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COVID-19 Update | Tuesday, July 28

July 28, 2020

Congress

The House and Senate are both back in session. However, the House will not vote again until tomorrow to allow Members to pay respects to the late Rep. John Lewis (D-GA).

  • Senate Republicans unveiled their proposal for the next COVID-19 relief package, the Health, Economic Assistance, Liability protection, and Schools (HEALS) Act, last night. As expected, the legislation’s topline is around $1T. The HEALS Act is an opening salvo from Senate Republicans and the White House and the legislation will be stiffly negotiated over the next few weeks. These negotiations will likely drive the overall topline funding higher as Democrats hold a significant amount of leverage as the bill needs to pass both chambers. In addition, there is not unified support for additional COVID-19 relief among Senate Republicans.
    • Republican Senators including, but not limited to, Sens. John Kennedy (R-LA), Josh Hawley (R-MO) and Rick Scott (R-FL) have already expressed concerns with the HEALS Act.
  • Bipartisan negotiations have begun at a high level. White House Chief of Staff Mark Meadows, Treasury Secretary Steven Mnuchin, House Speaker Nancy Pelosi (D-CA), and Senate Minority Leader Chuck Schumer (D-NY) met last night.
    • The White House team also met with Pelosi and Schumer today and separately with Senate Majority Leader Mitch McConnell (R-KY).
      • According to published reports, White House Chief of Staff Meadows commented that Pelosi and Schumer are pushing for unemployment insurance to stay at $600 per week and $915B in additional relief for state and local governments.
  • As a reminder, the current plan is to pass the legislation through both chambers of Congress by August 7, a timeline that is subject to change depending on the progress of negotiations. Among the highlights of the HEALS Act are:
    • The $306B appropriations title, which includes $226.2B for the Labor-Health and Human Services-Education subcommittee, $29.4B for the Defense Subcommittee, $20B for the Agriculture-Food and Drug Administration-Rural Development subcommittee, and $13B for the Transportation, Housing and Urban Development (THUD) subcommittee.
      • Of the THUD funding, $10B is for airports through the Airport Improvement Program and will be distributed by statutory entitlement and enplanements (this was done to remedy the issues with the CARES Act formula).
        • Large airports that receive the money would be required, through the end of March 2021, to retain at least 90% of the workforce they employed as of March 27, 2020. Department of Transportation (DOT) Secretary Elaine Chao would be allowed to waive the requirement if an airport is “experiencing economic hardship as a direct result of the requirement, or the requirement reduces aviation safety or security.”
        • Of the $10B, up to $500M would be set aside for general aviation airports and “non-primary” commercial airports.
      • The appropriations title also includes $88M for the Transportation Security Administration (TSA) for “cleaning and sanitation at checkpoints and other airport common areas and related expenses,” $50M for “the procurement and installation of credential authentication technology units and related infrastructure upgrades” and an additional $70M for “the procurement and installation of computed tomography technologies.”
      • The appropriations title also includes $105.1B for the Department of Education including:
        • $1B for the Bureau of Indian Education and outlying areas.
        • $5B for the Governors Emergency Education Relief Fund.
        • $70B for the Elementary and Secondary School Emergency Relief Fund.
        • $29B for the Higher Education Emergency Relief Fund.
      • Senior Congressional Democrats, including House Appropriations Chairwoman Nita Lowey (D-NY), House Armed Services Committee Chairman Adam Smith (D-WA), Senate Minority Leader Schumer and Congressional Progressive Caucus Co-Chair Mark Pocan (D-WI) have criticized the defense spending included in the package as being unrelated to COVID-19 relief.
    • The Republican liability protection proposal, “The Safeguarding America’s Frontline Employees to Offer Work Opportunities Required to Kickstart the economy (SAFE TO WORK) Act,” creates a Federal cause of action as the exclusive remedy for all claims of personal injury caused by an actual, alleged, feared or potential exposure to COVID-19. The cause of action applies retroactively to December 1, 2019 until the emergency declaration for COVID-19 is lifted on October 1, 2024. Pending cases on the date of enactment that fall in the timeframe are also covered.
    • A Senate Finance Committee title, which includes, among other things:
      • A reduction of Federal unemployment benefits from $600 to $200 per week for a 60-day period, or until states can adopt a system to provide 70% wage replacement.
