Passenger Transportation and Travel Services

The sentence is the Service's form language on the suspension prong, and for this industry it is false in every quarter. In the second quarter of 2020 every State's schools were closed by order, forty-two States and territories, the District among them, confined their residents, at least twenty-one States quarantined travelers, every State but South Dakota capped gatherings, and the No Sail Order, the entry proclamations, the land-border notifications and the FFCRA mandate were federal law (Ex. FED-027; Ex. FED-200; Ex. FED-216; Ex. FED-170; the fifty States, above). In the third quarter of 2021 the federal conveyance order and its TSA directives governed every bus, taxi, ferry, school bus, aircraft and airport in the country (Ex. FED-020; Ex. FED-051; Ex. FED-052), the Conditional Sailing Order every cruise product (Ex. FED-031), the proclamations, testing order and border notifications every inbound traveler (Ex. FED-207; Ex. FED-208; Ex. FED-042; Ex. FED-232), DOT Order 2021-4-13 the airline network to the quarter's last day (Ex. AGY-AVIATION-SURFACE-035), Hawaii's and Kansas's mandates every traveler to those States (Ex. HI-023; Ex. HI-024; Ex. KS-057), and the 2021-22 school orders every school bus and driver in the largest States (Ex. NY-075; Ex. CA-033; Ex. WA-079; Ex. OR-052; Ex. IL-042; Ex. NJ-057). The Service does not say what record it consulted before writing that sentence; the Library is the record, and the six quarters section inventories it quarter by quarter. It is factually incorrect. It describes a period that did not occur.

The statute does not contain the word "essential," and the Notice's own Q&A-11 makes an essential employer eligible where "more than a nominal portion of its business operations are suspended by a governmental order" or where an order requires it "to close for a period of time during normal working hours."¹¹⁴ The transportation exemptions in the closure orders of 2020 were the premise of the conditions those orders imposed, not an exemption from them: New Jersey's essential carriers were capped at fifty percent with face coverings and back-door boarding wherever feasible (Ex. NJ-013); New York's for-hire vehicles were placed under a face-covering requirement and their pooled rides banned (Ex. NY-018; Ex. MET-NYC-004); California's, Colorado's, Indiana's, Ohio's and Wisconsin's taxis and ride-shares were placed by name under face-covering requirements, the exposure controls those States placed on the ride and its operator (Ex. CA-016; Ex. CO-031; Ex. IN-035; Ex. OH-030; Ex. WI-009); every school bus was idled by the school closure whatever the contractor's designation; every coach that "remained open" had no gathering to carry; and from February 1, 2021 the federal conveyance order applied to every operator without regard to any designation (Ex. FED-020). The CISA guidance on which the essential lists were built describes itself as "advisory in nature" (Ex. FED-394). An operator that remained open to carry masked passengers at capped capacity to venues that were closed was an operator whose operation was partially suspended by order; the designation that let it keep its doors open is the reason the conditions reached it. The Service's "essential" ground answers a question the statute does not ask.

The statute says nothing of the source of the order beyond "an appropriate governmental authority," and nothing of its addressee. It asks whether the order limited "commerce, travel, or group meetings," which describes the order's effect on the world, and a stay-at-home order is an order limiting travel in terms. The Notice's own Q&A-10 lists "[a] State's emergency proclamation that residents must shelter in place for a specified period" and "[a]n order from a local official imposing a curfew on residents" as orders that count, and the United States told the Ninth Circuit that "a business may be suspended 'due to' a government order addressing a third party" and told the District Court that the Service's interpretation of "governmental orders" "did not set eligibility requirements or narrow the ERC program."¹¹⁵ For this industry the addressee is always someone else: the school board, the host, the traveler, the cruise line, the airline, the resident. The order on each is the order on the route, the charter, the tour, the transfer, the shuttle and the fare (Ex. IL-005 ¶ 4: "All travel, including, but not limited to, travel by automobile, motorcycle, scooter, bicycle, train, plane, or public transit, except Essential Travel and Essential Activities ... is prohibited"). The gloss the Service applies rides on a document the United States has represented "lacks the force of law," and it contradicts that document's own list. It is not the statute.

"[A] business may be suspended 'due to' a government order addressing a third party."

