Funds,
https://home.treasury.gov/system/files/136/IFR-
Explainer.pdf.
workers during the pandemic.178 The
interim final rule also posed the
question of what, if any, conditions
should be considered to ensure that
funds used under this eligible use
category repair economic impacts of the
pandemic and strengthen
unemployment insurance systems.

Public Comment: Inclusion as an
Eligible Use and Conditions:

Commenters expressed mixed
perspectives on this eligible use
category. Some commenters supported
its inclusion, arguing that
unemployment insurance systems have
faced significant costs to support
unemployed workers during the
pandemic and that this constitutes a
negative economic impact that SLFRF
funds should be able to address. Other
commenters opposed this eligible use
category, arguing that funds used under
this category may not ultimately support
unemployed workers. Some
commenters noted that unemployment
insurance taxes on businesses
automatically increase when trust fund
balances are low and suggested that
permitting the deposit of funds into
unemployment insurance trust funds
prevents a tax increase on businesses,
some of which may not have faced
negative economic impacts from the
pandemic, rather than providing
assistance to unemployed workers.

Other comments suggested that deposits
are better thought of as savings for
future needs than assistance to
unemployed workers in the near term.

Responding to the interim final rule’s
question, several commenters suggested
that, if Treasury maintains this eligible
use, the final rule should require
detailed reporting on funds used under
this category or place conditions on this
category to increase the likelihood that
funds ultimately support unemployed
workers. For example, some
commenters suggested that recipients
that deposit SLFRF funds into their trust
fund should be barred from cutting
unemployment insurance benefits for
workers during the period of
performance or from erecting new
barriers to accessing benefits (e.g.,
through the application process and
ongoing requirements to receive
benefits). One commenter, noting that
unemployment insurance benefits often
provide low rates of wage replacement
and do not cover some types of
unemployed workers, argued that
recipients should not be permitted to
deposit funds into the trust fund unless
the recipient concurrently expands
benefits. Finally, one commenter
suggested a cap on the amount of funds
that can be used for this purpose.

Treasury Response: Inclusion as an
Eligible Use and Conditions: In the final
rule, Treasury is maintaining the
inclusion of this eligible use category.

Because unemployment insurance trust
funds directly fund benefits to
unemployed workers, maintaining the
solvency of the trust fund is critical to
the continued provision of assistance to
unemployed workers. Further, funds
deposited into the trust fund must be
used as assistance to unemployed
workers, an eligible use of SLFRF funds.

Finally, while, in the absence of the
SLFRF, trust fund deposits would likely
be funded through increases on
employer payroll taxes, the eligibility of
uses of SLFRF funds does not depend
on how obligations would otherwise be
satisfied if the SLFRF were not available
for this use.

While deposits to unemployment
insurance trust funds generally serve as
assistance to unemployed workers,
recipients that make deposits but also
cut unemployment insurance benefits to
workers substantially decrease the
likelihood that the deposited funds will
assist unemployed workers. In other
words, SLFRF funds deposited into an
unemployment insurance trust fund
generally serve as assistance to
unemployed workers, unless recipients
take policy actions that substantially
decrease the extent to which SLFRF
funds would flow to unemployed
workers. As such, through December 31,
2024, recipients that deposit SLFRF
funds into an unemployment insurance
trust fund or use SLFRF funds to repay
principal on Title XII advances, may not
take action to reduce benefits available
to unemployed workers by changing the
computation method governing regular
unemployment compensation in a way
that results in a reduction of average
weekly benefit amounts or the number
of weeks of benefits payable (i.e., the
maximum benefit entitlement).

Finally, until the final rule becomes
effective on April 1, 2022, the interim
final rule remains binding and
effective.
179 These requirements were
not in effect under the interim final rule
and do not apply to funds used (i.e.,
obligated or expended) under the
interim final rule while it is in effect. In
addition, recognizing that some
recipients have taken significant steps
toward making a trust fund deposit or
repaying principal on Title XII advances
under the interim final rule, such as the
legislative appropriation of funds for
this purpose, even if a formal obligation
has not occurred, Treasury will exercise
enforcement discretion to not pursue
violations of this final rule provision
(i.e., the requirement not to reduce
benefits) for recipients that have
appropriated funds for this purpose
prior to the date of adoption of the final
rule consistent with the laws and
procedures in their jurisdiction.

Recipients should refer to Treasury’s
Statement Regarding Compliance with
the Coronavirus State and Local Fiscal
Recovery Funds Interim Final Rule and
Final Rule, which provides additional
detail on these issues.

Public Comment and Treasury
Response: Technical Corrections and
Amendments: Following the interim
final rule, Treasury received recipient
questions on whether paying interest on
advances received under Title XII of the
Social Security Act (42 U.S.C. 1321) is
an eligible use of SLFRF funds; Treasury
is clarifying that such use is
permissible, consistent with Treasury’s
treatment of the eligibility of interest on
Title XII advances under the
Coronavirus Relief Fund.

Treasury is further clarifying that
recipients may only use SLFRF funds
for contributions to unemployment
insurance trust funds and repayment of
the principal amount due on advances
received under Title XII of the Social
Security Act up to an amount equal to
(i) the difference between the balance in
the recipient’s unemployment insurance
trust fund as of January 27, 2020 and the
balance of such account as of May 17,
2021, plus (ii) the principal amount
outstanding as of May 17, 2021 on any
advances received under Title XII of the
Social Security Act between January 27,
2020 and May 17, 2021. Further,
recipients may use SLFRF funds for the
payment of any interest due on such
Title XII advances. In other words,
excluding interest due on Title XII
advances, the magnitude of the decrease
of the balance in the unemployment
insurance trust fund plus the principal
outstanding on any Title XII borrowings
made from the beginning of the public
health emergency to the date of
publication of the SLFRF interim final
rule sets a cap on the amount of SLFRF
funds a recipient may use for trust fund
contributions and repayment of
principal on Title XII advances. Further,
a recipient that deposits SLFRF funds
into its unemployment insurance trust
fund to fully restore the pre-pandemic
balance may not draw down that
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4371 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 180 U.S. Department of Health and Human
Services, COVID–19 and Economic Opportunity:

Inequities in the Employment Crisis, April 2021.

Retrieved from https://aspe.hhs.gov/sites/default/
files/migrated_legacy_files//199901/covid-
economic-equity-brief.pdf.
181 Adelle Simmons et al., Health disparities by
race and ethnicity during the COVID–19 pandemic:

Current evidence and policy approaches. U.S.

Department of Health and Human Services https://
aspe.hhs.gov/sites/default/files/migrated_legacy_
files//199516/covid-equity-issue-brief.pdf.
182 Perry, Brea L., Brian Aronson, and Bernice A.

Pescosolido, Pandemic precarity: COVID–19 is
exposing and exacerbating inequalities in the
American heartland, National Academy of Sciences
(Febuary 2021), https://www.pnas.org/content/118/
8/e2020685118.
183 Id.
184 Jesse Bennet & Rakesh Kochhar, Two
Recessions, Two Recoveries, Pew Research Center
(December 13, 2019), https://www.pewresearch.org/
social-trends/2019/12/13/two-recessions-two-
recoveries-2/.
185 Darrick Hamilton et al., Building an Equitable
Recovery: The role of Race, Labor Markets, and
Education, The New School’s Institute on Race and
Political Economy (February 2021).
186 Adhikari S, Pantaleo NP, Feldman JM,
Ogedegbe O, Thorpe L, Troxel AB. Assessment of
Community-Level Disparities in Coronavirus
Disease 2019 (COVID–19) Infections and Deaths in
Large US Metropolitan Areas. JAMA Netw Open.
2020;3(7):e2016938. doi:10.1001/
jamanetworkopen.2020.16938.
balance and deposit more SLFRF funds,
back up to the pre-pandemic balance.

Enumerated Eligible Uses for
Disproportionately Impacted
Households
Background
The COVID–19 pandemic has had
disproportionally negative impacts on
many households and communities that
were already experiencing inequality
related to race, gender, age, or income
before the pandemic. People of color,
low-income workers, and women
disproportionately lost their jobs during
the COVID–19 pandemic and
experienced disproportionate rates of
negative health outcomes.
180 181
These disproportionate negative
impacts experienced by systemically
underserved communities are not novel
to the COVID–19 pandemic and the
economic downturn. Research shows
that historically underserved
communities that are experiencing
economic and social disparities
typically experience disproportionate
impacts of economic downturns and
natural disasters.
182 This pattern held
true for the effects of COVID–19 and the
economic downturn: Historically
undeserved groups experienced
amplified negative impacts, further
widening inequality.
183
Many communities facing systemic
barriers had not yet recovered from the
impact of the Great Recession before
experiencing the impacts of COVID–19
and the economic downturn. For
example, in 2009, at the end of the Great
Recession, households without a high
school diploma had an average annual
income of $32,300 (measured in 2018
dollars). By 2018, nine years into the
economic recovery, those same
households saw their average income
increase by $600. During that same time
period, households with a bachelor’s
degree saw an increase in their average
household income of $6,100 (measured
in 2018 dollars).
184
The impact pre-existing inequalities
have on a household or community’s
ability to recover is intersectional.