        • As a reminder, current expanded unemployment benefits are set to expire on Friday, July 31.
      • Additional $1,200 stimulus payments to Americans.
        • Income limits for the full, $1,200 stimulus checks are $75,000 for individuals and $150,000 for families.
        • $500 for each dependent in a family, mirroring the CARES Act.
      • An increase in the Employee Retention Tax Credit (ERTC) to 65% and the gross receipts threshold required to qualify would be reduced from 50% to 25% compared to the same calendar quarter in the previous year. The amount of wages the ERTC can be claimed for is also increased, from $10,000 per year to $30,000 per year, limited to $10,000 per quarter.
        • Currently the tax credit can only be claimed for employee wages that compensate employees for not performing services if a firm is over 100 employees. This proposal would expand this threshold to 500 employees or less, meaning firms with 101 to 500 employees can now claim this tax credit on all employee wages.
      • A temporary expansion of the Work Opportunity Tax Credit for 2020 qualified COVID-19 unemployment recipients.
        • The maximum credit would be expanded from $2,400 (40% of the first $6,000 of qualified first-year wages) to $5,000 (50% of the first $10,000 of qualified first year wages).
      • A new refundable payroll tax credit for up to 50% of an employer’s employee protection expenses including testing, cleaning supplies, and personal protective equipment (PPE).
        • The maximum amount of qualified expenses is $1,000 for each of the first 500 employees, plus $750 for each employee between 500 and 1,000, and $500 for each employee over 1,000. The credit would apply to expenses paid after March 12, 2020 and before January 1, 2021.
      • Increased flexibility for state and local governments for the Coronavirus Relief Fund (CRF) established by the CARES Act.
        • The end date for use of these funds would be extended to 90 days after the end of a state/local government’s Fiscal Year (FY) 2021.
        • Governments could use CRF funds for revenue shortfalls up to 25% of the funds received under the CRF and only if the government certifies that it provided at least 25% of the CRF funds to smaller so-called “downstream” governments (e.g. from a state to a city).
    • The Continuing Small Business Recovery and Paycheck Protection Program Act, introduced by Sens. Marco Rubio (R-FL) and Susan Collins (R-ME), which would:
      • Improve terms of Small Business Administration (SBA) 7(a) loans for seasonal businesses located in low-income communities by allowing for loans up to two times the borrowers’ annual revenues (up to $10M) with up to 20-year maturity with a 1% interest rate. The legislation would allow these loans for businesses with 500 employees or fewer that have seen their revenues decline by 50% or more in the first or second quarter this year compared to the same quarter last year.
      • Provide an additional round of Paycheck Protection Program (PPP) loans for businesses that have faced a revenue decline of 50% or more in the first or second quarter this year compared to the same quarter last year. These second loans would be limited to businesses with 300 or fewer employees and create an additional set aside of funds for businesses with 10 or fewer employees to ensure equitable access to forgivable loans. The bill includes a $10B set aside for community lenders to access second draw funds.
      • Expand PPP eligibility for costs to be able to be used for PPE and other safety investments.
      • Expand PPP eligibility to 501(c)(6) organizations with 300 employees or fewer as well as Destination Marketing Organizations (DMOs) if they meet certain criteria, including a limit on receipts from lobbying activities.
      • Simplify the loan forgiveness process for loans under $150,000.
    • The Restoring Critical Supply Chains and Intellectual Property Act, introduced by Sen. Lindsey Graham (R-SC), which would:
      • Require PPE “such as clothing, sanitizing supplies, ancillary medical supplies (wipes, bedding, test swabs, etc.) and other textile equipment” to be grown, reprocessed, reused, or produced in the United States.
      • Require the Department of Health and Human Services (HHS) to “immediately begin increasing procurements of domestic PPE for the Strategic National Stockpile incrementally and reach 100% domestic sourcing as soon as practicable within five years.”
      • Require HHS to submit a “plan to Congress within 90 days detailing how they will reach 50% domestic sourcing in one year, 75% in 18 months, and 100% in two years.”
      • Establish a “$7.5B medical manufacturing project tax credit to buildout and retrofit factories to meet increased PPE demand.”
    • The Supporting America’s Restaurant Workers Act, introduced by Sen. Tim Scott (R-SC), which would:
      • Provide a 100% deduction for business meals until the end of the year.
        • Currently, the deduction is available for only 50% of such expenses.