Br. for Appellees at 41 & n.5

"First, the IRS's interpretation of 'governmental orders' did not set eligibility requirements or narrow the ERC program."

Doc. 44 at 13

A driver, a chauffeur, a deckhand, a pilot, a flight instructor and a mechanic cannot telework, and a coach, a school bus, a taxi, a ferry and an aircraft cannot be operated from a residence. The "comparable operations" language is not in the statute; it appeared in the Notice on March 1, 2021, eleven months after the second quarter of 2020 began; and Q&A-16's own third factor provides that 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," a factor that answers itself for every revenue function of this industry.¹¹⁶ The reservationist and the dispatcher who did work from home under the telework orders were performing the one function whose product is a booking for a trip the orders prevented; the Notice's Q&A-15 makes a workplace closed "for certain purposes, but not others" a partial suspension, and the United States told the District Court that an employer "could be considered to have a partial suspension due to the governmental order if it was required to suspend certain operations for certain purposes."¹¹⁷ The telework ground has no application to an industry whose operation is the movement of people.

"[A]n employer could be considered to have a partial suspension due to the governmental order if it was required to suspend certain operations for certain purposes."

Doc. 44 at 15

Q&A-13's exclusion is a Notice gloss, first stated in April 2020 for "an essential business that is not required to close its physical locations" claiming a suspension "for the sole reason" of its customers' order, and broadened without explanation on March 1, 2021 to every employer and to any "reduction in demand."¹¹⁸ It has no force of law, and it does not describe this industry's facts. The orders that reached this industry's customers reached the employer's own operation directly: the school closure order idled the contractor's route because the route's only cargo is the school day; the gathering ban cancelled the charter because the charter's only cargo is the gathering; the No Sail Order removed the transfer because the transfer's only cargo is the sailing's passenger; the quarantine order removed the tour because the tour's only product is the arrival. In each case the order operated on the employer's function, not on a customer's preference, and Q&A-12's own logic (a supplier suspended by order suspends the employer) applies with more force to an order that removes the object of the service than to one that delays an input.¹¹⁹ The Service's word for a cruise passenger who could not board under a federal order is "demand"; the statute's word is "orders," and Tri-State holds the test to be but-for causation, under which an order that removed the customer is the cause of the suspension.¹²⁰ The customer-exclusion ground mistakes the industry's product for its market.

Nothing this industry did in the period was voluntary in the Notice's sense. The route stopped because the school closed by order; the charter stopped because the gathering was banned by order; the passenger was refused because federal law and thirty-three States' exposure-control orders required a face covering; the shared ride was banned by order; the capacity was capped by order; the driver was tested or vaccinated by order; the cruise did not sail by order; the border was closed by order; the credential was extended by order because the office was closed by order. Tri-State refused the United States' argument that a hospital's changes were its own choices: the changes "were not voluntary," and "the required protocols and procedures to comply with the Proclamation" were caused by the order.¹²¹ The voluntary-measures ground has no object. Every modification this analysis relies on was compelled by an instrument with an operative clause and an enforcement provision, and the Notice's own Q&A-14 excludes only a suspension an employer chose in the absence of any order; no such suspension is relied on here. A position that calls a face covering refused by federal command, a route idled by a closure order and a ride capped by executive order "voluntary" describes a choice no employer in this industry had.

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," one that "chooses not to" continue comparable operations.¹²² No employer in this industry answered that description in any of the six quarters. The reopening orders permitted operation only on conditions with the force of law: in Texas, GA-28's occupancy clause and GA-29's face-covering clause under the § 418.173 penalty (Ex. TX-021; Ex. TX-022; Ex. DUT-TX-012), and in the other principal States the clauses quoted in the standing-duties layer above, with the fifty-one-State table at Nothing Was Voluntary for the rest. The standing statutes commanded the same conduct independently and would have commanded it had no order named a bus: the communicable-disease control acts ("Each person shall act responsibly to prevent and control communicable disease," Ex. DUT-TX-001; "All persons shall comply with control measures," Ex. DUT-NC-001), the emergency acts' penalties (Ex. DUT-TX-012; Ex. LAW-347), the workplace-safety duties (Ex. DUT-TX-013; Ex. DUT-NY-013; Ex. DUT-VA-005) and the general duty clause, enforced by citation from September 2020 (Ex. DUT-FED-001; Ex. LAW-487). The Texas Legislature then fixed the standard of care as compliance with "government-promulgated standards, guidance, or protocols" for every action commenced on or after March 13, 2020 (Ex. DUT-TX-015), and the States that enacted no shield left the orders and the safety statutes as the standard of care itself (the standing duties, above). The safe-workplace statute had no COVID-19 content until the health authorities said what a safe workplace required; the dividers, the sanitizing between fares, the screening of drivers and the face covering on the ride 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.¹²³ The Notice's own words confirm it: 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.¹²⁴ A statute that commands conduct is an order from an appropriate governmental authority, and the Service's premise fails wherever a command reached the employer. In this industry a command reached every employer, in every State, on every day.