Research shows that pre-existing racial
and gender disparities exacerbated the
disproportionate economic and health
impact COVID–19 and the economic
downturn had on workers of color, and
specifically, women of color.
185 Another
study found that during the first six
months of the pandemic counties that
were both high-poverty and majority
non-white experienced COVID–19
infection rates eight times higher than
high-poverty, majority white
counties.
186 Many residents in these
communities are still coping with the
negative health and economic impacts.

Summary of the Interim Final Rule and
Final Rule Structure
As described previously, the interim
final rule provided a broader list of
enumerated eligible uses to respond to
the pandemic in disproportionately
impacted communities, in recognition
that pre-existing health, economic, and
social disparities contributed to
disproportionate pandemic impacts in
certain communities and that
addressing the root causes of those
disparities constitutes responding to the
public health and negative economic
impacts of the pandemic. The interim
final rule described eligible uses in
disproportionately impacted
communities in four categories, spread
across public health and negative
economic impacts: (1) Addressing
disparities in public health outcomes,
(2) building stronger communities
through investments in housing and
neighborhoods, (3) addressing
educational disparities, and (4)
promoting healthy childhood
environments. As described above,
Treasury has moved eligible uses related
to community violence intervention,
assistance accessing or applying to
public benefits and services, affordable
housing development, healthy
childhood environments, and
addressing lost instructional time in K–
12 schools into the category ‘‘assistance
to impacted households,’’ recognizing
that these pandemic impacts were
widely shared across the country.

This section discusses enumerated
eligible uses to address health
disparities, to build stronger
communities through investments in
neighborhoods, to address educational
disparities, to provide rental assistance
vouchers or assistance relocating to
areas of greater economic opportunity,
and additional eligible uses to respond
to negative economic impacts in
disproportionately impacted
communities. While many of these
services impact both health and
economic outcomes, Treasury has
consolidated them into a single section
for simplicity and clarity and to reflect
the intertwined nature of these issues.

As a reminder, recipients can
presume these uses are eligible when
provided in a QCT, to families and
individuals living in QCTs, by Tribal or
territorial governments, or to low-
income households or communities. As
provided in section Standards:

Designating Other Disproportionately
Impacted Classes, recipients can also
provide these services to other
populations, households, or geographic
areas disproportionately impacted by
the pandemic. Recipients may also
identify additional disproportionate
impacts of the pandemic and design an
appropriate response to address that
harm. For details on eligibility
standards and presumed eligible
populations, see section General
Provisions: Structure and Standards.

Enumerated Eligible Uses for
Disproportionately Impacted
Households

1. Addressing health disparities.

Public Comment: General: In general,
commenters supported eligible uses to
address health disparities and support
health equity; several commenters
highlighted the disparities faced by
communities of color and low-income
populations, as well as the importance
of community engagement in
developing effective programs to serve
disproportionately impacted
communities. Many commenters
recommended additional enumerated
eligible uses to address health
disparities; these are discussed further
below in this section.

Treasury Response: In line with
commenters’ recommendations, the
final rule maintains several enumerated
eligible uses to address health
disparities, specifically:
a. Community health workers.

Treasury received few comments on
community health workers, though one
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4372 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 187 See, e.g., Centers for Disease Control and
Prevention, Community Health Worker (CHW)
Toolkit, https://www.cdc.gov/dhdsp/pubs/toolkits/
chw-toolkit.htm (last visited November 9, 2021).
188 Environmental Protection Agency, 40 CFR
141.80(c)(1), https://www.ecfr.gov/current/title-40/
chapter-I/subchapter-D/part-141/subpart-I/section-
141.80.
189 See, e.g., Opportunity Insights, Creating Moves
To Opportunity (August 2019), https://
opportunityinsights.org/policy/cmto/.
190 U.S. Department of Health and Human
Services, Neighborhood and Built Environment,
https://health.gov/healthypeople/objectives-and-
data/browse-objectives/neighborhood-and-built-
environment#cit1 (last visited November 9, 2021).
191 Social determinants of health are ‘‘the
conditions in the places where people live, learn,
work, and play that affect a wide range of health
risks and outcomes.’’ Centers for Disease Control
and Prevention, About Social Determinants of
Health (SDOH), https://www.cdc.gov/social
determinants/about.html (last visited November 9,
2021).
192 In public health, this is referred to as ‘‘built
environment,’’ or the man-made physical aspects of
a community (e.g., homes, buildings, streets, open
spaces, and infrastructure).
requested further clarification on their
role.187 Treasury is maintaining this
eligible use in the final rule.
b. Remediation of lead paint or other
lead hazards. The interim final rule
included remediation of lead paint or
other lead hazards as an enumerated
eligible use to address health
disparities.

Public Comment: Treasury received
several comments asking for
clarification on the eligibility of a
particular use that would indirectly
address lead pollution. For example, a
commenter requested the ability to fund
remedial actions, such as filtration and
plumbing procedures to help address
lead pollution. One commenter
requested that private wells be eligible
for funding to address contamination
with substances such as lead. Other
commenters requested that Treasury
allow replacement of lead pipes as an
eligible use of funds.

Treasury Response: Recipients may
make a broad range of water
infrastructure investments under section
602(c)(1)(d) and 603(c)(1)(d), which can
include lead service line replacement
and other activities to identify and
remediate lead in water. These uses are
discussed in greater detail in section
Water and Sewer Infrastructure of this
Supplemental Information.

Treasury has further determined that
several of the services identified by
commenters are appropriate responses
to address health disparities in
disproportionately impacted
households. These services were eligible
under the interim final rule and
continue to be so under the final rule.

These services include remediation to
address lead-based public health risk
factors, outside of lead in water,
including evaluation and remediation of
lead paint, dust, or soil hazards; testing
for blood lead levels; public outreach
and education; and emergency
protection measures, like bottled water
and water filters, in areas with an action
level exceedance for lead in water in
accordance with the Environmental
Protection Agency’s Lead and Copper
Rule.
188
Further, Treasury had determined that
certain capital expenditures, including
improvements to existing facilities to
remediate lead contaminants (e.g.,
removal of lead paint), are eligible
responses, although this does not
include construction of new facilities
for the purpose of lead remediation.

Recipients should make sure that all
capital expenditures adhere to the
standards and presumptions detailed in
section Capital Expenditures in General
Provisions: Other.
c. Medical facilities. Treasury
received a few comments from
recipients seeking to use SLFRF funds
to build new medical facilities, such as
hospitals or public health clinics, to
serve disproportionately impacted
communities. Given the central role of
access to high-quality medical care in
reducing health disparities and
addressing the root causes that led to
disproportionate impact COVID–19
health impacts in certain communities,
the final rule recognizes that medical
equipment and facilities designed to
address disparities in public health
outcomes are eligible capital
expenditures. This includes primary
care clinics, hospitals, or integrations of
health services into other settings.

Recipients should make sure that all
capital expenditures adhere to the
standards and presumptions detailed in
section Capital Expenditures in General
Provisions: Other.

2. Housing vouchers and assistance
relocating. In addition to other housing
services, the interim final rule permitted
a variety of rental assistance approaches
to support low-income households in
securing stable, long-term housing,
including housing vouchers, residential
counseling, or housing navigation
assistance to facilitate household moves
to neighborhoods with high levels of
economic opportunity and mobility for
low-income residents. Examples could
include SLFRF-funded analogues to
Section 8 Housing Choice vouchers;
other kinds of rent subsidies, including
shallow subsidies; and programs to help
residents move to areas with higher
levels of economic mobility.
189 Treasury
did not receive public comments on
these enumerated eligible uses.

Treasury Response: Treasury
maintains the eligibility of vouchers and
relocation assistance in the final rule.

