Hotels, Travel and Tourism

The six quarters section lists, for each of the six quarters, the orders in force with their exhibit numbers, issuers, dates and operative clauses; its third-quarter section lists seventeen classes of instruments for the quarter the Service most often describes in this sentence; the tables on this page tabulate them. In the second quarter of 2020 eleven States closed lodging to leisure guests or banned short-term rentals, more than twenty States quarantined the arriving traveler, every gaming State closed its casinos and the CDC halted every cruise; in the third quarter of 2021 the federal conveyance, entry, border and cruise orders were in force on every day, Hawaii quarantined every arrival and kept every person under its face-covering and gathering controls throughout, six States and the District reinstated universal indoor face coverings, workplace infection-prevention and exposure-control requirements on every indoor public space, and four more required them of the unvaccinated, and four of the largest markets conditioned entry to every hotel restaurant on proof of vaccination.²⁶⁰ The sentence is not a finding about this industry. It is factually incorrect, and it describes a period that did not occur.

The word "essential" is not in the clause; it is in the orders, and in the orders it is a limitation. Hotels were essential "to the extent used for lodging and delivery or carryout food services" in Arizona, Hawaii, Illinois, Kentucky, North Carolina, Ohio, Tennessee, West Virginia and Montana, a formula that permitted the room and forbade the ballroom, the restaurant, the bar, the pool, the gym and the casino; Michigan's order made a hotel critical only if it offered no "gyms, pools, spas, dining, entertainment facilities, meeting rooms, or like facilities"; the District declared hotels' "conference facilities, ballrooms, and dining-in facilities of their restaurants" non-essential by name.²⁶¹ Q&A-11 states the rule: an employer "that maintains both essential and non-essential business operations ... may be considered to have a partial suspension of its operations if a governmental order restricts the operations of the non-essential portion of the business, even if the essential portion of the business is unaffected"; Q&A-17's Example 4 applies it to a hospital; the United States told the District Court that an employer is partially suspended "if it was required to suspend certain operations for certain purposes."²⁶² Tri-State applied the same rule to a hospital that never closed.²⁶³ A hotel that kept its rooms and lost its ballroom, its restaurant, its pool and its casino was open and partially suspended at once, and the statute asks only the second question.

The statute says nothing of the source or addressee of the order; it asks whether the order limited "commerce, travel, or group meetings."²⁶⁴ Q&A-10 itself lists "A State's emergency proclamation that residents must shelter in place" and "An order from a local official imposing a curfew on residents" as governmental orders, and the Service is bound to its Notice where it helps the taxpayer.²⁶⁵ The United States told the Ninth Circuit that "a business may be suspended 'due to' a government order addressing a third party."²⁶⁶ For this industry the orders "to the public" were the orders that emptied the rooms: the quarantine served on the guest at the airport and enforced in the room he rented; the proclamation that excluded the foreign traveler; the border notice that excluded the day visitor; the stay-at-home order that confined the customer. An order limiting travel is an order the clause names, whoever opens the envelope.²⁶⁷ The position that such orders are "not considered" has no text, no holding and no representation of the United States behind it.

Q&A-16's third factor answers the ground for this industry in the Service's own words: where "the employer's physical work space is so critical to its trade or business operations that tasks central to the trade or business's operations are unable to be performed remotely, then this factor alone indicates that the employer is not able to continue comparable operations."²⁶⁸ A room cannot be cleaned, a meal served, a banquet staged, a wager taken or a guest checked in from home. The telework that this industry did adopt, in its sales, reservations and accounting offices, was itself compelled by the stay-at-home and telework orders of 2020 and 2021 and is a suspension of the office function, not a substitute for the premises.²⁶⁹ Tri-State refused the premise that a business which kept operating under compelled protocols was not suspended: "the required protocols and procedures to comply with the Proclamation" were the suspension.²⁷⁰ The ground has no application to an operation whose product is a physical place.

Q&A-13 addresses an employer whose customers were "subject to a government order requiring them to stay at home or otherwise causing a reduction in demand" and who then chose to reduce operations; it does not address, and cannot exclude, an order that reached the employer's own operation through the customer.²⁷¹ A stay-at-home order on the guest is itself an order limiting commerce and travel, and the commerce it limited was the hotel's; the statute has no customer exception, and the United States has represented that the document carrying one "lacks the force of law." The Hawaii quarantine was served on the guest and executed in the hotel's room, whose operator was made responsible for housing positive guests; the New York City orders made the hotel the party that verified the traveler form and, in 2021, the party that checked the vaccination card; the cruise orders halted the guest's conveyance at the hotel's own pier; the border notices excluded the guest at the hotel's own city limits. These are orders limiting travel and commerce that suspended the hotel's operation of its rooms, restaurants and events because of the order; the statute asks nothing more, and the causation is but-for.²⁷² Q&A-13 is a gloss without force of law; the statute has no customer exception; and Tri-State held that on the United States' causation theory "there are not many businesses or any business that would be eligible under the ERC at all."²⁷³