The ten percent figure is not in the statute. It first appeared on March 1, 2021 in the Notice; the FAQs as posted on April 29, 2020 contained no nominal test and no percentage, and the words "more than a nominal" first appeared on June 19, 2020; the United States has told the District Court that it "isn't an eligibility requirement" and is "[e]ffectively ... a safe harbor," has told the Ninth Circuit that it is "a quintessential safe harbor," "a safe harbor rather than a hard floor," stating conditions that are "sufficient" and "not necessary," and the District Court held that it "is not an exclusionary cut-off point"; Tri-State held that the Notice "provides a method for the test to be met not as a requirement to meet the test" and that reading the figure as a requirement "would read requirements into the statute that do not exist."¹²⁵ This analysis holds the United States to that account. A letter that decides a claim on the figure applies as a floor what the United States told two courts is a safe harbor. And the showing for this industry exceeds the safe harbor many times over on the orders' own terms: the charter, school-route, cruise-transfer and tour functions were suspended entirely for the whole of the second quarter of 2020 by order; the school-route function ran at ordered fractions for four more quarters; the cruise product was removed for fifteen months and the foreign product for twenty; the airline network was fixed by order for roughly thirteen months. The Service's own instruments administer the figure as a floor (AM 2023-007 at 12; the current FAQ page), and the inconsistency between that administration and the United States' representations is set out at The Government's Own Words. "More than nominal" is not "significant," and neither word is in the statute; Tri-State said so.¹²⁶

"The 10 percent is not determinative for whether an employer has been partially suspended. ... Effectively, this is a safe harbor ... Properly understood, it isn't an eligibility requirement."

Doc. 44 at 14

"That is a quintessential safe harbor. In reading the 10 percent provision otherwise, [the plaintiff] erroneously swaps an 'if' with an 'only if.'"

Br. for Appellees at 37-38

The Notice's sentence concerns "[m]odifications altering customer behavior (for example, mask requirements or making store aisles one way to enforce social distancing)" in a store, and Q&A-18's own list of modifications that are partial suspensions includes "limiting occupancy to provide for social distancing" and "requiring employees and customers to wear face coverings."¹²⁷ The sentence first appeared March 1, 2021, has no force of law, and does not describe the orders on this industry. The federal conveyance order did not ask a passenger to wear a mask in a store; it made the operator of every conveyance an enforcer required to refuse boarding, to disembark passengers en route and to post that "Federal law requires wearing a mask," with TSA directives carrying civil penalties for the operator's failure (Ex. FED-020; Ex. FED-050; Ex. FED-051; Ex. FED-052). New Jersey's EO 125 capped every private carrier at fifty percent of capacity (Ex. NJ-013); Louisiana's BESE rule capped school buses at twenty-five, fifty and seventy-five percent by phase (Ex. LA-072); Nevada's Directive 038 capped them at sixty-six percent (Ex. NV-033); New York City banned the shared ride (Ex. MET-NYC-004); the quarantine, testing and vaccination orders on drivers removed them from the route (Ex. NY-075; Ex. WA-079). None of these is a one-way aisle. The masks-and-aisles sentence answers an argument this analysis does not make about orders this analysis does not rely on.

