The interconnected economy and the broken leg
A manufacturer's operation was suspended in part by orders addressed to its suppliers, its customers, its carriers, its workers' schools and its own technical office as surely as by orders addressed to its plant, because the statute asks whether "the operation of the trade or business" was suspended "due to orders," not whether the employer was the addressee; because "due to" means but-for; and because a suspension, on the definition the United States agreed to and the court in Tri-State adopted, includes a "delay," which does not end on the day the order that caused it expires. This section states the six mechanisms by which the orders reached the operation of a manufacturer, applies the Notice's own supplier rule to them, and then states the continuing-suspension analysis from the clause's grammar, from Tri-State, from the Notice and from the orders' own restart steps, never from any employer's private figures.
The six mechanisms
An order limiting commerce, travel or group meetings reaches a manufacturer's operation by six routes, each of which is a chain of orders and not a chain of economic effects. First, the order on the plant: a closure, a restart condition, a workplace standard, a face-covering and exposure-control order. Second, the order on the supplier: the closure of the tier plant, the barring of its engineers at the border, the diversion of its output by federal priority. Third, the order on the customer: the closure of the dealership, the postponement of the hospital's procedures, the cap on the restaurant, the shutting of the school, the barring of the Canadian buyer at the border. Fourth, the order on the carrier and the port: the FRA's order on the rail yard, the FEMA rule on the export, the federal conveyance order on the truck driver at the gate and, as the Coast Guard's bulletins applied it, at the sea port. Fifth, the order on the workforce: the school closure, the child-care rule, the quarantine directive, the transit order, the stay-home order. Sixth, the order on the place of transaction: the closed convention center, the capped meeting room, the closed courthouse, the closed recorder's office, the entry proclamation on the trade-show attendee. The layer, quarter and function sections collect the instruments under each route by quarter; this section states why each route is a route the statute recognizes.
The text recognizes them
The clause asks whether "the operation of the trade or business ... is fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings." The subject is the operation; the cause is orders; the orders are described by what they limit, not by whom they address. An order that closes a customer limits commerce; an order that bars a supplier's engineer at the border limits travel; an order that caps a show hall at fifty limits group meetings for commercial purposes. When such an order causes a portion of a manufacturer's operation to be delayed, interrupted or terminated, the statute's every element is met. The statute says nothing of the source of the order, nothing of its addressee, and nothing of the number of steps between the order and the operation; it asks whether the operation was suspended "due to" the order, and Tri-State holds that "due to" means but-for.167
The Notice recognizes them
Q&A-12 is the Service's own statement of the second route: "An employer may be considered to have a full or partial suspension of operations due to a governmental order if, under the facts and circumstances, the business's suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations," and its example is an automobile parts manufacturer whose supplier is closed by order and who "would be considered an eligible employer during this period because its operations have been suspended due to the governmental order that suspended operations of its supplier." Nothing in Q&A-12 confines the rule to the second route. The United States told the Ninth Circuit that "a business may be suspended 'due to' a government order addressing a third party (such as an order that suspends the operations of a supplier of the business)," an example introduced by "such as," and that the rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier." Q&A-19's food-processing example (Employer K, whose 24-hour plant is ordered by the local health department to deep clean once every 24 hours and reduces its operating hours to comply) is the first route, an order on the plant that the Notice itself calls a partial suspension; Q&A-16's third factor (a work space "so critical to its trade or business operations that tasks central to the trade or business's operations are unable to be performed remotely," with "manufacturing involving special equipment or materials" as its named example) is the sixth; Q&A-17 and Q&A-18's face-covering and spacing modifications are also the first.168
