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House Democrats today unveiled H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. The approximately $3 trillion proposal, which is outlined in greater detail below, provides nearly $1 trillion to state, local, territorial and tribal governments to pay workers such as first responders, health workers and teachers. The bill would also establish a $200 billion Heroes Fund to provide hazard pay for essential workers, enhance the employee retention tax credit and provide $10 billion for COVID-19 emergency grants through the Economic Injury Disaster Loan (EIDL) program. The HEROES Act would also provide a second round of economic impact payments of $1,200 per family member.
Majority Leader Steny Hoyer (D-MD) informed members that the House is expected to meet at 9:00 a.m. on Friday to consider the legislation. In addition, the House is expected to vote on rules changes that would allow for proxy voting and remote committee work.
Senate Majority Leader Mitch McConnell (R-KY) has made clear that Senate Republicans are pausing to assess the effectiveness of the Phase 3 package and are not likely to roll out a comprehensive Phase 4 proposal prior to the Memorial Day recess. The Majority Leader, however, released a statement on Tuesday indicating that Senate Republicans are working on a major package of COVID-related liability reforms to foster economic recovery. This package, spearheaded by Leader McConnell and Senator John Cornyn (R-TX), will extend new lawsuit protections to those on the frontlines of the COVID-19 response and the reopening, including healthcare providers, small businesses, universities and nonprofit organizations.
As public officials at all levels of government continue to escalate their responses to the pandemic, the latest actions and developments may be found below. Akin Gump will continue to provide regular policy developments related to COVID-19.
Summary of Key Policies in the HEROES Act:
Coronavirus Recovery Supplemental Appropriations Act, 2020
- Agriculture, Rural Development, Food and Drug Administration and Related Agencies : Includes $10 billion to support program cost increases related to flexibilities provided to the Supplemental Nutrition Assistance Program (SNAP) by the Families First Coronavirus Response Act, as well as $3 billion to provide emergency financial relief to school meal providers and the Department of Agriculture’s (USDA) Child and Adult Care Food Program.
- Commerce, Justice, Science and Related Agencies : Includes $400 million for expenses due to delays in the 2020 Decennial Census; $500 million to stop the presence of COVID-19 in correctional institutions; and $300 million for Byrne Justice Assistance Grants.
- Financial Services and General Government : Includes $500 billion for state governments and $375 billion for local governments to mitigate the fiscal impacts of COVID-19.
- Homeland Security : Provides $1.3 billion to the Federal Emergency Management Agency (FEMA) to respond to COVID-19.
- Interior, Environment, and Related Agencies : Includes $2.1 billion for the Indian Health Service to address health care needs related to coronavirus for Native Americans, as well as $1 billion for building hospitals and critical infrastructure in the Insular Areas.
- Labor, Health and Human Services, Education, and Related Agencie s: Includes $100 billion in grants for hospital and health care providers (tied to additional restrictions); $75 billion for testing, contact tracing, and other activities necessary to suppress COVID-19; and $90 billion for a State Fiscal Stabilization Fund for grants to support funding for elementary and secondary schools and public postsecondary institutions.
- Transportation, Housing and Urban Development, and Related Agencies : Includes $100 billion to provide emergency assistance to help low-income renters at risk of homelessness; $15.75 billion for operating assistance grants to support transit agencies; and $15 billion for grants to support the ongoing work of state, tribal, and territorial Departments of Transportation and local governments.
- Provides additional economic stimulus payments in the form of a refundable tax credit of $1,200 for single filers, $2,400 for joint filers, plus $1,200 for each dependent (up to three dependents per household), with a phase-out for higher incomes. The legislation also retroactively includes any qualifying child or relative under IRC Section 152 (which includes students under age 24), not just those considered dependents for purposes of the child tax credit (which was limited to children under age 17), as eligible for dependent status for both this additional recovery rebate and the Coronavirus Aid, Relief and Economic Security (CARES) Act Economic Impact Payments.
- Raises the amount of the Child Tax Credit (CTC) from $1,000 to $3,000 (or $3,600 for children under the age of six), makes 17-year-olds eligible, allows the credit to be fully refundable and allows advance payments of the credit to be made on a monthly basis.