Senate

  • Senate Armed Services Committee Chairman Jim Inhofe (R-OK) said he will block the reconfirmation of Federal Communications Commission (FCC) Commissioner Mike O’Rielly until O’Rielly publicly states that he will vote to overturn the Ligado contract, which could scramble GPS signals across the United States.
    • As a reminder, the FCC approved a contract with Ligado to build out 5G infrastructure across the country. However, new concerns have arisen due to reports that the technology that Ligado plans to use could cause problems with GPS systems.
  • The Senate Commerce, Science, and Transportation Subcommittee on Communications, Technology, and Innovation held a hearing titled “The PACT Act and Section 230: The Impact of the Law that Helped Create the Internet and an Examination of Proposed Reforms for Today’s Online World.” The hearing discussed the role of Section 230 in assisting and circulating user-produced online content, the history and evolution of Section 230’s protections for online platforms, potential ways to have Section 230 better reflect the current online ecosystem, and how the PACT Act would address current Section 230-related issues, among other items.

House

  • The House Rules Committee met today to determine which of the over 500 amendments offered to H.R. 7617, the second appropriations minibus which includes Defense, Commerce-Justice-Science, Energy and Water Development, Financial Services and General Government, Labor-Health and Human Services-Education, and Transportation, Housing, and Urban Development appropriations.
    • The minibus was originally slated to contain the Homeland Security appropriations legislation, but House Democratic leadership decided to pull the Homeland Security funding legislation from floor consideration amid concern from progressive and other frontline members.
    • 340 amendments were made in order under the rule.
    • The package is set to be considered starting tomorrow and will likely pass later this week.
  • The House is slated to vote on their Water Resources Development Act (WRDA) under the suspension of the rules tomorrow. This means that no amendments will be allowed to the legislation and also means that it must pass by a two-thirds majority. As a reminder, the Senate passed its versions of WRDA, split into the America’s Water Infrastructure Act and Drinking Water Infrastructure Act, unanimously out of the Environment and Public Works Committee in May but the timing on floor action is unclear.
  • 223 bipartisan Members of Congress, led by Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR) and Aviation Subcommittee Chairman Rick Larsen (D-WA), signed onto a letter to Congressional leadership asking for an extension of the Payroll Support Program (PSP), set to expire on September 30, which is currently keeping thousands of airline workers employed. The letter can be found here.

Administration

  • The Department of Commerce petitioned the FCC to narrow the liability protections of online companies under Section 230 of the Communications Decency Act through creating regulations on social media companies, even though the FCC does not regulate social media agencies. The petition asked for mandated disclosures of the companies similar to what broadband companies currently must provide and to ensure that Section 230 does not restrict access availability of material provided by information content providers. The petition can be found here.
  • Federal Register Notices:
    • The Coast Guard and Department of Homeland Security issued a notice of a meeting of the National Offshore Safety Advisory Committee. The notice can be found here.
    • DOT issued a request for comments on the Non-Traditional and Emerging Transportation Technology (NETT) Council. The notice can be found here. 
    • The Department of Treasury issued a notice of availability and request for comment on the Multiemployer Pension Plan Application to reduce benefits. The notice can be found here.

Other News

  • Twitter banned Donald Trump Jr. from tweeting for 12 hours after he posted a video clip that discussed the benefits of hydroxychloroquine in fighting COVID-19. Twitter said the post violated its COVID-19 misinformation rules.
    • This will likely bring substantial criticism from Republicans as it relates to technology companies regulating content on their respective sites, and will likely be brought up in tomorrow’s House Judiciary Antitrust, Commercial, and Administrative Law Subcommittee hearing on “Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google.” The CEOs of those companies will be testifying.
  • A new report from the World Resources Institute said that the U.S. real gross domestic product (GDP) expanded 25% between 2005 and 2018, while energy related carbon dioxide emissions dropped 12%. Additionally, the report found that 41 states and Washington D.C. increased their economic growth while decreasing their carbon dioxide emissions. The report can be found here.
  • According to a report from the Pew Research Center, eight states, including Iowa, Maine, Mississippi, Nebraska, North Dakota, South Carolina, Tennessee and West Virginia have announced that they will utilize money they received through the CARES Act to increase their unemployment insurance trust funds. The report can be found here.
  • Many trade groups and other organizations have come out in support of portions of the HEALS Act.
    • Airports Council International North America (ACI-NA) President Kevin Burke emphasized that the $10B for airports through the Airport Improvement Program has bipartisan support and would offset many of the additional costs that airports have incurred since COVID-19.
    • The U.S. Travel Association has long advocated for the expansion of PPP eligibility to include 501(c)(6) organizations, and specifically DMOs. The U.S. Travel Association applauded the language in the bill, stating that it will spare many DMOs from layoffs.
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