The United States recognizes them
In Tri-State the United States argued that the hospital's protocols were caused by the virus and not by the order, and the court held that "the required protocols and procedures to comply with the Proclamation" were caused by the order, that "[s]ick patients and employees alone did not require additional protocols," and that on the United States' theory "there are not many businesses or any business that would be eligible under the ERC at all." The same answer disposes of the position that a supplier's or a customer's closure is the virus's doing: the supplier's plant was closed by an order that named it, the customer's dealership by an order that named it, the border by a notification that named it. But for the order, no law closed them; but for their closure, the manufacturer's inbound parts and outbound sales ran on schedule. The chain is a chain of orders.169
The counterparty order as an order
The Service's letters treat an order on a third party as an "effect" rather than an order. The distinction has no footing in the text. The order on the supplier is an order; it is from an appropriate governmental authority; it limits commerce; it is due to COVID-19. The only question the statute leaves is whether the manufacturer's operation was suspended in part because of it, and that question is answered by the orders' own terms: a plant that cannot receive a critical part cannot build the assembly that uses it; a plant whose customer is closed cannot ship. The Notice's supplier rule is a recognition of that logic and not a limit on it. The layer section lists the counterparty orders in force each quarter (the State elective-procedure orders (Ex. NY-005; Ex. NJ-006; Ex. TX-004; Ex. OH-007; Ex. MN-005; Ex. PA-025); the school orders (Ex. LAW-212); the dealership, construction and hospitality closures; the carrier and port orders (Ex. FED-020; Ex. AGY-AVIATION-SURFACE-014); the entry proclamations and border notifications (Ex. FED-200 through Ex. FED-209; Ex. FED-220 through Ex. FED-236)); the function section applies them function by function.170
Causation
But-for
Tri-State holds that "due to" requires but-for causation and that the United States' "proximate, independent and sufficient cause" formulation "improperly adds words into the statute." The but-for test asks whether, absent the order, the law would have required the change. For every modification described in the quarter and function sections the answer is the same: no law required a Michigan plant to close on March 24, 2020 but Executive Order 2020-21 (Ex. MI-011); no law required its restart to wait until May 11 and to run under daily screening, dedicated entry, suspended tours and staggered shifts but Executive Order 2020-77 (Ex. MI-026); no law required a New Jersey manufacturer to telework its office and to cap its worksite meetings at ten but Executive Orders 107 and 122 (Ex. SEC-10-023; Ex. SEC-10-020); no law required a California employer to exclude an exposed worker on pay but 8 C.C.R. § 3205 (Ex. SEC-10-039; Ex. SEC-10-041); no law required an Oregon factory to require face coverings of every worker in August 2021, one of the airborne-transmission controls of OAR 333-019-1025 and Administrative Order 10-2021, but those instruments (Ex. OR-048; Ex. SEC-10-056); no law required a technician to wear a face covering on every flight from February 1, 2021, the airborne-transmission control of the conveyance order, but that order (Ex. FED-020); no law barred a Canadian engineer from crossing at Detroit on travel the notifications did not exempt but the monthly notifications (Ex. FED-233; Ex. FED-234; Ex. FED-235). The orders are the but-for cause of the modifications on their face.171
The virus is not the alternative cause
The United States' argument in Tri-State, that the employer would have taken the same steps regardless, was refused on the ground that the order, not the illness, "required" the protocols. The point is stronger for a manufacturer than for a hospital: a hospital treats the sick, and the virus reached it directly; a plant's floor was closed, reopened on conditions, masked, distanced, screened and told which workers to send home by orders that named the conditions in numbered paragraphs. The Notice agrees that a change made under an order is caused by the order and that a change made without one is not (Q&A-14: an employer that "voluntarily suspends" without an order is not suspended); the corollary is that a change made under an order is a change the order caused.172
A suspension shared by every employer is still a suspension
