Final Rule


In December 2022, Congress passed the final budget for 2023, setting funding levels for every federal agency and grant program for the year. The budget package included a significant provision to make the SLFRF program more flexible, known as ARPA Flex.

On Jan. 27, 2023, the Treasury issued the final rule, providing substantial flexibility to recipients so they may respond to their unique pandemic-related needs. This flexibility is designed to help state, local and tribal governments adapt to the evolving public health emergency while allowing them to tailor their response to the needs of their local communities.

What’s Changed?

The ARPA Flex provision provides additional flexibility for states, tribes and local units of government to spend up to $10 million—or 30% of the total ARPA funds received—on newly eligible SLFRF grant expenditures.

The new eligible SLFRF grant expenditures include spending on:

  • Emergency relief from natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.
  • Transportation infrastructure eligible projects and matching funds.
  • Any program, project, or service that would also be eligible under HUD’s Community Development Block Grant program.
  • Government services, which includes the modernization of cybersecurity (hardware, software and critical infrastructure).

In addition, Congress issued two types of ineligible uses of funds: 1) funds may not be used for deposit into any pension fund and, 2) for states and territories only, funds may not be used to offset a reduction directly or indirectly in net tax revenue resulting from a change in law, regulation or administrative interpretation.

Under ARPA Flex, funds must be used for costs incurred on or after March 3, 2021. Further, costs must be obligated by December 31, 2024, and expended by December 31, 2026.

Learn more >>.

U.S. Treasury Releases Final Rule for ARPA COVID Relief Funds

On January 6, 2022, the U.S. Treasury issued the final rule implementing the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program under the American Rescue Plan. Please see below for more information, including the press release.

The State and Local Fiscal Recovery Funds program provides governments across the country with the resources needed to:

  • Fight the pandemic and support families and businesses struggling with its public health and economic impacts
  • Maintain vital public services, even amid declines in revenue resulting from the crisis
  • Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity


About the Final Rule

The final rule - which takes effect on April 1, 2022 - provides state, local, and Tribal governments with even broader flexibility to pursue a wider range of uses to respond to local public health and economic needs - as well as greater simplicity so they can focus on responding to the needs in their communities and maximizing the impact of their funds. Recipients may find the full text of the final rule on our website with available supporting materials.

Prior to April 1, 2022, recipients may take actions and use funds in a manner consistent with the final rule, and Treasury will not take action to enforce the Interim final rule if the use of funds is consistent with the terms of the final rule, regardless of when the SLFRF funds were used. Please see the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule for more information.


Additional Treasury Resources for Navigating the Final Rule

U.S. Treasury is committed to working with recipients to help them digest the final rule and effectively maximize their use of funds.

Recipients are encouraged to consult the Overview of the Final Rule, which is a user guide that boils the rule text down into an easy-to-understand summary. The Overview of the Final Rule includes a non-exhaustive list of projects that recipients can undertake with these funds without undergoing additional independent analysis.


Final Rule Webinar and PowerPoint

U.S. Treasury's Final Rule webinar and slide presentation provide an introduction and summary of the Final Rule.

Some changes included in the Final Rule are:

  • It allows a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a total revenue loss calculation. Recipients that select the standard allowance may use that amount - in many cases their full award - for government services, with streamlined reporting requirements.
  • The Final Rule clarifies that recipients can use funds for capital expenditures that support an eligible COVID-19 public health or economic response.
  • The Final Rule also broadens eligible broadband infrastructure investments to address challenges with broadband access, affordability, and reliability. It adds additional eligible water and sewer infrastructure investments, including a broader range of lead remediation and stormwater management projects.


NLC Article -

Final Rule on ARPA SLFRF Grants: 10 Things for City Leaders to Know

For local governments that have delayed obligations and expenditures of their initial ARPA SLFRF grant, and before any local government obligates the second half of their grant, read NLC's article to learn ten things about the final rule.