Earmarks Are Back for FY 2023 – How to Take Advantage of Community Project Funding

Earmarks Are Back for FY 2023 – How to Take Advantage of Community Project Funding

Congress recently announced that earmarks will be back for Fiscal Year 2023 in the form of Community Project Funding...

Congress recently announced that earmarks will be back for Fiscal Year 2023 in the form of Community Project Funding. Both the House and Senate have released guidance on how funding may be requested and what accounts and projects will be eligible.

After a lengthy hiatus, congressionally-directed spending (better known as earmarks) returned to Congress last year. As discussed in greater detail here, Congress enacted a series of reforms to improve transparency and accountability. The new Community Project Funding process, which allows members of Congress to target federal funds towards projects and programs in their respective congressional districts, was launched last year and was generally well-received by members of both parties.

FY 2023 Community Project Funding

Following President Joe Biden’s signing of the Consolidated Appropriations Act of 2022 into law, both the House and Senate Appropriations Committees have issued guidance regarding the FY 2023 earmark process.

For FY 2023, the Senate Appropriations Committee will accept appropriations requests of two different types: 

• Programmatic/Bill and Report Language Requests: These types of requests are general funding requests for national and regional programs, and/or bill and report language requests that directs, encourages, or urges an Agency or Department to carry out an action. 
• CDS Requests: As defined in Senate Rule XLIV, a CDS is a provision “included primarily at the request of a Senator providing, authorizing, or recommending a specific amount of discretionary budget authority, credit authority, or other spending authority for a contract, loan, loan guarantee, grant, loan authority or other expenditure with or to an entity, or targeted to a specific State, location or Congressional district, other than through a statutory or administrative formula-driven or competitive award process.” In most cases, CDS directs funding to a specific project in a specific location.

The Senate Appropriations Committee guidance includes links to eligible agencies and accounts. It also includes the deadlines for both Programmatic Requests/ Bill and Report Language Requests and requests for Congressionally Directed Spending.

In line with the reforms instituted last year, there is a one percent cap on discretionary spending for congressionally directed spending items. The Committee will not fund CDS to for-profit entities, and each member must certify in the cover letter accompanying their request that none of the entities for which they have requested CDS is a for-profit entity. Additionally, senators are required to publish their requests to their website as well as submit and make public a financial disclosure letter certifying that they do not have any financial interest in the items requested.

New for FY 2023, Congressional offices must post this information to their website 15 calendar days after submitting their requests to the Committee. According to the guidance, providing 15 days between making a request and posting it on a Member’s website will allow subcommittee staff to review requests and make sure they are properly categorized as a request for congressionally directed spending.

As set forth in the guidance issued by the House Committee on Appropriations, Members may submit up to 15 requests (up from 10 requests last year), excluding programmatic and language requests, across all Subcommittees. The guidance also emphasizes that community engagement and support is “crucial in determining which projects are worthy of Federal funding,” and only projects with demonstrated community support will be considered. Additionally, Members will be required to present to the Committee evidence of community support that were compelling factors in their decision to submit the request. Examples of these include, but are not limited to:

• Letters of support from elected community leaders (e.g., mayors or other officials);
• Press articles highlighting the need for the requested Community Project Funding;
• Support from newspaper editorial boards;
  Projects listed on State intended use plans, community development plans, or other publicly available planning documents; or
• Resolutions passed by city councils or boards.

Guidelines for Appropriation Requests

Generally, House and Senate subcommittees will consider the following when evaluating funding requests:

• Ban on For-Profit recipients. The Committee is imposing a ban on directing Community Project Funding to for-profit entities.
• Matching requirements. Several Federal programs eligible for Community Project Funding requests require a State or local match for projects either by statute or according to longstanding policy. The Committee will not waive these matching requirements for Community Project Funding requests, so it is important that Member offices discuss with their State and local officials the ability for localities to meet matching requirements prior to requesting a project. This does not mean that matching funds must be in-hand prior to requesting a project, but that local officials must have a plan to meet such requirements in order for such a project to be viable.
• One-year funding. Each project request must be for fiscal year 2023 funds only and can’t include a request for multi-year funding. However, the performance period for a project funded with amounts provided in fiscal year 2023 will depend on the appropriations account from which it is funded, and may be longer than one year.
• State, local or Tribal governmental entities as grantees. Members are encouraged to consider public entities as primary grantees to oversee the completion of the project. For infrastructure projects, many States have established lists or intended use plans with projects that have already been vetted by governmental officials (e.g., drinking water, wastewater and highways).
• Non-profits as grantees. If a Member requests that funding be directed to a non-profit organization, the Member will need to provide evidence that the recipient is a non-profit organization by either supplying the Employer Identification Number or an IRS determination letter. Further, many water projects often partner with non-profit entities to complete projects. Therefore, projects may also be directed to non-profits with an inherently governmental function.

Key Takeaway

The resurrection of earmarks creates new funding opportunities for nonprofits and local governments. However, it is important to note that the process will be competitive, with numerous applicants vying for a relatively small pool of funds. Deadlines are also quickly approaching, so the time to act is now.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Teddy Eynon, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.