In Tri-State the United States asked the court to read into "partial suspension" a requirement that the disruption be significant and exceed what every employer experienced in the pandemic; the court refused, holding that "Defendant attempts to conflate 'more than nominal' to suggest that it means 'significant'" and that "the plain language and ordinary meaning of partial and nominal do not suggest either of those interpretations," and that a ten percent requirement "would read requirements into the statute that do not exist." Congress wrote a clause whose every element is met by every employer under an order that suspended a portion of its operation, and paired it with a gross-receipts prong for those who were not; the court held the prongs independent "by Defendant's admission." That every manufacturer in Michigan was closed on March 24, 2020 does not make any one of them less closed.173
Continuing suspension
The grammar
The clause reads: "the operation of the trade or business ... is fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority." The adverbial phrase "during the calendar quarter" modifies the verb phrase "is ... suspended." It asks when the operation was suspended. It does not modify "orders," and Congress did not write "due to orders in effect during the calendar quarter" or "due to orders issued during the calendar quarter." When Congress wants to tie eligibility to the period in which a governmental act is in force it says so; here it tied eligibility to the period in which the operation was suspended and required only that the suspension be "due to" an order. An operation that an order terminated in one quarter and that had not been restored in the next is "partially suspended during" the next quarter "due to" that order, on the words as written.174
The definition
In Tri-State the United States agreed, and the court held, that a "suspension" is "[t]he act of temporarily delaying, interrupting, or terminating something," and that "a 'partial suspension' is a temporary delay, interruption, or termination of a portion an employer's business. The language is plain." A delay is by definition a period after the event that caused it. An order that closed a plant for seven weeks and then let it reopen on conditions delayed everything the plant would have done in those seven weeks into the weeks that followed; the delay ran until the plant had done it, and the plant had not done it on the day the order lapsed. The court's definition makes the delay itself the suspension, and the delay is "during" every quarter in which it persists.175
The Notice's own recognition
The Service's guidance recognizes both halves of the point. Q&A-22: "An employer with business operations that are fully or partially suspended due to a governmental order during a portion of a calendar quarter is an eligible employer for the entire calendar quarter." The suspension need not fill the quarter; a day suffices. Q&A-16(4): where an employer moves its operations under an order, "some adjustment period is expected," and where the employer "incurs a significant delay (for example, beyond 2 weeks) in moving operations," its operations "may be deemed subject to a partial suspension during that transition period." The transition period is the period after the order's compulsion in which the operation is restored to its ordinary course; the Notice treats it as a suspension.176
What the orders compelled this industry to dismantle
The closure orders of March 2020 did not pause a plant; they emptied it. In the six weeks that followed, the industry laid off or furloughed 1,361,000 workers (10.7 percent of its February payroll) because the orders left no work for them; the Federal Reserve recorded a 13.7 percent fall in manufacturing output in April 2020, "its largest decline on record," motor-vehicle and parts output down more than 70 percent, and capacity utilization at 64.9 percent. Plants cancelled orders for materials; suppliers laid off the workers who would have made them; customers cancelled the purchase orders the plants were building against; the trade-show calendar for the year was withdrawn; field-service and installation crews were grounded; inventories of finished goods were run down and inventories of parts were not replenished. The Federal Reserve's account of what followed is the mechanism in a sentence: "Companies laid off workers, idled plants, and canceled orders for materials ... by late 2020, factories in some industries were scrambling to find the workers, parts, and materials." The Service's letters assume that on the day a closure order lapsed a plant that had done these things was operating in its ordinary course. It was not, and the reason it was not is the order that made it do them.177
The time the orders' own steps took