3. Building strong, healthy
communities through investments in
neighborhoods. While the interim final
rule included a category of enumerated
eligible uses for ‘‘building stronger
communities through investments in
housing and neighborhoods,’’ the
examples of services provided generally
focused on housing uses. In response to
questions following release of the
interim final rule, Treasury issued
further guidance clarifying that
‘‘investments in parks, public plazas,
and other public outdoor recreation
spaces may be responsive to the needs
of disproportionately impacted
communities by promoting healthier
living environments.’’
Public Comment: General: A
significant theme across many public
comments was the importance of
neighborhood environment to health
and economic outcomes and the
potential connections between
residence in an underserved
neighborhood and disproportionate
impacts from the pandemic. Many
commenters highlighted the connection
between neighborhoods and health
outcomes, including citing public health
research linking neighborhood traits to
health outcomes. For example, the CDC
states that ‘‘neighborhoods people live
in have a major impact on their health
and well-being.’’
190 As such, CDC
identifies ‘‘neighborhoods and built
environment’’ as one of five key social
determinants of health
191 and includes
‘‘creat[ing] neighborhoods and
environments that promote health and
safety’’ as one of the agency’s goals for
social determinants of health outcomes.
a. Neighborhood features that
promote improved health and safety
outcomes.

Public Comment: Commenters argued
that neighborhoods impact physical
health outcomes in several ways. First,
some commenters reasoned that the
physical environment and amenities in
a community
192 influence a person’s
level of physical activity, with features
like parks, recreation facilities, and safe
sidewalks promoting increased physical
activity that improves health outcomes.

Conversely, commenters argued that a
lack of these features in a neighborhood
could dampen physical activity and
contribute to health conditions like
obesity that are risk factors for more
severe COVID–19 health outcomes.

Second, some commenters also
suggested that access to healthy food in
a neighborhood impacts health
outcomes. These commenters reasoned
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4373 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 193 J Beaulac, E Kristjansson, S Cummins, A
systematic review of food deserts, 1966–2007, Prev
Chronic Dis 2009;6(3):A105, http://www.cdc.gov/
pcd/issues/2009/jul/08_0163.htm.
194 See, e.g., Yijun Zhang et al. The Association
between Green Space and Adolescents’ Mental
Well-Being: A Systematic Review. International
journal of environmental research and public health
vol. 17,18 6640 (Sep. 11 2020), doi:10.3390/
ijerph17186640; EC South, BC Hohl, MC Kondo, JM
MacDonald, CC Branas, Effect of Greening Vacant
Land on Mental Health of Community-Dwelling
Adults: A Cluster Randomized Trial, JAMA Netw
Open. 2018;1(3):e180298 (2018), available at:
doi:10.1001/jamanetworkopen.2018.0298.
195 See, e.g., Yanqing Xu, Cong Fu, Eugene
Kennedy, Shanhe Jiang, Samuel Owusu-Agyemang,
The impact of street lights on spatial-temporal
patterns of crime in Detroit, Michigan, Cities,
Volume 79, Pages 45–52, ISSN 0264–2751 (2018),
https://doi.org/10.1016/j.cities.2018.02.021.
196 A. Chalfin, B. Hansen, J. Lerner et al.,
Reducing Crime Through Environmental Design:

Evidence from a Randomized Experiment of Street
Lighting in New York City, Journal of Quantitative
Criminology (2021), https://doi.org/10.1007/s10940-
020-09490-6.
197 See, e.g., American Public Health Association,
Improving Health and Wellness through Access to
Nature (November 5, 2013), https://www.apha.org/
policies-and-advocacy/public-health-policy-
statements/policy-database/2014/07/08/09/18/
improving-health-and-wellness-through-access-to-
nature.
198 LR Larson et al., Urban Park Use During the
COVID–19 Pandemic: Are Socially Vulnerable
Communities Disproportionately Impacted?, Front.

Sustain. Cities 3:710243 (2021), https://doi.org/

10.3389/frsc.2021.710243.
199 JP Despre´s, Severe COVID–19 outcomes—the
role of physical activity. Nat Rev Endocrinol 17,
451–452 (2021). https://doi.org/10.1038/s41574-
021-00521-1.
200 Caroline George and Adie Tomer, Beyond
‘food deserts’: America needs a new approach to
mapping food, Brookings Institution (August 17,
2021), https://www.brookings.edu/research/beyond-
food-deserts-america-needs-a-new-approach-to-
mapping-food-insecurity/.
201 However, Treasury cautions recipients that
general infrastructure development, including street
or road construction, remains a generally ineligible
use of funds under the final rule. Sidewalks and
pedestrian safety should be the predominant
component of uses of funds in this category. While
projects may include ancillary construction needed
to execute the predominant component, a project
that predominantly involves street construction or
repair to benefit vehicular traffic would be
ineligible.
that lacking adequate access to
affordable, healthy food or living in a
‘‘food desert’’ may contribute to
disparities in diet that influence health
outcomes, including contributing to pre-
existing conditions that increased risk
for severe COVID–19 outcomes. These
commenters cited public health research
finding ‘‘clear evidence for disparities in
food access in the United States by
income and race.’’
193
Some commenters also suggested that
neighborhood environment is connected
to other public health outcomes, like
mental health and public safety. For
example, some research suggests that
living in neighborhoods with green
space and tree cover correlates with
improved mental health outcomes.
194
Finally, some commenters argued that
activities like installing streetlights,
greening or cleanup of public spaces or
land, and other efforts to revitalize
public spaces would support improved
public safety.
195 196
These commenters recommended that
Treasury include as an enumerated
eligible use in disproportionately
impacted communities projects to
develop neighborhood features that
promote improved health and safety
outcomes, such as parks, green spaces,
recreational facilities, sidewalks,
pedestrian safety features like
crosswalks, projects that increase access
to healthy foods, streetlights,
neighborhood cleanup, and other
projects to revitalize public spaces.

Background: Investments in
neighborhood features, including parks,
recreation facilities, sidewalks, and
healthy food access, can work to
improve physical and mental health
outcomes. Allowing people access to
nature, including parks, has been
connected to decreased levels of
mortality and illness and increased
well-being.
197 Urban park use during
the COVID–19 pandemic may have
declined among lower-income
individuals.
198 Encouraging physical
activity can also play a role in health
outcomes, as a sedentary lifestyle is a
risk factor for chronic diseases and more
severe COVID–19 outcomes.
199 Parks,
recreation facilities, and sidewalks can
promote healthier living environments
by allowing for safe and socially
distanced recreation during the COVID–
19 pandemic.

Additionally, food insecurity rates,
which are higher among lower-income
households and households of color,
doubled among all households and
tripled among households with children
during the onset of COVID–19 from
February 2020 to May 2020.
200
Improving healthy food access supports
public health, particularly among lower-
income households and households of
color that face disproportionate
outcomes.

Treasury Response: Treasury
recognizes the connection between
neighborhood built environment and
physical health outcomes as discussed
in the research and analysis provided by
commenters, including risk factors that
may have contributed to
disproportionate COVID–19 health
impacts in low-income communities.

The final rule also recognizes that the
public health impacts of the pandemic
are broader than just the COVID–19
disease itself and include substantial
impacts on mental health and public
safety challenges like rates of violent
crime, which are correlated with a
neighborhood’s built environment and
features. As such, neighborhood features
that promote improved health and
safety outcomes respond to the pre-
existing disparities that contributed to
COVID–19’s disproportionate impacts
on low-income communities.

The final rule includes enumerated
eligible uses in disproportionately
impacted communities for developing
neighborhood features that promote
improved health and safety outcomes,
such as parks, green spaces, recreational
facilities, sidewalks, pedestrian safety
features like crosswalks,
201 projects that
increase access to healthy foods,
streetlights, neighborhood cleanup, and
other projects to revitalize public
spaces. Recipients seeking to use funds
for capital expenditures should refer to
the section Capital Expenditures in
General Provisions: Other, which
describes additional eligibility
standards that apply to uses of funds for
capital expenditures.
b. Vacant or abandoned properties.

As discussed above, the interim final
rule included enumerated eligible uses
for building stronger communities
through investments in housing and
neighborhoods in disproportionately
impacted communities. The interim
final rule also posed a question of
whether other potential uses in this
category, specifically ‘‘rehabilitation of
blighted properties or demolition of
abandoned or vacant properties,’’
address the public health or economic
impacts of the pandemic.

Public Comment: Several commenters
argued that programs or services to
address vacant or abandoned property
would respond to the public health and
negative economic impacts of the
pandemic in disproportionately
impacted communities. Some
commenters cited research suggesting
that living near such property is
correlated with worse physical health
and mental health outcomes, noted that
such properties pose an environmental
hazard, or argued that such properties
present a barrier to economic recovery.

These commenters suggested that
renovation or demolition of vacant or
abandoned property could benefit
community health and raise property
values. Other commenters
recommended that Treasury include an
enumerated eligible use for the
operation of land banks that redevelop
or renew vacant properties and land.