Nothing in the layers, the quarters and the functions above was voluntary. The Maine innkeeper who closed on April 5, 2020 faced a Class E crime; the Delaware operator who took a leisure reservation faced enforcement action; the Nevada licensee who kept a machine running faced the Board; the Louisiana casino that admitted an unmasked patron on August 5, 2021 faced a citation; the New York City hotel that seated an unvaccinated diner on September 13, 2021 faced a $1,000 fine; the Hawaii hotel that did not file its Health and Safety Plan faced a misdemeanor; the airport concessionaire whose employee removed a mask faced TSA.²⁷⁴ The Notice provides that an order's status "is determined without regard to the level of enforcement," and these orders were enforced.²⁷⁵ Q&A-14 addresses an employer that closed with no order behind it; this industry closed, capped, distanced, screened and masked because the orders said so.

Q&A-14 reaches, by its own terms, only a suspension "not due to a governmental order," and the United States and the District Court have defined the excluded employer as one "not being ordered to do so."²⁷⁶ No employer in the eight principal States answered that description in any of the six quarters. The reopening orders permitted operation only on conditions, each with a penalty recited: 50 percent of listed occupancy in Texas, 20 percent of fire occupancy in Delaware, face coverings on every public-facing employee in Nevada, one of the workplace infection-prevention and exposure-control requirements Directive 018 imposed beside its distancing and sanitation conditions.²⁷⁷ The standing statutes commanded the same conduct independently, from Texas Health and Safety Code section 81.002 and Labor Code section 411.103 to Ohio's R.C. 3701.81(C), Wisconsin's section 101.11, Nevada's NRS 447.045, Florida's chapter 509, Arizona's section 23-403 and Missouri's section 292.300, and over all of them the general duty clause, 29 U.S.C. § 654(a)(1).²⁷⁸ The legislatures of Texas, Arizona, Florida and Nevada then fixed the standard of care as compliance with governmental standards, guidance and protocols.²⁷⁹ The safe-workplace statutes had no COVID-19 content until the health authorities said what a safe lobby, kitchen or gaming floor required; the measures were taken because those directives defined the duty and would not have been taken without them. "Due to" is but-for causation, and the causation here runs from the command to the measure without an intervening choice.²⁸⁰ The Notice agrees: a modification "required by a governmental order as a condition of reopening a physical space for business or service to the public" is a partial suspension due to the order, and the modifications it lists, "limiting occupancy to provide for social distancing" and "requiring employees and customers to wear face coverings," are the measures the Service now calls voluntary.²⁸¹ A statute that commands conduct is an order from an appropriate governmental authority; a legislature, a health department, a labor department and an occupational-safety agency are each such an authority; and the source of the command is irrelevant. The Service's premise under Q&A-14 is the absence of a command, and it fails wherever a command reached the employer, which in the public record is everywhere.

The ten percent figure is, in the United States' words, "a safe harbor," "not determinative," "not an eligibility requirement," and a line that "exists only as a safe harbor"; the District Court held it "not an exclusionary cut-off point"; and Tri-State held that the Notice "provides a method for the test to be met not as a requirement to meet the test."²⁸² Applied as a floor, it is a rule the United States has represented to two courts does not exist. Applied as a safe harbor, this industry clears it many times over: rooms revenue vanished for leisure guests in the closure States; food and beverage, the second revenue line, was closed to dine-in service in every State for weeks or months; group and catering revenue fell to zero under the gathering bans for a year or more; gaming revenue was zero while the shutdowns ran; accommodation employment fell by half; tourism output fell 47.4 percent in 2020.²⁸³ The hours-of-service measure gives the same answer, because the housekeeping, food-and-beverage, banquet and casino departments are the majority of the hours. Whether measured by the Service's deeming rules or by the statute's words, the portion suspended was more than nominal in every quarter.

Q&A-18 names "limiting occupancy to provide for social distancing," "changing the format of service (for example, restrictions on buffet or self-serve ...)" and "requiring employees and customers to wear face coverings" as modifications that constitute a partial suspension when their effect is more than nominal under the facts and circumstances; the sentence on masks and one-way aisles was first published on March 1, 2021 in a document that "lacks the force of law"; and the United States told the District Court that "employees having to wear face masks may impact business operations."²⁸⁴ For this industry the modifications were never masks alone; the face-covering rules were one element of workplace infection-prevention and exposure-control regimes that also compelled closed buffets, half-empty gaming floors, tables three players wide, spaced ballrooms, capped pools, screened entrances, verified traveler forms, checked vaccination cards and quarantined guests. Tri-State held that compelled protocols, screening and isolation are the suspension.²⁸⁵ The ground assumes a record of gloves and signage; the public record is one of closures, caps and conditions.

