How does Congress’ termination of the COVID-19 National Emergency affect CSLFRF funds?

On April 10, 2023, in response to Congress enacting H.J.RES.7[1] which terminated the COVID-19 National Emergency Declaration, the U.S. Department of the Treasury (“Treasury”) updated its Final Rule guidance, updating its FAQ document enumerated section 4.11. The updated CSLFRF FAQ document reflects a minimal change to utilization of Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”).[2] Premium Pay was the only area affected by the updated CSLFRF FAQs, with a clarification that CSLFRF recipients may not use CSLFRF funds for premium pay after April 10, 2023.[3]

Treasury expressly provides in the updated FAQ document that recipients will “generally be able to continue to make investments without changes.”[4] As discussed below, the updated Treasury guidance clarifies the allowability of the post-emergency use of CSLFRF funds for premium pay to eligible workers, while also providing confirmation that there are no impacts on any other eligible use categories. Treasury has not, at this time, issued any additional guidance regarding the use of CSLFRF funds following the termination of the National Emergency. 

Premium Pay –Clarification in Allowability (Expired April 10, 2023)

• The SLFRF statute and final rule provide that recipients can use CSLFRF funds to provide premium pay to eligible workers performing essential work during the COVID-19 public health emergency, as defined in the final rule, as the period ending when the COVID-19 National Emergency is terminated.
• Recipients may continue to use CSLFRF funds to provide premium pay to essential workers for work conducted before the termination of the National Emergency on April 10, 2023.
• Recipients may not use CSLFRF funds to provide premium pay to essential workers for work conducted after the end of the National Emergency on April 10, 2023. 

Public Health and Negative Economic Impacts – No Change

• Recipients may continue to use CSLFRF funds to support workers through the public health and negative economic impacts eligible use category. Specifically, CSLFRF recipients may continue to use funds to respond to the public health impacts or negative economic impacts of the COVID-19 pandemic.
• Under this eligible use category, recipients may continue to use CSLFRF funds to support and expand the workforce, including helping impacted workers enter in-demand careers, such as health care and childcare. Recipients may also continue to use CSLFRF funds to build public sector capacity, including hiring public sector workers and providing retention incentives.  

Revenue Loss – No Change

• There is no impact on how recipients calculate revenue loss according to the formula articulated in the final rule.
• There is no impact on how recipients may opt to claim up to $10 million in revenue loss under the standard allowance.  

Water/Sewer/Broadband – No Change

• There is no impact on how recipients may use SLFRF funds under the water, sewer, and broadband infrastructure eligibility use category.[5]

Procurement – No Change

Previous Treasury guidance remains unchanged regarding procurement and emergency/exigency and as such, advises under FAQ 13.12:

The COVID-19 public health emergency does not itself qualify as a “public exigency or emergency” under 2 CFR 200.320 (c). 

In other words, a recipient may not justify a noncompetitive procurement simply on the basis that the procurement is conducted during the public health emergency or that the project is in response to the public health emergency. Instead, the recipient must make its own assessment as to whether in the case of a particular project there is a public exigency or emergency that “will not permit a delay resulting from publicizing a competitive solicitation.[6]

A recipient should, as directed by Treasury above, undertake its own assessment regarding procurement conducted under various conditions including the determination of an emergency.

 Conclusion

As outlined above, new guidance issued by Treasury following the termination of the National Emergency reflects little change. Aside from the discontinued use of CSLFRF funds for premium pay for work performed after termination of the National Emergency on April 10, 2023, there are currently no other changes to previous guidance.