- Reduces the age for qualifying Earned Income Tax Credit (EITC) applicants from 25 to 19 (except for full-time students) and increases the upper age limit for the childless EITC from age 65 to age 66. This section also increases childless EITC amount by increasing the credit and phase-out percentages from 7.65 to 15.3 percent, increasing the earned income amount to $9,720, increasing the phase-out amount to $11,490. Under these parameters, the maximum credit amount in 2020 increases from $538 to $1,487.
- Eliminates the $10,000 cap on State and Local Taxes (SALT) deductions.
- Increases the per-employee limit for the Employee Retention Credit (ERC) from 50 percent of $10,000 (or $5,000 for the year) to 80 percent of $45,000 (or $36,000 for the year) per employee. A partial credit would be allowed for employers with a decline in gross receipts between 10 percent and 50 percent, and the 100 full-time employee threshold (for determining whether wages paid when an employee is providing services are qualified) would increase to 1,500 full-time employees and gross receipts of greater than $41.5 million in 2019.
- Creates a refundable employment tax credit capped at 50 percent of $50,000 per quarter (or $25,000 per quarter) to help certain businesses whose operations have been fully or partially suspended or who have experienced a significant decline in gross receipts with “fixed costs” including covered rent obligations, covered mortgage obligations and covered utility payments.
- Reinstates and makes permanent a limit on the ability of pass-through business owners to deduct business net operation losses over $250,000 ($500,000 for joint filers).
- Amends the provisions of CARES that provide for net operating loss (NOL) carrybacks by limiting carrybacks to taxable years beginning on or after January 1, 2018. In addition, this provision prohibits taxpayers with excessive executive compensation or excessive stock buybacks and dividends from carrying back losses.
- Increases Federal Medical Assistance Percentage (FMAP) payments to state Medicaid programs by a total of 14 percentage points through June 30, 2021.
- Eliminates cost sharing for Medicaid beneficiaries for COVID-19 treatment and vaccines.
- Establishes zero cost-sharing for COVID-19 treatment under Medicare Parts A and B and creates a new special enrollment period during the public health emergency.
- Regarding private insurance, the measure provides for a two-month open enrollment period to allow uninsured individuals to enroll in coverage.
- Requires the President to appoint a Medical Supplies Response Coordinator to serve as the point of contact for the health care system, supply chain officials, and states on medical supplies.
- Includes several proposed improvements to the Strategic National Stockpile, including establishing a supply chain flexibility manufacturing pilot program.
- Codifies the CARES Act provider relief fund to reimburse eligible providers for expenses related to responding to COVID-19 and creates a loan repayment program to improve recruitment and retention of state, local, tribal and territorial public health department workforce.
Continued Assistance to Unemployed Workers
- Extends the $600 per week Federal Pandemic Unemployment Compensation (FPUC) supplement and the Pandemic Unemployment Assistance (PUA) benefits through January 31, 2021.
- Includes an extension of full funding for the first week of compensable regular unemployment for states with no waiting week through January 31, 2021.
Small Business Provisions
- Amends PPP funding by setting aside funds specifically for small Community Development Financial Institutions (CDFIs), Minority Development Institutions (MDIs), SBA microlenders, and SBA Certified Development Companies (CDCs) and mandating that 25 percent of the funds be used for small businesses with 10 or fewer employees and that another 25 percent of the funds be used solely for nonprofits.
- Appropriates an additional $10 billion for Emergency EIDL Grants to remain available until expended.
- Includes proposals to better support SBA’s core programs, including waiving fees associated with the SBA 7(a) and 504 loan programs for borrowers and lenders and increasing the annual lending limit of the 7(a) program from $30 billion to $75 billion.
COVID-19 HERO Act
- Expands the use and oversight of Defense Production Act (DPA) authorities to increase production of critical medical supplies.
- Includes several protections for renters and homeowners from evictions and foreclosures, including authorizing a $100 billion for an Emergency Rental Assistance program.
- Suspends negative consumer credit reporting during the pandemic and provides a temporary moratorium on consumer debt collection.
- Includes the SAFE Banking Act, which closely tracks the House-passed version of the measure. This section would allow cannabis-related businesses that have remained open as essential services to access banking services and products, as well as insurance.
