Program

COVID-19 Federal Assistance e311

Topics

Infrastructure & Maintenance Investments

In what circumstances can a municipality use ARP funds for an infrastructure project not specified in the guidance?

The ARP specifically authorizes expenditures of monies through the Coronavirus Local Fiscal Recovery Fund (“CLFRF”) “to make necessary investments in water, sewer, or broadband infrastructure.”[1]  The CLFRF provides recipients with “broad latitude” to use the federal funds “for the provision of government services to the extent of the reduction in revenue experienced due to the COVID-19 public health emergency.”[2]

The U.S. Treasury Department’s (“Treasury”) May 10, 2021 Interim Final Rule (“The Rule”) on the use of state and local fiscal recovery funds identifies the maintenance of infrastructure (such as roads) as a government service that may in certain circumstances be funded by CLFRF.  According to The Rule, “government services to the extent of the reduction in revenue experienced due to the COVID-19 public health emergency” may include (but are not limited to):

  • Maintenance or pay-go funded building of infrastructure, including roads;
  • Modernization of cybersecurity, including hardware, software, and protection of critical infrastructure;
  • Health services;
  • Environmental remediation;
  • School or educational services; and
  • The provision of police, fire, and other public safety services.”[3]

Another ARP eligible use category authorizes the use of CLFRF funds “to respond to [the] negative economic impacts” of the COVID-19 pandemic. The Rule states:

“A general infrastructure project, for example, typically would not be included unless the project responded to a specific pandemic public health need (e.g., investments in facilities for the delivery of vaccines) or a specific negative economic impact like those described above (e.g., affordable housing in a QCT). The ARPA explicitly includes infrastructure if it is ‘necessary’ and in water, sewer, or broadband.”[4].

The Rule indicates that infrastructure projects are allowable if they are “necessary” and improvements to water, sewer, or broadband. The ARP and the  Rule generally exclude general infrastructure projects.  However, a general infrastructure project might be permitted in certain circumstances, particularly where the general infrastructure project responds to a specific public health need or a specific negative economic impact.  Finally, in terms of revenue loss and government provision of services, the Rule may permit certain infrastructure projects, such as road maintenance.  A municipality may wish to consider the above scenarios as part of its determination as to whether a supplemental project (i.e., an infrastructure project that is not clearly identified as eligible to receive CLFRF funds, but which is necessary to complete a related infrastructure project that is clearly eligible for CLFRF funds) may be eligible to receive CLFRF funds.

If the relevant project involves water or sewer infrastructure, The Rule notes that ARP provides state, local, and tribal governments “with wide latitude to identify investments in water and sewer infrastructure that are of the highest priority for their own communities” by aligning the eligible uses of CLFRF funds with “the wide range of types or categories of projects that would be eligible to receive financial assistance through the EPA’s Clean Water State Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF).”[5] Recipients seeking to identify the categories of projects that would be eligible to receive funding assistance may wish to check EPA’s site for possible additional resources available in the event a project isn’t clearly eligible for CLFRF funds.[6] 

Last Revised: June 10, 2021

[1] American Rescue Plan Act (HR 1319 Subtitle M Section 9901 (amending 42 U.S.C. 801 Section 603(c)(1)(D)).

[2] DEPARTMENT OF THE TREASURY, 31 CFR Part 35 RIN 1505-AC77 Coronavirus State and Local Fiscal Recovery Funds, at pg. 55.

[3] DEPARTMENT OF THE TREASURY, 31 CFR Part 35 RIN 1505-AC77 Coronavirus State and Local Fiscal Recovery Funds, at pg.60

[4] DEPARTMENT OF THE TREASURY, 31 CFR Part 35 RIN 1505-AC77 Coronavirus State and Local Fiscal Recovery Funds, at 42

[5] DEPARTMENT OF THE TREASURY, 31 CFR Part 35 RIN 1505-AC77 Coronavirus State and Local Fiscal Recovery Funds, at pg.63

[6] Environmental Protection Agency, Drinking Water State Revolving fund, https://www.epa.gov/dwsrf (last visited Apr. 30, 2021); Environmental Protection Agency, Clean Water State Revolving Fund, https://www.epa.gov/cwsrf (last visited Apr. 30, 2021).