Treasury Response: As noted
throughout the final rule, the pandemic
underscored the importance of safe,
affordable housing and healthy
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4374 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 202 A state or locality may use its existing
classifications of what is considered vacant or
abandoned property under state law and local
ordinances, as well as any corresponding processes
for demolition, for these eligible uses. A recipient
without a definition of vacant or abandoned
property may refer to definitions used in the
Department of Housing and Urban Development’s
Neighborhood Stabilization Program (available at
the citations below); however, recipients should be
aware that other federal, state, or local requirements
may apply such as compliance with the Uniform
Relocation Act (see U.S. Department of Housing and
Urban Development, Real Estate Acquisition and
Relocation Overview in HUD Programs, https://
www.hudexchange.info/programs/relocation/
overview/#overview-of-the-ura (last visited
November 9, 2021) and other state and local
requirements like condemnation and code
enforcement. U.S. Department of Housing and
Urban Development, What is the definition of
vacant properties as referenced in NSP Eligible Use
E—Redevelop Demolished or Vacant Properties?
(October 2012), https://www.hudexchange.info/
faqs/programs/neighborhood-stabilization-program-
nsp/redevelopment/what-is-the-definition-of-
vacant-properties-as-referenced-in-nsp-eligible/.

U.S. Department of Housing and Urban
Development, What are the definitions of
abandoned and foreclosed? (October 2012), https://
www.hudexchange.info/faqs/programs/
neighborhood-stabilization-program-nsp/program-
requirements/eligible-activitiesuses/what-are-the-
definitions-of-abandoned-and-foreclosed/.
203 For analysis of vacancy rates considered low
or high, see, e.g., page 12 of Alan Mallach, The
Empty House Next Door, Lincoln Institute (May
2018), https://www.lincolninst.edu/publications/
policy-focus-reports/empty-house-next-door#
:∼:text=%E2%80%9CAlan%20Mallach%20is%20
the%20sage,through%20data%20and%20
model%20 practices. Recipients may determine the
appropriate geographic unit for which to analyze
vacancy rates (e.g., county, census tract) based on
their circumstances. As needed, recipients may
refer to the Current Population Survey/Housing
Vacancy Survey data series on Housing Vacancies
and Homeownership as one data source to assess
vacancy rates. See https://www.census.gov/housing/
hvs/index.html. Other data sources include the
American Community Survey five-year estimates,
for smaller geographic areas, or tabulations by the
Department of Housing and Urban Development
based on United States Postal Service Vacancy Data.

See, respectively, https://data.census.gov/cedsci/
table?q=DP04&tid=ACSDP5Y2019.DP04&
hidePreview=true or https://www.huduser.gov/
portal/datasets/usps.html.
204 See U.S. Environmental Protection Agency,
Large-Scale Residential Demolition, https://
www.epa.gov/large-scale-residential-demolition
(last visited November 9, 2021) for a primer on
requirements that may apply.
neighborhood environments to public
health and economic outcomes.

Treasury agrees with commenters that
high rates of vacant or abandoned
properties in a neighborhood may
exacerbate public health disparities, for
example through environmental
contaminants that contribute to poor
health outcomes or by contributing to
higher rates of crime. As such, certain
services for vacant or abandoned
properties are eligible to address the
public health and negative economic
impacts of the pandemic on
disproportionately impacted households
or communities. Eligible activities
include:
• Rehabilitation, renovation,
maintenance, or costs to secure vacant
or abandoned properties to reduce their
negative impact
• Costs associated with acquiring and
securing legal title of vacant or
abandoned properties and other costs to
position the property for current or
future productive use
• Removal and remediation of
environmental contaminants or hazards
from vacant or abandoned properties,
when conducted in compliance with
applicable environmental laws or
regulations
• Demolition or deconstruction of
vacant or abandoned buildings
(including residential, commercial, or
industrial buildings) paired with
greening or other lot improvement as
part of a strategy for neighborhood
revitalization
• Greening or cleanup of vacant lots,
as well as other efforts to make vacant
lots safer for the surrounding
community
• Conversion of vacant or abandoned
properties to affordable housing
• Inspection fees and other
administrative costs incurred to ensure
compliance with applicable
environmental laws and regulations for
demolition, greening, or other
remediation activities
Vacant or abandoned properties are
generally those that have been
unoccupied for an extended period of
time or have no active owner.
202 Such
properties may be in significant
disrepair (e.g., major structural defects;
lack of weather tight conditions; or lack
of useable plumbing, kitchen facilities,
electricity, or heating infrastructure (not
to include utilities currently out of
service or disconnected but able to be
reconnected and used)), or may be
declared unfit for inhabitants by a
government authority.

As noted above, demolition and
greening (or other structure or lot
remediation) of vacant or abandoned
properties, including residential,
commercial, or industrial buildings, is
an eligible use of funds. Treasury
encourages recipients to undertake these
activities as part of a strategy for
neighborhood revitalization and to
consider how the cleared property will
be used to benefit the disproportionately
impacted community. Activities under
this eligible use should benefit current
residents and businesses, who
experienced the pandemic’s impact on
the community.

Treasury encourages recipients to be
aware of potential impacts of demolition
of vacant or abandoned residential
properties. Demolition activities that
exacerbate the pandemic’s impact on
housing insecurity or lack of affordable
housing are not eligible uses of funds.

This risk is generally more acute in
jurisdictions with low or reasonable
vacancy rates and less acute in
jurisdictions with high or hyper-
vacancy.
203
Treasury presumes that demolition of
vacant or abandoned residential
properties that results in a net reduction
in occupiable housing units for low- and
moderate-income individuals in an area
where the availability of such housing is
lower than the need for such housing
would exacerbate the impacts of the
pandemic on disproportionately
impacted communities and that use of
SLFRF funds for such activities would
therefore be ineligible. This includes
activities that convert occupiable
housing units for low- and moderate-
income individuals into housing units
unaffordable to current residents in the
community. Recipients may assess
whether units are ‘‘occupiable’’ and
what the housing need is for a given
area taking into account vacancy rates
(as described above), local housing
market conditions (including conditions
for different types of housing like multi-
family or single-family), and applicable
law and housing codes as to what units
are occupiable. Recipients should also
take all reasonable steps to minimize the
displacement of persons due to
activities under this eligible use
category, especially the displacement of
low-income households or longtime
residents.

Recipients engaging in these activities
and other construction activities with
SLFRF funds should be mindful of the
provisions of the Uniform Relocation
Assistance and Real Property
Acquisition Policies Act of 1970, as
amended, 42 U.S.C. 4601, and the
Department of Transportation’s
implementing regulations, 49 CFR part
24, that apply to projects funded with
federal financial assistance, such as
SLFRF funds. Recipients should also be
aware of federal, state, and local laws
and regulations, outside of SLFRF
program requirements, that apply to this
activity. Recipients must comply with
the applicable requirements of the
Uniform Guidance regarding
procurement, contracting, and conflicts
of interest and must follow the
applicable laws and regulations in their
jurisdictions. Recipients must also
comply with all federal, state, and local
public health and environmental laws
or regulations that apply to activities
under this eligible use category,
204 for
example, requirements around the
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4375 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations handling and disposal of asbestos-
containing materials, lead paint, and
other harmful materials may apply, as
well as environmental standards for any
backfill materials used at demolition
sites. Treasury encourages recipients to
consult and apply best practices from
the Environmental Protection Agency as
well.

Recipients must evaluate each
subrecipient’s risk of noncompliance
with federal statutes, regulations, and
the terms and conditions of the
subaward related to safely and properly
conducting activities under this eligible
use. This may include checking for any
past violations recorded by state or local
environmental, workplace safety,
licensing, and procurement agencies, as
well as regular reviews for suspensions,
debarments, or stop work orders.

Recipients must establish rigorous
oversight and internal controls
processes to monitor compliance with
any applicable requirements, including
compliance by subrecipients.

4. Addressing educational disparities.

The interim final rule included an
enumerated eligible use for addressing
educational disparities in
disproportionately impacted
communities and outlined some
enumerated eligible services under this
use. These enumerated uses included
early learning services, assistance to
high-poverty school districts to advance
equitable funding across districts and
geographies, and educational and
evidence-based services to address the
academic, social, emotional, and mental
health needs of students. Addressing the
many dimensions of resource equity—
including equitable and adequate school
funding; access to a well-rounded
education; well-prepared, effective, and
diverse educators and staff; and
integrated support services—can also
begin to mitigate the impact of COVID–
19 on schools and students and can
close long-standing gaps in educational
opportunity. As discussed above, in the
final rule, early learning services and
addressing the impacts of lost
instructional time for K–12 students are
enumerated eligible uses for impacted
communities, not just
disproportionately impacted
communities.

Public Comment: Treasury received
some comments in this category.

Generally, commenters expressed
agreement with the elements of the
interim final rule regarding use of funds
for addressing educational disparities.