Families, Workers, and Community Support Provisions
- Expands energy assistance for low-income families, reduces barriers to Low Income Home Energy Assistance Program (LIHEAP) participation during the pandemic and temporarily increases LIHEAP agencies’ administrative resources.
- Extends the waiver authority provided to USDA under the Families First Coronavirus Response Act to the Fresh Fruit and Vegetable Program (FFVP).
- Temporarily suspends the current 1,250 hour eligibility requirement and reduces the tenure eligibility requirement from 12 months to 90 days under nonemergency Family and Medical Leave Act (FMLA).
- Extends the availability of Emergency Family and Medical Leave benefits from December 31, 2020 to December 31, 2021.
Consumer Protection and Telecommunications
- Includes the COVID-19 Price Gouging Prevention Act to prohibit the sale of consumer goods and services at excessive prices.
- Prohibits broadband and telephone providers from terminating service due to a customer’s inability to pay their bill because of financial hardships during the pandemic.
- Entitles households with individuals who have been laid off or furloughed to get a $50 benefit ($75 benefit on tribal lands) to put toward the monthly cost of internet service during the pandemic.
- Authorizes $2 billion for a temporary expansion of the FCC’s Rural Health Care Program (RHCP) to partially subsidize their health care providers’ broadband service.
COVID-19 Heroes Fund
- Establishes a $200 billion Heroes Fund. Under the provision, Treasury would award grants to essential employers to provide premium pay to essential workers.
- While the provision does not require private employer contribution, it requires the Department of the Treasury to transfer 0.25 percent of the funds to the Department of Labor to implement an advertising campaign encouraging employers with over 500 employees to provide the same premium pay without utilizing grant funds.
Transportation and Infrastructure
- Extends the prohibition on involuntary furloughs of employees of airlines that receive financial assistance under the CARES Act through full exhaustion of the assistance, instead of ending on September 30, 2020.
- Includes several safety requirements for airlines, mandating that flight attendants, passengers and pilots wear face coverings. Public transit passengers would also be required to wear face coverings;
- Enhances benefits under the Railroad Unemployment Insurance Act by extending the temporary recovery benefit that provides $1,200 every two weeks.
Senate Judiciary Committee Holds Hearing on Liability during the COVID-19 Pandemic
On Tuesday, May 12, the Senate Judiciary Committee held a hearing entitled, “Examining Liability during the COVID-19 Pandemic.” Chairman Lindsey Graham (R-SC) argued that federal liability protections are necessary but must be limited in scope and not provide complete immunity. The Chairman emphasized the need to ensure that bad actors are not given a break, but rather, that liability reforms be afforded to those who are making good faith efforts to do right by their patients, employees and customers. Chairman Graham also highlighted the need to swiftly finalize a regulatory Occupational Safety and Health Administration- (OSHA) driven process for large, small and intermediate businesses. In acknowledging that the threat of lawsuits may detour businesses from reopening, Ranking Member Dianne Feinstein (D-CA) reiterated her commitment to ensuring that businesses act responsibly and follow federal safety guidelines, but stopped short of endorsing federal liability reforms. The partisan battle over lawsuit limits is expected to be waged over the next several weeks as Republicans and Democrats try to negotiate a Phase 4 package after Memorial Day.
More States Take First Steps to Reopen; Others Announce Extensions of Emergency Measures
A number of states have announced initials steps to reopen their economies in response to the three-phase guidelines issued by the Administration on April 16 in addition to the following recent state actions, a complete list of state status may be found at this link:
· Nevada – Gov. Steve Sisolak signed an executive order on May 8 outlining the first phase of the state’s reopening plan. Effective May 9, all businesses that engage in retail sales may allow customer access in store with a maximum occupancy of 50 percent, drive-in theaters may reopen, nail care salons and barber shops may reopen, and restaurants and food establishments may provide onsite dining. All business reopenings are permitted provided that businesses adhere to the safety provisions outlined in the order. The stay-at-home order is still set to expire on May 15.
· Rhode Island – Gov. Gina Raimondo signed an updated executive order on May 8 extending the state of emergency until June 8 and allowing some businesses to begin to reopen. Governor Raimondo did not extend the stay-at-home order which expired on May 8. Effective May 9, all non-critical retail businesses with a physical location in Rhode Island shall be permitted to reopen for in-store pickup and limited browsing only and will be required to operate in accordance with the social distancing protocols set forth by RIDOH. Elective medical procedures and other medical services shall be allowed to resume and the Department of Environmental Management shall start reopening state parks in a graduated manner.