The restoration was itself ordered, in steps whose dates the orders fix. Michigan: closed March 24, 2020; manufacturing restarted 12:01 a.m. May 11, 2020 under section 11(k)'s safeguards; the safeguards ran as gubernatorial orders through Executive Order 2020-184 to October 2, 2020, as MDHHS orders from October 5, 2020, and as MIOSHA emergency rules from October 14, 2020, with in-person work prohibited "to the extent that their work activities can feasibly be completed remotely" until May 24, 2021 and the rules rescinded June 22, 2021; indoor non-residential gatherings prohibited outright from November 18, 2020 into January 2021 (Ex. MI-011; Ex. MI-026; Ex. MI-031; Ex. SEC-10-024; Ex. AGY-ST-LABOR-WORKPLACE-062; Ex. MI-054; Ex. MI-050; Ex. MI-059; Ex. MI-060; Ex. ECO-B-076; Ex. MI-062; Ex. MI-063; Ex. AGY-ST-LABOR-WORKPLACE-063; Ex. MI-076). Pennsylvania: closed March 19, 2020 (effective 8:00 p.m.); the Worker Safety Order from April 19; reopened by county in the yellow phase from May 8 to June 5, 2020 (the southeast last) under the Order's conditions; telework "[u]nless not possible" from July 16, 2020 and "[u]nless impossible" from November 27, 2020 (the order of November 23) to April 3, 2021; the face-covering and exposure-control order to June 28, 2021 (Ex. PA-002; Ex. PA-003; Ex. PA-008; Ex. PA-010; Ex. PA-016; Ex. PA-022; Ex. PA-035; Ex. PA-100). New York: 100 percent in-person reduction from 8:00 p.m. March 22, 2020; Phase 1 manufacturing by region from May 15 to June 8, 2020 under Interim Guidance limiting occupancy to 50 percent; Red-zone remote mandates from October 2020; capacity and distancing lifted June 15, 2021; HERO Act plans mandatory August 5 and activated September 6, 2021 (Ex. NY-002; Ex. NY-003; Ex. SEC-10-026; Ex. NY-005; Ex. NY-106; Ex. NY-008; Ex. SEC-10-028; Ex. SEC-10-031). New Jersey: telework and minimum staffing from 9:00 p.m. March 21, 2020; manufacturing protocols from 8:00 p.m. April 10, 2020; every in-person employer's protocols from 6:00 a.m. November 5, 2020; both rescinded June 4, 2021 (Ex. SEC-10-023; Ex. SEC-10-020; Ex. SEC-10-021; Ex. SEC-10-022). Illinois: critical products only from 5:00 p.m. March 21, 2020; manufacturers under distancing and masking from May 1; Phase 3 May 29; Phase 4 June 26, 2020 with venues at fifty; Tier 3 from November 20, 2020 with venues closed and non-production staff remote; Phase 5 June 11, 2021; face-covering and exposure-control requirements again from August 30, 2021 (Ex. SEC-10-034; Ex. SEC-10-035; Ex. SEC-10-037; Ex. SEC-10-038; Ex. IL-037; Ex. SEC-10-036). Minnesota: non-critical manufacturing workers home from 11:59 p.m. March 27, 2020; back from 11:59 p.m. April 26, 2020 only with a Preparedness Plan; "Workers who can work from home must continue to do so" from May 18, 2020; work from home "whenever possible" from November 20, 2020; every business under a Plan to 11:59 p.m. June 30, 2021 (Ex. MN-010; Ex. MN-015; Ex. SEC-10-044; Ex. SEC-10-045; Ex. MN-032; Ex. MN-038). Massachusetts: physical workplaces closed from noon March 24, 2020; Phase I May 18, 2020 under the Mandatory Safety Standards and the manufacturing checklist ("Face coverings are required for all workers"); 25 percent from December 26, 2020 to February 8, 2021, with the Phase III Step 1 rollback from December 13, 2020 to March 1, 2021 (Ex. MA-040; Ex. MA-039); standards and face-covering and exposure-control order to May 29, 2021 (Ex. MA-008; Ex. SEC-10-046; Ex. MA-048). Kentucky: non-life-sustaining businesses closed from March 26, 2020; manufacturing reopened May 11, 2020 under Requirements the business "must meet ... in order to reopen and remain open" (six feet "for their entire shift"; "minimal interaction between drivers at loading docks"); offices to telework or 33 percent from November 20 to December 13, 2020; requirements ended June 11, 2021 (Ex. KY-010; Ex. SEC-10-051; Ex. SEC-10-053; Ex. KY-033; Ex. KY-049). Washington: closed 11:59 p.m. March 25, 2020; Phase 1 manufacturing from May 2020 under requirements made workplace law by L&I; office 25 percent from November 17, 2020; Phase 3 caps to June 30, 2021; face-covering and exposure-control requirements again from August 23, 2021 (Ex. WA-016; Ex. WA-034; Ex. AGY-ST-LABOR-WORKPLACE-050; Ex. WA-047; Ex. WA-065; Ex. WA-078). California: closed March 19, 2020; Stage 2 manufacturing from May 8, 2020 under mandatory industry guidance; offices remote in Purple and Red from August 31, 2020; Regional order issued December 3, 2020, effective in the first regions December 6, 2020, to January 25, 2021; Cal/OSHA standard from November 30, 2020, readopted June 17, 2021 and in force through the period; Blueprint ended June 15, 2021 (Ex. CA-007; Ex. CA-008; Ex. CA-015; Ex. CA-055; Ex. CA-020; Ex. SEC-10-039; Ex. SEC-10-041; Ex. CA-027). Oregon: Executive Order 20-12 from March 23, 2020; county tiers from November 2020; the workplace rule from November 