Some commenters had questions about
whether a few specific uses of funds
qualified under this category. For
example, commenters inquired about
whether the funds could be used for
behavioral health in a school setting or
cultural language classes.

Treasury Response: Treasury is
maintaining these enumerated eligible
uses in the final rule, which are now
organized under the heading of
‘‘services to address educational
disparities.’’ Treasury reiterates that
these uses include addressing
educational disparities exacerbated by
COVID–19, including but not limited to:
increasing resources for high-poverty
school districts, educational services
like tutoring or afterschool programs,
summer education and enrichment
programs, and supports for students’
social, emotional, and mental health
needs. This also includes responses
aimed at addressing the many
dimensions of resource equity—
including equitable and adequate school
funding; access to a well-rounded
education; well-prepared, effective, and
diverse educators and staff; and
integrated support services—in order to
close long-standing gaps in educational
opportunity.

Further, Treasury is clarifying that
improvements or new construction of
schools and other educational facilities
or equipment are eligible capital
expenditures for disproportionately
impacted communities. Recipients
seeking to use funds for capital
expenditures should refer to the section
Capital Expenditures in General
Provisions: Other for additional
eligibility standards that apply to uses
of funds for capital expenditures.

Treasury notes that services to
promote healthy childhood
environments, including childcare,
early learning services, and home
visiting programs that serve infants and
toddlers, is a separate category of
enumerated eligible uses for households
impacted by the pandemic (see eligible
uses for ‘‘promoting healthy childhood
environments’’). Similarly, education
services to address the impact of lost
instructional time during the pandemic
are a separate eligible use category for
households impacted by the pandemic;
when providing these services,
recipients may presume that any K–12
student who lost access to in-person
instruction for a significant period of
time has been impacted by the
pandemic and is thus eligible for
responsive services (see eligible uses for
‘‘addressing the impact of lost
instructional time’’).

Proposed Additional Enumerated
Eligible Uses Not Incorporated
The interim final rule posed a
question on what other types of services
or costs Treasury should consider as
eligible uses to respond to the
disproportionate public health or
negative economic impacts of COVID–
19 on low-income populations and
communities.

In response, commenters proposed a
wide variety of additional
recommended enumerated eligible uses
to assist disproportionately impacted
households, ranging from general
categories of services (e.g., long-term
investments to remediate long-term
disparities) to highly specific examples
of services (e.g., a specific type of
healthcare equipment). As discussed
above, Treasury is including several
additional categories of enumerated
eligible uses in the final rule in response
to public comments.

Given the large number and diversity
of SLFRF recipients, Treasury’s
approach to assistance to households in
disproportionately impacted
communities in the final rule aims to
provide enumerated eligible uses that
respond to disproportionate impacts of
the pandemic experienced widely in
many jurisdictions across the country
and are intended to simplify and clarify
these enumerated eligible uses. At the
same time, Treasury recognizes that the
impacts of the pandemic vary over time,
by jurisdiction, and by population; as
such, the final rule provides flexibility
for recipients to identify additional
disproportionate impacts to additional
households or classes of households and
pursue programs and services that
respond to those disproportionate
impacts.

In the final rule, Treasury has not
chosen to include as enumerated uses
all uses proposed by commenters; given
the significant range, and in some cases
highly specific nature, of the proposed
uses Treasury was not able to assess that
the proposed uses would respond to
disproportionate impacts experienced in
many jurisdictions across the country,
supporting an enumerated eligible use
available to all recipients
presumptively. However, the final rule
continues to provide a framework to
allow recipients to identify and respond
to additional disproportionate impacts
(for details, see section General
Provisions: Structure and Standards).

Some types of proposed additional
enumerated eligible uses for assistance
to households in disproportionately
impacted communities were
recommended by several commenters:
• Capital expenditures. Many
commenters recommended that capital
expenditures on many different types of
public and private facilities be
enumerated eligible uses. For clarity,
Treasury has addressed all comments on
the eligibility of capital expenditures on
property, facilities, or equipment in one
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4376 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 205 Board of Governors of the Federal Reserve
System, Monetary Policy Report (June 12, 2020),
https://www.federalreserve.gov/monetarypolicy/
2020-06-mpr-summary.htm.
206 U.S. Small Business Administration, Office of
Advocacy, Small Businesses Generate 44 Percent of
U.S. Economic Activity (Jan. 30, 2019), https://
advocacy.sba.gov/2019/01/30/small-businesses-
generate-44-percent-of-u-s-economic-activity/.
207 Joseph R. Biden, Remarks by President Biden
on Helping Small Businesses (Feb. 22, 2021),
https://www.whitehouse.gov/briefing-room/
speechesremarks/2021/02/22/remarks-by-president-
bidenon-helping-small-businesses/.
208 Daniel Wilmoth, U.S. Small Business
Administration Office of Advocacy, The Effects of
the COVID–19 Pandemic on Small Businesses, Issue
Brief No. 16 (Mar. 2021), available at https://
cdn.advocacy.sba.gov/wp-content/uploads/2021/
03/02112318/COVID-19-Impact-On-Small-
Business.pdf.
209 U.S. Census Bureau, Small Business Pulse
Survey, https://portal.census.gov/pulse/data/ (last
visited December 7, 2021).
210 Olivia S. Kim et al., Revenue Collapses and
the Consumption of Small Business Owners in the
Early Stages of the COVID–19 Pandemic (Nov.
2020), https://www.nber.org/papers/w28151.
211 See, e.g., Board of Governors of the Federal
Reserve System, Report to Congress on the
Availability of Credit to Small Businesses (Sept.
2017), available at https://www.federalreserve.gov/
publications/2017-september-availability-of-credit-
to-small-businesses.htm.
212 Alexander W. Bartik et al., The Impact of
COVID–19 on small business outcomes and
expectations, PNAS 117(30): 17656–66 (July 28,
2020), available at https://www.pnas.org/content/
117/30/17656.
213 Robert Fairlie, The impact of COVID–19 on
small business owners: Evidence from the first
3 months after widespread social-distancing
restrictions, Journal of economics & management
strategy (August 27, 2020), https://doi.org/10.1111/
jems.12400.
214 U.S. Small Business Administration, The
Effects of the COVID–19 Pandemic on Small
Businesses (March 2021), https://cdn.advocacy.
sba.gov/wp-content/uploads/2021/03/02112318/
COVID-19-Impact-On-Small-Business.pdf.
215 Robert Fairlie, supra note 213.
216 Federal Reserve Bank of Atlanta. 2019. Small
Business Credit Survey 2019 Report on Minority-
Owned Firms. December. fedsmallbusiness.org/
survey/2019/report-on-minority-owned-firms.
217 Ding, Lei, and Alvaro Sanchez. 2020. What
Small Businesses Will Be Impacted by COVID–19?
Federal Reserve Bank of Philadelphia.
philadelphiafed.org/covid-19/covid-19-equity-in-
recovery/what-small-businesses-will-be-impacted.
218 Lucas Misera, An Uphill Battle: COVID–19’s
Outsized Toll on Minority-Owned Firms, Federal
Reserve Bank of Cleveland (October 8, 2020),
https://www.clevelandfed.org/newsroom-and-
events/publications/community-development-
briefs/db-20201008-misera-report.aspx.
219 Robert Fairlie, A. Robb, D. Robinson, Black
and White: Access to Capital among Minority-
Owned Startups, NBER Working Paper 28154
(November 2020), https://www.nber.org/papers/
w28154.
section (see section Capital
Expenditures in General Provisions:

Other).
• Equity funds. Several commenters
recommended that Treasury permit
SLFRF funds to be deposited into an
equity fund to support long-term racial
and economic equity investments. The
eligibility of such use would depend on
the specific structure and uses of funds.

Under the statute, SLFRF funds can
only support costs incurred until
December 31, 2024; see section
Timeline for Use of SLFRF Funds in
Program Administration Provisions.

Further, recipients may calculate the
cost incurred with respect to
investments in revolving loan funds
based on the methodology described in
section Treatment of Loans in Program
Administration Provisions. Projects
funded by a revolving loan fund using
SLFRF funds would also need to be
eligible uses of SLFRF funds.
• Environmental quality and climate
resilience. Several commenters
recommended eligible uses to enhance
environmental quality, remediate
pollution, promote recycling or
composting, or increase energy
efficiency or electrical grid resilience.