· Virginia – Gov. Ralph Northman signed an updated executive order to allow businesses to slowly reopen in the state. Effective May 15, restaurants may operate delivery, take-out, and outdoor dining and beverage services only, brick and mortar retail business not listed in section C may continue to operate, fitness centers may reopen for outdoor activities only, and barbershops and other personal care services may reopen. All businesses reopening must comply with the Guidelines for All Business Sectors and the sector-specific guidelines.
· Wisconsin – Gov. Tony Evers signed an updated executive order easing some of the restrictions of the state’s stay-at-home order. Effective May 11, standalone or strip mall-based retail stores with an entrance to the outside may offer in-person shopping for up to five customers at a time provided they observe social distancing requirements outlined in Section 26 of Emergency Order #28 signed by Governor Evers. Drive-in theaters may also open subject to the restrictions outlined in the order.
President Trump and Administration Officials Deliver Remarks on Testing
On Monday, May 11, President Trump and Administration officials conducted a briefing on testing. Highlights of the discussion included:
· The Food and Drug Administration (FDA) has issued the first emergency use authorization (EUA) for a COVID-19 antigen test.
· President Trump indicated that the country is on track this week to pass 10 million coronavirus tests conducted.
· The President announced that the Administration is distributing $11 billion from the CARES Act to states, territories and tribes to allow them to meet their testing goals.
· President Trump also announced that the Administration will provide collection supplies to help states meet their targets. In May, the Federal Emergency Management Agency (FEMA) and the Department of Health and Human Services (HHS) will be delivering 12.9 million swabs to states.
· The Administration has partnered with the private sector to coordinate delivery of over 90 million N95 masks, 126 million surgical masks, nine million face shields and other personal protective equipment (PPE).
· When asked about the merits of providing a second round of direct payments to Americans, as proposed by House Democrats, President Trump indicated that negotiations on the issue are ongoing, and he also reiterated the need for a payroll tax cut in a future COVID-19 relief package.
· ADM Brett Giroir, HHS Assistant Secretary for Health, stated that the Secretary’s Office of Minority Health will soon be awarding a contract to guarantee a national network of state, local and community-based organizations to ensure that minority groups are linked to the resources they need.
White House Briefing Highlights
On Tuesday, May 12, White House Press Secretary Kayleigh McEnany conducted a briefing from the White House Press Briefing Room. Highlights of the discussion included:
· White House Press Secretary Kayleigh McEnany began the press briefing by highlighting critical aspects of the Trump Administration’s COVID-19 response. In particular, she noted that the Administration has procured 100,000 ventilators in 100 days, which is three times the amount produced in the average year.
· On testing, McEnany emphasized that all 50 states are testing at a higher rate per capita than South Korea. She also underscored the importance of focusing on preventative measures to limit the spread of the virus, such as using face coverings, washing hands and practicing social distancing.
· McEnany confirmed that the virus has disproportionately affected individuals in medically underserved communities. She mentioned that the Administration has distributed $12 billion in provider relief fund payments to support the hardest-hit hospitals. In addition, she stated that President Trump has approved $583 million to expand testing to over 1,300 health centers across the nation.
· In response to questions regarding a vaccine, McEnany noted that there are currently eight candidates for vaccines, stressing that President Trump would work to ensure that it is affordable for everyone.
· McEnany reiterated President Trump’s desire for a payroll tax cut, describing it as a “regressive tax,” meaning that the lowest-wage workers would benefit the most.
· When asked about statements made by Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, about not having “total control of the outbreak,” McEnany applauded the American private sector for its success in expanding testing. She also encouraged every state and governor to follow President Trump’s phased guidelines to reopen their economies.
· Phase 3: Updated FAQs on the Provider Relief Fund
· Phase 4: HEROES Act Section-By-Section Summary
· Phase 4: HEROES Act Full Text
· Phase 4: HEROES Act Financial Services Summary
· Phase 4: HEROES Act Small Business Summary
· Phase 4: HEROES Act Small Business Fact Sheet