16, 2020 made permanent May 4, 2021 and never lifted in the period (its general distancing and face-covering provisions suspended June 30 to August 12, 2021, Ex. OR-044, and restored August 13, Ex. SEC-10-056); caps ended June 30, 2021 (Ex. OR-007; Ex. OR-035; Ex. OR-043; Ex. SEC-10-054; Ex. SEC-10-055). Virginia: Executive Order 53 from March 24, 2020; Phase 1 May 15, 2020 under Executive Order 61; Executive Order 72's curfew from December 14, 2020 to February 28, 2021 and its gathering, face-covering and venue rules as amended to midnight May 28, 2021; the Emergency Temporary Standard from July 27, 2020, permanent from January 27, 2021 and in force through the period (Ex. VA-004; Ex. VA-010; Ex. VA-016; Ex. VA-033; Ex. VA-017; Ex. SEC-10-042; Ex. SEC-10-043). In every closure State other than New Mexico (July 1, 2021) and Hawaii (December 1, 2021 and March 25, 2022) the last general step came off between April 3 and June 30, 2021; in four States the workplace standard never came off. A dining room ordered closed in March 2020 and reopened at 25, 50 and 75 percent reached 100 percent in the spring or summer of 2021; the manufacturing floor reached the end of its restart conditions in the same months, and in California, Oregon, Virginia and, from August, New York it did not reach that end at all.178
What the arithmetic shows
The restoration of a plant's operation after fourteen months under a restart order is not the flip of a switch. Workers laid off in April 2020 had to be rehired, and the industry was 350,000 workers short of its February 2020 payroll on September 30, 2021; suppliers whose own restart ran on the same steps had to rebuild the inventories they had run down, and the Federal Reserve's account of mid-2021 records factories "scrambling to find the workers, parts, and materials"; customers whose purchasing had been suspended by their own orders had to resume it; shows withdrawn from in 2020 were not held until late 2021; a border closed since March 21, 2020 did not admit a Canadian customer's engineer until November 8, 2021. The Service's position is that on the morning after the last order lapsed each of those things was already done. The orders' own steps show that they had barely begun. An employer whose operation was ordered suspended through June 30 was not walking normally on July 1.179
The four pathways stated
Continuing suspension reaches every later quarter by four independent routes, each sufficient. First, the orders in force in the quarter itself: in the third quarter of 2021 the federal general layer, the four State workplace standards, the face-covering and exposure-control orders, the school, child-care and quarantine orders, the sector regulators and the counterparty orders collected in the third-quarter section. Second, the orders issued inside the quarter: the reinstated face-covering and exposure-control orders, the HERO Act activation, the Oregon and Virginia amendments, the vaccination-proof conditions. Third, the counterparty orders in force in the quarter: on the industry's suppliers abroad and across the border, on its health-care, school, federal and hospitality customers, on its carriers and ports. Fourth, the restoration period the orders' own steps compelled, measured from the dates above. The finding for each quarter rests on all four; the closing paragraph of the third-quarter section names the expired instruments on which it does not rest, so that no reader mistakes the fourth route for a claim that an expired order was in force.
What the Service's contrary position requires
To hold that a manufacturer's operation was not suspended in the third quarter of 2021 the Service must hold that an operation closed by order for seven weeks, reopened on conditions for fourteen months, and released from the last condition between one day and thirteen weeks before the quarter began was in its ordinary course on July 1; that the federal orders on every flight, every border crossing, every port and every federal customer that were in force on every day of the quarter were not orders; that the workplace standards of California, Oregon and Virginia and the plans of New York were not orders; that the face-covering and exposure-control orders of seven States, the District and thirty cities and counties were of nominal effect; and that the orders on the industry's suppliers, customers, carriers and workforce were effects rather than orders. Each of those propositions is answered above from the text, from Tri-State and from the instruments. The United States has told two federal courts that the statute controls, that a suspension is a delay, that "due to" is but-for and that an order on a third party is an order; The COVID Project holds the United States to those positions, and the orders do the rest.180