Whether these projects respond to the
disproportionate impacts of the
pandemic on certain communities
would depend on the specific issue they
address and its nexus to the public
health and economic impacts of the
pandemic.
b. Assistance to Small Businesses
Background
The pandemic has severely impacted
many businesses, with small businesses
hit especially hard. Small businesses
make up nearly half of U.S. private-
sector employment
205 and play a key
role in supporting the overall economic
recovery as they are responsible for two-
thirds of net new jobs.
206 Since the
beginning of the pandemic, however,
400,000 small businesses have closed,
with many more at risk.
207 Sectors with
a large share of small business
employment have been among those
with the most drastic drops in
employment.
208 The negative outlook
for small businesses has continued: As
of November 2021, approximately 66
percent of small businesses reported
that the pandemic has had a moderate
or large negative effect on their
business, and over a third expect that it
will take over 6 months for their
business to return to their normal level
of operations.
209
This negative outlook is likely the
result of many small businesses having
faced periods of closure and having seen
declining revenues as customers stayed
home.
210 In general, small businesses
can face greater hurdles in accessing
credit,
211 and many small businesses
were already financially fragile at the
outset of the pandemic.
212
While businesses everywhere faced
significant challenges during the
pandemic, minority-owned and very
small businesses have faced additional
obstacles. Between February and April
2020, the number of actively self-
employed Black business owners
decreased by 41 percent.
213 During that
same time period, Asian and Latino
business owners decreased by 26 and 32
percent, respectively, compared to a 17
percent decrease in white business
owners.
214 Female business owners also
saw significant impacts, with businesses
owned by women falling by 25
percent.
215
Many of the disparities in how
minority business owners experienced
the pandemic are rooted in systemic
issues present even before the
pandemic. For example, before the
economic downturn, only 12 percent of
Black-owned businesses and 19 percent
of Hispanic-owned businesses had
annual earnings of over $1 million
compared to 31 percent of white-owned
businesses.
216 Minority-owned
businesses were also overrepresented in
industries hit hardest by the economic
downturn (e.g., services, transportation
and warehousing, healthcare and social
assistance, administrative and support
and waste management, and
accommodation and food services).
217
Approximately 22 percent of all
minority-owned business fell into the
hardest hit industries compared to 13
percent of nonminority-owned
businesses.
218
Although disparities in annual
revenue are not a direct indication of a
business’s ability to weather an
economic downturn, they do highlight
other disparities that make it more
challenging for these businesses to
survive the effects of the pandemic.

Black-owned startups, for example, face
larger challenges in raising capital,
including securing business loans.
219
Summary of the Interim Final Rule and
Final Rule Structure
Summary of Interim Final Rule: As
discussed above, small businesses faced
significant challenges in covering
payroll, mortgages or rent, and other
operating costs as a result of the public
health emergency and measures taken to
contain the spread of the virus. Under
Sections 602(c)(1)(A) and 603(c)(1)(A),
recipients may ‘‘respond to the public
health emergency or its negative
economic impacts,’’ by, among other
things, providing ‘‘assistance to . . .
small businesses.’’ Accordingly, the
interim final rule allowed recipients to
provide assistance to small businesses
to address the negative economic
impacts faced by those businesses. A
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4377 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations ‘‘small business’’ is defined as a
business concern or other organization
that:
(1) Has no more than 500 employees
or, if applicable, the size standard in
number of employees established by the
Administrator of the Small Business
Administration for the industry in
which the business concern or
organization operates; and
(2) Is a small business concern as
defined in section 3 of the Small
Business Act (15 U.S.C. 632).

Specifically, the interim final rule
provided that recipients may provide
assistance to small businesses to adopt
safer operating procedures, weather
periods of closure, or mitigate financial
hardship resulting from the COVID–19
public health emergency, including:
• Loans or grants to mitigate financial
hardship such as declines in revenues
or impacts of periods of business
closure;
• Loans, grants, or in-kind assistance
to implement COVID–19 prevention or
mitigation tactics; and
• Technical assistance, counseling, or
other services to assist with business
planning needs.

The interim final rule further
provided that recipients may consider
additional criteria to target assistance to
businesses in need, including small
businesses. Such criteria may include
businesses facing financial insecurity,
substantial declines in gross receipts
(e.g., comparable to measures used to
assess eligibility for the Paycheck
Protection Program), or other economic
harm due to the pandemic, as well as
businesses with less capacity to weather
financial hardship, such as the smallest
businesses, those with less access to
credit, or those serving underserved
communities. The interim final rule also
indicated that recipients should
consider local economic conditions and
business data when establishing such
criteria. Finally, the interim final rule
posed a question on whether there are
other services or costs that Treasury
should consider as eligible uses to
respond to the disproportionate impacts
of COVID–19 on low-income
populations and communities.

Final Rule Structure: Consistent with
the interim final rule approach, the final
rule provides a non-exhaustive list of
enumerated eligible uses for assistance
to small businesses that are impacted or
disproportionately impacted by the
pandemic. Further, within Assistance to
Small Business, a recipient may also
identify a negative economic impact
experienced by small businesses and
design and implement a response to that
negative economic impact, beyond the
uses specifically enumerated in the final
rule, according to the standard
described in the section Standards:

Identifying a Negative Economic Impact.

A recipient may also identify small
businesses that have been
disproportionately impacted by the
public health emergency and design and
implement a program that responds to
the source of that disproportionate
impact.

Consistent with other eligible use
categories to respond to the public
health and economic impacts of the
pandemic, recipients may identify and
serve small businesses that experienced
a negative economic impact or
disproportionate impact due to the
pandemic, as described in the section
Standards for Identifying Other Eligible
Populations. For example, to identify
impacted small businesses, a recipient
may consider whether the small
businesses faced challenges in covering
payroll, mortgage or rent, or other
operating costs as a result of the public
health emergency and measures taken to
contain the spread of the virus. In order
to ease administrative burden, the final
rule presumes that small businesses
operating in QCTs, small businesses
operated by Tribal governments or on
Tribal Lands, and small businesses
operating in the U.S. territories were
disproportionately impacted by the
pandemic.

Reorganizations and Cross-
References: As detailed above, Treasury
has re-categorized some uses of funds in
the final rule to provide greater clarity.

For discussion of assistance to small
businesses and impacted industries to
implement COVID–19 mitigation and
prevention strategies, see section
COVID–19 Mitigation and Prevention in
Public Health.

Small Businesses Eligible for Assistance
Public Comment: Treasury received
many comments about the general
benefits or drawbacks of use of SLFRF
funds to provide assistance to small
businesses. Some commenters suggested
that SLFRF funds should be available to
assist all small businesses, rather than
only businesses that experienced direct
negative economic impacts due to the
public health emergency. Other
commenters argued that aid to small
businesses should be narrowed in the
final rule, asserting that SLFRF funds
should instead focus on assistance to
households or building public sector
capacity.

Treasury also received comments
requesting clarification of the types of
small businesses eligible for assistance.

For example, some commenters
requested clarification about whether
microbusinesses were included in the
definition of small business. Comments
also suggested that self-employed
individuals and Tribal enterprises be
classified as small businesses,
respectively. Commenters argued that
these types of small businesses are more
common among low-income and
minority businessowners and serve as
important institutions in underserved
communities.

Finally, some commenters suggested
that Treasury permit broader
enumerated eligible uses to assist small
businesses in disproportionately
impacted communities and generally
strengthen economic growth in these
communities. These commenters
recommended that Treasury presume
small businesses operating in QCTs are
disproportionately impacted and
eligible for broader enumerated uses.

Treasury Response: As discussed in
the section Designating a Negative
Economic Impact, in the final rule,
recipients must identify an economic
harm caused or exacerbated by the
pandemic on a small business or class
of small businesses to provide services
that respond.

As discussed above, programs or
services in this category must respond
to a harm experienced by a small
business or class of small businesses as
a result of the public health emergency.

To identify impacted small businesses
and necessary response measures,
recipients may consider impacts such as
lost revenue or increased costs,
challenges covering payroll, rent or
mortgage, or other operating costs, the
capacity of a small business to weather
financial hardships, and general
financial insecurity resulting from the
public health emergency.

Recognizing the difficulties faced by
small businesses in certain
communities, the final rule presumes
that small businesses operating in QCTs,
small businesses operated by Tribal
governments or on Tribal Lands, and
small businesses operating in the U.S.
territories were disproportionately
impacted by the pandemic. This
presumption parallels the final rule’s
approach to assistance to households,
reflecting the more severe pandemic
impacts in underserved communities
and creating a parallel structure across
different categories of eligible uses to
make the structure simpler for
recipients to understand and navigate.

Treasury notes that recipients may
also designate a class of small
businesses that experienced a negative
economic impact or disproportionate
negative economic impact (e.g.,
microbusinesses, small businesses in
certain economic sectors), design an
intervention to fit the impact, and
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4378 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 220 In regard to counting employees, businesses
owned and controlled by a Tribal government are
not considered affiliates of the Tribal government
and are not considered affiliates of other businesses
owned by the Tribal government because of their
common ownership by the Tribal government or
common management, as described in 13 CFR
121.103(b)(2). This definition is consistent with the
Small Business Administration (SBA) HUBZone
definition of a ‘‘small business concern’’ relating to
Tribal governments as well as how Tribal
enterprises are defined for the State Small Business
Credit Initiative (SSBCI).
document that the individual entity is a
member of the class. Additional
information about this framework is
included in the section General
Provisions: Structure and Standards.

