Treasury Department Interim Final Rule to Amend ‘Obligation’ in SLFRF Regulations
On November 20, 2023, the Treasury Department issued an interim final rule to amend the definition of ’obligation’ set forth in Coronavirus State and Local Fiscal Recovery Fund (SLFRF) regulations and to give additional flexibility and clarity to recipients to support their use of SLFRF funds. The rule does not alter the eligible use categories described in the 2022 SLFRF final rule or the 2023 interim final rule and does not alter existing SLFRF obligation or expenditure deadlines. Recipients must obligate SLFRF funds by December 31, 2024, and expend obligated funds by December 31, 2026.
While the term ’obligation’ continues to mean an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment, the interim final rule provides that a recipient is also considered to have incurred an obligation by December 31, 2024, if SLFRF funds are used to cover costs related to reporting and compliance requirements, including subrecipient monitoring; single audit costs; record retention and internal control requirements; property standards; environmental compliance requirements; or civil rights and nondiscrimination requirements. The rule also clarifies that subrecipients are not subject to the December 31, 2024, obligation deadline. The obligation deadline applies to the recipient of SLFRF funds, and a cost is considered to have been incurred once a recipient enters into a subaward or contract that obligates the recipient to cover that cost. Treasury also published a reference guide to provide an overview of the interim final rule. While the provisions in the rule are effective immediately, Treasury is accepting comments on it until December 20, 2023.