This analysis agrees, and cites no declaration as the limiting order. Every instrument in the layers and the quarters that carries the proof is an operative order: a closure, a cap, a quarantine, a ban, a face-covering rule, an entry condition, with an enforcement clause. The declarations are cited as predicates only, in the federal layer and, so marked, in the State table, because the orders recite them and because the instruments they kept alive are the orders relied on. The Q&A-10 point is the Service's, and it is satisfied.²⁸⁶

The statute contains no supplier rule and no attenuation rule; it asks whether an order limiting commerce, travel or group meetings caused the suspension, and Tri-State fixed the causation at but-for and refused the "proximate, independent and sufficient cause" gloss as one that "improperly adds words into the statute."²⁸⁷ AM 2023-005 states on its face that it "may not be used or cited as precedent," and Tri-State refused to consider one for that reason.²⁸⁸ The United States told the Ninth Circuit that the supplier rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier."²⁸⁹ For this industry the suppliers of guests, groups and labor were the airline, the cruise line, the border post, the convention center, the school and the consulate, and each was under an order that closed, halted or confined it: the No Sail Order closed the ship; the proclamations closed the entry; the convention-center closures closed the group; the visa suspension closed the labor channel.²⁹⁰ The suppliers were closed by order, and the orders are in the Library.

For the second quarter of 2020 through the second quarter of 2021 the ground has no factual basis: the State table and the six quarters section show orders in force in every State in every one of those quarters. For the third quarter of 2021 the ground is answered by the third quarter of 2021, subpart B, and the State and metro tables, which list the instruments in force on every day of the quarter (the conveyance, testing, entry, border, cruise and Title 42 orders; Hawaii's proclamations and quarantine; Kansas's quarantine; Louisiana's Order No. 24; Nevada's accommodation statute; Philadelphia's Full Reopening Order; New Mexico's June 30 order) and those issued inside it (the face-covering reinstatements, workplace infection-prevention and exposure-control requirements on every indoor public space, of the seven States and the District that required them of every person, the four States that required them of the unvaccinated, and more than thirty metros; the vaccination conditions of New York City, San Francisco, New Orleans, Honolulu, Puerto Rico and Guam; Hawaii's proclamation and caps; Honolulu's event closures; Nevada's and Louisiana's directives and gaming orders; the federal contractor orders).²⁹¹ The word "lingering" describes an effect without a cause; this analysis names causes with exhibit numbers. And where an order's compelled dismantling had not been restored by the quarter, the clause's grammar ("suspended during the calendar quarter"), Tri-State's "delay" and the Notice's own Q&A-22 and transition-period language make the continuing suspension a suspension during the quarter.²⁹² The ground describes a quarter in which no order was in force. That quarter did not occur.

The gross-receipts test is the second, independent prong of section 2301(c)(2)(A)(ii), and this analysis does not rely on it. Tri-State held the prongs independent "by Defendant's admission" and found "even Defendant's own argument is contradictory" in using the second to narrow the first.²⁹³ An employer that satisfies the Suspension Clause is an eligible employer whether or not its receipts fell, and Congress wrote two prongs because it meant two.

Every instrument on which the proof rests carries an operative command and an enforcement clause, and this analysis cites the advisory instruments of the period (the West Coast travel advisories, the New Jersey travel advisory, Alaska's 2021 health advisories, Ohio's and Kentucky's travel advisories) only as such and never as the order.²⁹⁴ The DECD Sector Rules were "legally binding and enforceable" by the Governor's order; the Nevada Board's notices were enforced under Regulation 5.011; the Louisiana Board's orders were license conditions under La. R.S. 27:15; the Washington Ready plan was incorporated by proclamation under RCW 43.06.220(5); the CDC's conveyance order carried criminal penalties; the TSA directives carried civil penalties; the Hawaii proclamations carried misdemeanor penalties under HRS § 127A-29.²⁹⁵ The Notice provides that an order's status "is determined without regard to the level of enforcement."²⁹⁶ The ground describes a record of pamphlets; the public record is one of orders.

This analysis agrees and applies it. An order, in ordinary meaning, is a command from an authority that must be obeyed. Every instrument on which the proof rests commands ("shall close," "shall be suspended," "shall be subject to mandatory self-quarantine," "shall cease operations," "shall not permit," "must wear," "is hereby suspended and limited," "are prohibited") and threatens a sanction for disobedience. The United States told the District Court that the qualifying instruments are "orders, proclamations, or decrees from the Federal government or any State or local government."²⁹⁷ The instruments here are orders in that sense and in every sense, and the ordinary meaning of the word admits them all.

The Service is free to disagree about the weight of these instruments. It is not free to say they did not exist.