Further, Treasury is maintaining the
interim final rule definition of ‘‘small
business,’’ which used the Small
Business Administration’s (SBA)
definition of fewer than 500 employees,
or per the standard for that industry, as
defined by SBA. This definition
includes businesses with very few
employees, self-employed individuals,
and Tribally owned businesses.
220
Finally, Treasury notes that recipients
may award SLFRF funds to many
different types of organizations,
including small businesses, to function
as a subrecipient in carrying out eligible
uses of funds on behalf of a recipient
government. In this case, a small
business need not have experienced a
negative economic impact in order to
serve as a subrecipient. See section
Distinguishing Subrecipients versus
Beneficiaries for more detailed
discussion of interactions with
subrecipients, in contrast to
beneficiaries of assistance.

Enumerated Eligible Uses for Assistance
to Small Businesses
Public Comment: Treasury received
comments requesting clarification of the
types of assistance available to small
businesses. For example, one
commenter suggested that outdoor
dining be an eligible use for SLFRF
funds as assistance to small businesses.

Other commenters asked for
clarification about how SLFRF funds
could be used to support new
businesses and start-ups.

Several commenters requested
clarification of whether and how
recipients may provide services to
business districts or downtown areas,
particularly those that exist in whole or
in part within a QCT, and requested
reduced documentation of the specific
negative economic impact for the
businesses operating within those areas.

These commenters argued in favor of
allowing redevelopment or other
support, including capital investments,
in business districts that were
negatively impacted by COVID–19.

Several commenters also argued that
funds should be available to support
and grow microbusinesses, or
businesses with five or fewer
employees, which are more likely to be
owned by women and people of color.

Treasury Response: In the final rule,
Treasury is maintaining and clarifying
the enumerated eligible uses of funds
for assistance to small businesses that
are impacted or disproportionately
impacted by the pandemic.

Impacted small businesses.

Specifically, Treasury is maintaining
enumerated eligible uses from the
interim final rule for assistance to
impacted small businesses. These
include but are not limited to:
• Loans or grants to mitigate financial
hardship such as declines in revenues
or impacts of periods of business
closure, for example by supporting
payroll and benefits costs, costs to retain
employees, mortgage, rent, or utilities
costs, and other operating costs;
• Loans, grants, or in-kind assistance
to implement COVID–19 prevention or
mitigation tactics (see section Public
Health for details on these eligible uses);
and
• Technical assistance, counseling, or
other services to assist with business
planning needs.

Treasury acknowledges a range of
potential circumstances in which
assisting small businesses could be
responsive to the negative economic
impacts of COVID–19, including for
small businesses startups and
microbusinesses and individuals
seeking to start small or
microbusinesses. For example:
• As noted above, a recipient could
assist small business startups or
microbusinesses with additional costs
associated with COVID–19 mitigation
tactics; see section Public Health for
details on these eligible uses.
• A recipient could identify and
respond to a negative economic impact
of COVID–19 on new small business
startups or microbusinesses; for
example, if small business startups or
microbusinesses in a locality faced
greater difficulty accessing credit than
prior to the pandemic or faced increased
costs to starting the business due to the
pandemic or if particular small
businesses or microbusinesses had lost
expected startup capital due to the
pandemic.
• The interim final rule also
discussed, and the final rule maintains,
eligible uses that provide support for
individuals who have experienced a
negative economic impact from the
COVID–19 public health emergency,
including uses that provide job training
for unemployed individuals. These
initiatives also may support small
business start-ups, microbusinesses, and
individuals seeking to start small or
microbusinesses.

Disproportionately impacted small
businesses. Additionally, Treasury
agrees with commenters that
disproportionately impacted small
businesses may benefit from additional
assistance to address the sources of that
disparate impact.

As such, the final rule provides a
broader set of enumerated eligible uses
for disproportionately impacted small
businesses and/or small businesses in
disproportionately impacted business
districts. Recipients may use SLFRF
funds to assist these businesses with
certain capital investments, such as
rehabilitation of commercial properties,
storefront improvements, and fac¸ade
improvements. Recipients may also
provide disproportionately impacted
microbusinesses additional support to
operate the business, including
financial, childcare, and transportation
supports.

Recipients could also provide
technical assistance, business
incubators, and grants for start-ups or
expansion costs for disproportionately
impacted small businesses. Note that
some of these types of assistance are
similar to those eligible to respond to
small businesses that experienced a
negative economic impact (‘‘impacted’’
small businesses). However, because the
final rule presumes that some small
businesses were disproportionately
impacted, these enumerated eligible
uses can be provided to those
businesses without any specific
assessment of whether they individually
experienced negative economic impacts
or disproportionate impacts due to the
pandemic.

Cross-References: Recipients
providing assistance to small businesses
for capital expenditures (i.e.,
expenditures on property, facilities, or
equipment) should also review the
section Capital Expenditures in General
Provisions: Other, which describes
eligibility standards that apply to capital
expenditures. Recipients should also
note that services to address vacant or
abandoned commercial or industrial
properties are addressed in section
Vacant or Abandoned Properties in
Assistance to Households.

Loans to Small Businesses
Public Comment: Treasury received
many comments requesting clarification
on using SLFRF funds to establish funds
that provide loans to small businesses.

For example, commenters sought
clarification of how eligible use
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4379 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 221 See, e.g., Federal Reserve Bank of San
Francisco, Impacts of COVID–19 on Nonprofits in
the Western United States (May 2020), https://
www.frbsf.org/community-development/files/
impact-of-covid.
222 Philanthropy and COVID–19: Measuring one
year of giving, Candid and the Center for Disaster
Philanthropy. (2021), https://www.issuelab.org/
resources/38039/38039.pdf.
223 Id.
224 Elizabeth T. Boris et al., Nonprofit Trends and
Impacts 2021, Urban Institute (October 7, 2021),
https://www.urban.org/research/publication/
nonprofit-trends-and-impacts-2021/view/full_
report.
225 Id.
226 Chelsea Newhouse, COVID–19 JOBS UPDATE,
NOVEMBER 2021: Nonprofits add just 5,000 jobs in
November, Center for Civil Society Studies at Johns
Hopkins University (December 10, 2021), http://
ccss.jhu.edu/november-2021-jobs/.
227 Elizabeth T. Boris et al. supra note 224 at p.

38. 228 § 35.3 Definitions.
229 The ARPA also states under ‘‘Transfer
Authority’’ that a Recipient may transfer funds to
a private nonprofit organization such as those
defined in paragraph (17) of section 401 of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11360(17). See 602 & 603(c)(3) of the Social
Security Act. See section Transfers of Funds for
additional information on other types of entities,
including other forms of nonprofits, that may
receive transfers.
230 While not stated specifically in the interim
final rule, the Department does not require or have
a preference as to the payment structure for
recipients that transfer funds to subrecipients (e.g.,
advance payments, reimbursement basis, etc.).

Ultimately, recipients must comply with the
eligible use requirements and any other applicable
laws or requirements and are responsible for the
actions of their subrecipients or beneficiaries.
requirements and applicable dates for
SLFRF funds would apply to third party
organizations (like economic
development organizations) who receive
SLFRF funds in order to establish a loan
fund. In addition, commenters
requested clarification on what
requirements apply to loan programs
with available funds remaining after
December 31, 2024.

Treasury Response: SLFRF funds may
be used to make loans, including to
small businesses, provided that the loan
is an eligible use, and the cost of the
loan is tracked and reported in
accordance with Treasury’s Compliance
and Reporting Guidance. Funds that are
unobligated after December 31, 2024
must be returned to Treasury. See
section Treatment of Loans for more
information about using SLFRF funds
for loan programs.
c. Assistance to Nonprofits
Background: Nonprofits have faced
significant challenges because of the
pandemic, including increased demand
for services and changing operational
needs.
221 Prior to the pandemic, the
median U.S. nonprofit reported that it
had six months of cash on hand.
222 This
varied by sector, however, with some
sectors like disaster relief organizations
reporting a median of 17 months cash
on hand, and others, like mental health
and crisis intervention organizations
reporting only three months.
223
Evidence suggests that the pandemic
has damaged the financial health of
nonprofits, with small nonprofits,
which tend to rely more heavily on
donations than large nonprofits,
reporting relatively larger declines in
donations — 42 percent versus 29
percent, respectively.
224 Among
nonprofits that collect fees for services,
the median revenue amount collected
from such fees fell by 30 percent from
2019 to 2020, with arts organization
experiencing a 50 percent decline.
225
Nonprofits also experienced significant
job losses. While employment in the
nonprofit sector has recovered from its
low point in 2020, as of November 2021,
the sector remained 485,000 jobs below
its pre-pandemic level.
226 In addition,
some nonprofits may have experienced
declines in volunteer staffing during the
pandemic.
227
At the same time, nonprofits provide
a host of services for their communities,
including helping Americans weather
the multitude of challenges presented
by the pandemic. The ARPA and the
interim final rule recognized this
dichotomy—nonprofits as entities that
have themselves been negatively
impacted by the pandemic and as
entities that provide services that
respond to the public health and
negative economic impacts of the
pandemic on households and others
—by creating two roles for nonprofits.

First, under Sections 602(c)(1)(A) and
603(c)(1)(A), recipients may ‘‘respond to
the public health emergency or its
negative economic impacts,’’ by, among
other activities, providing ‘‘assistance to
. . . nonprofits.’’ The interim final rule
defined assistance to nonprofits to
include ‘‘loans, grants, in-kind
assistance, technical assistance or other
services, that responds to the negative
economic impacts of the COVID–19
public health emergency,’’ and
‘‘nonprofit’’ to mean a tax-exempt
organization under Section 501(c)(3) of
the U.S. Internal Revenue Code.
228
Second, as discussed above, ARPA
and the interim final rule provided that
nonprofit organizations may also receive
funds as subrecipients of a recipient
government (i.e., a government that
received SLFRF funds); subrecipients
carry out an eligible use of SLFRF funds
on behalf of a recipient government
(e.g., a recipient government that would
like to provide food assistance to
impacted households may grant funds
to a nonprofit organization to carry out
that eligible use). Recipients generally
have wide latitude to award funds to
many types of organizations, including
nonprofit or for-profit organizations, as
subrecipients to carry out eligible uses
of funds on their behalf. For further
information on distinguishing between
beneficiaries and subrecipients, as well
as the impacts of the distinction on
reporting and other requirements, see
section Transfers of Funds and section
Distinguishing Subrecipients versus
Beneficiaries under the Public Health
and Negative Economic Impacts eligible
use category.
229
Reorganization and Cross-References:

Under the interim final rule, assistance
to disproportionately impacted
communities was a separate, stand-
alone category. The final rule
reorganizes the disproportionate impact
analysis within the sections Assistance
to Households, Assistance to Small
Business, and Assistance to Nonprofits
to better articulate how recipients can
serve disproportionately impacted
beneficiaries in each of those categories.

As detailed above in the Public Health
subsection, in response to public
comments describing uncertainty on
which eligible use category should be
used to assess different potential uses of
funds, Treasury has re-categorized some
uses of funds in the final rule to provide
greater clarity. For discussion of
assistance to nonprofits to implement
COVID–19 mitigation and prevention
strategies, see section COVID–19
Mitigation and Prevention in Public
Health.

Recipients providing assistance via
nonprofits involving capital
expenditures (i.e., expenditures on
property, facilities, or equipment)
should also review the section Capital
Expenditures in General Provisions:

Other, which describes eligibility
standards for these expenditures.

Recipients providing assistances in the
form of loans should review the section
Treatment of Loans.

Public Comment: Eligible Assistance
to Impacted and Disproportionately
Impacted Nonprofits: A few
commenters asked Treasury to be more
explicit in the final rule that recipients
may use funds to provide relief directly
to nonprofit organizations and to
explain how nonprofits might qualify
themselves for assistance and what
expenses SLFRF funds may be used to
cover.
230 Commenters requested that
Treasury note that the pandemic is
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4380 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Rules and Regulations 231 Note, this response is meant to clarify the
difference between nonprofits as beneficiaries and
nonprofits as subrecipients. It is not meant to limit
the types of relationships that a recipient may enter
into with a nonprofit as permitted under the
Uniform Guidance.
232 See sections 602(c)(3) and 603(c)(3) of the
Social Security Act. See also Section 401 of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11360(17), which defines a ‘‘private
nonprofit organization.’’
leading to a changing financial
landscape for nonprofits.

Treasury Response: Eligible
Assistance to Impacted and
Disproportionately Impacted
Nonprofits: The interim final rule
provided for, and the final rule
maintains, the ability for recipients to
provide direct assistance to nonprofits
that experienced public health or
negative economic impacts of the
pandemic. Specifically, recipients may
provide direct assistance to nonprofits if
the nonprofit has experienced a public
health or negative economic impact as
a result of the pandemic. For example,
if a nonprofit organization experienced
impacts like decreased revenues or
increased costs (e.g., through reduced
contributions or uncompensated
increases in service need), and a
recipient provides funds to address that
impact, then it is providing direct
assistance to the nonprofit as a
beneficiary under Subsection (c)(1) of
Sections 602 and 603. Direct assistance
may take the form of loans, grants, in-
kind assistance, technical assistance, or
other services that respond to the
negative economic impacts of the
COVID–19 public health emergency.

A recipient may identify a negative
economic impact experienced by a
nonprofit, or class of nonprofits, and
design and implement a response to that
negative economic impact, see section
Standards: Designating a Negative
Economic Impact. The final rule
provides a non-exhaustive list of
enumerated eligible uses for assistance
to nonprofits that are impacted or
disproportionately impacted by the
pandemic.

A recipient may also identify a class
of nonprofits that have been
disproportionately impacted by the
public health emergency and design and
implement a program that responds to
the source of that disproportionate
impact. For example, a recipient may
determine that nonprofits offering after-
school programs within its jurisdiction
were disproportionately impacted by
the pandemic due to the previous in-
person, indoors nature of the work and
the nonprofits’ reliance on fees received
for services (e.g., attendance fees). The
recipient might then design an
intervention to assist those nonprofits in
adapting their programming (e.g., to
outdoor or online venues), their revenue
structure (e.g., adapting the fee for
service structure or developing expertise
in digital donation campaigns), or both.

Additional information about this
framework is included in General
Provisions: Structure and Standards. In
order to ease administrative burden, the
final rule presumes that nonprofits
operating in QCTs, operated by Tribal
governments or on Tribal Lands, or
operating in the U.S. territories were
disproportionately impacted by the
pandemic.

To summarize, a recipient may
determine that certain nonprofits were
impacted by the pandemic or were
disproportionately impacted by the
pandemic and provide responsive
services.

Public Comment: Beneficiaries and
Subrecipients: As noted elsewhere in
this final rule, Treasury received
multiple comments expressing
uncertainty on how to categorize a
particular activity in the eligible use
categories. For instance, some
commenters requested that recipients be
able to use SLFRF funds for certain
expenses incurred by nonprofits (e.g.,
unemployment charges) as a response to
a public health or negative economic
impact to that nonprofit; others asked if
nonprofits providing certain services
(e.g., social services) made them eligible
for direct assistance. Commenters also
requested that Treasury acknowledge
that engagement directly with nonprofit
organizations in low-income
communities and communities of color
may allow the recipient to better assess
economic harms in these areas.

Treasury Response: Beneficiaries and
Subrecipients: Treasury recognizes that
many nonprofits play important roles in
their communities, and some may have
experienced public health or negative
economic impacts during the pandemic.

As such, under the interim final rule
and the final rule, nonprofits may be
impacted by the pandemic and receive
assistance as a beneficiary, as described
above, and/or be a subrecipient
providing services on behalf of a
recipient.
231
Specifically, the interim final rule
also allowed for, and the final rule
maintains, the ability for the recipient to
transfer, e.g., via grant or contract, funds
to nonprofit entities to carry out an
eligible use on behalf of the recipient.

Treasury notes that recipients may
award SLFRF funds to many different
types of organizations to carry out
eligible uses of funds and serve
beneficiaries on behalf of a recipient
government (e.g., assisting in a
vaccination campaign, operating a job
training program, developing affordable
housing). When a recipient provides
funds to an organization to carry out
eligible uses of funds and serve
beneficiaries, the organization becomes
a subrecipient. In this case, a nonprofit
need not have experienced a negative
economic impact in order to serve as a
subrecipient.

In the context of SLFRF, nonprofits of
all types may be subrecipients. Treasury
is not restricting the types of nonprofits
that can operate as subrecipients, rather
allowing recipients to decide what form
best meets the needs of their
community. Therefore, a ‘‘nonprofit’’
that is acting as subrecipient could
include, but is not limited to, a
nonprofit as that term is defined in
paragraph (17) of section 401 of the
McKinney-Vento Homeless
Assistance.
232 See section
Distinguishing Subrecipients versus
Beneficiaries for further information.