A declaration that limits nothing is cited here as what it is, the predicate on which the operative orders rested; a proclamation that limits travel or meetings in terms is an order whatever its caption, and this analysis cites it as one. The emergency declarations and public health emergency determinations are cited for what they prove: that every issuing government treated the emergency as continuing on every day of the six quarters, which is the predicate on which the operative orders rested (the third quarter of 2021, B-17; Ex. LAW-246; Ex. LAW-247). The orders relied on are the closures, caps, quarantines, face-covering and conveyance orders, service orders, border notifications and school orders inventoried in the layers and quarters sections, each with its operative clause and enforcement mechanism. Where an emergency proclamation itself carried operative terms, as Hawaii's did (face coverings, quarantine, caps, employee testing) (Ex. HI-023; Ex. HI-024) and Alaska's mandates did (Ex. AK-012; Ex. AK-014), the operative terms are relied on and the declaration is the vehicle. The ground has nothing to attach to.

AM 2023-005 is a Chief Counsel memorandum that "may not be used or cited as precedent," and the United States told the Ninth Circuit that the supplier rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier."¹²⁸ This industry's suppliers were closed or limited by order in terms: the cruise lines by the No Sail and Conditional Sailing Orders (Ex. FED-027; Ex. FED-031); the airlines by the DOT network orders (Ex. AGY-AVIATION-SURFACE-028; Ex. AGY-AVIATION-SURFACE-035); the schools by the closure orders of every State; the venues by the gathering and closure orders; the motor-vehicle offices that issue the industry's credentials by the orders and emergency closures that shut them (Ex. NY-002; Ex. AGY-ST-DMV-SOS-RECORDERS-076; the closures recorded in Ex. AGY-ST-DMV-SOS-RECORDERS-018); the bus and coach plants by the manufacturing closures of Michigan, Indiana, Pennsylvania and New Jersey (Ex. MI-011; Ex. IN-006; Ex. PA-004; Ex. NJ-004). Attenuation is a proximate-cause concept, and Tri-State held that the United States' "proximate, independent and sufficient cause" formulation "improperly adds words into the statute"; the test is but-for.¹²⁹ Where the supplier's order is the reason the product did not arrive, the employer's suspension is due to the order; a memorandum that "may not be used or cited as precedent" cannot write into the statute the proximate-cause test the United States proposed in Tri-State and the court refused.

For every quarter of the period the orders had not lifted; the six quarters section inventories the instruments in force on the first and last day of each, and the third quarter of 2021 above lists seventeen classes of instrument in force during the quarter, fourteen on July 1, 2021 and all seventeen on September 30, 2021, with three federal directives renewed and dozens of State and metropolitan orders issued inside the quarter. The federal conveyance order was renewed September 14, 2021 (Ex. FED-052); the Conditional Sailing Order ran to November 1, 2021 (Ex. FED-031; the post-period extension of October 25, 2021, Ex. FED-033, reciting the November 1 expiry); the proclamations and borders to November 8, 2021 (Ex. FED-209; Ex. FED-236); Hawaii's quarantine regime through the quarter and beyond (Ex. HI-024; Ex. HI-029); Kansas's to November 18, 2021 (Ex. KS-057); the 2021-22 school orders through the school year. Where an order did end inside a quarter, the statute's grammar ("suspended during the calendar quarter," not "orders in effect during the quarter"), Tri-State's definition (a suspension includes a "delay") and Q&A-22 (an employer suspended "during a portion of a calendar quarter is an eligible employer for the entire calendar quarter") each make the quarter a claimable quarter, and the orders' own phase steps fix the restoration arithmetic (the interconnected economy, above).¹³⁰ The Service's account of a school-bus contractor operating on September 30, 2021 under the federal conveyance order, a State school face-covering order, a quarantine rule and a driver-testing regulation is that the orders governing it had ended before the quarter began. The orders had not ended. It is factually incorrect.

The gross-receipts prong is a separate, alternative test; a claim under the Suspension Clause does not depend on it and is not measured by it. Congress joined the two prongs with "or"; the United States admitted in Tri-State that the gross-receipts test is "another method to qualify," and the court held that "the fact an employer can be eligible and affected without partial or full suspension is reasonable" and refused the argument that one prong narrows the other.¹³¹ Congress placed its numerical thresholds in the gross-receipts prong alone and wrote none into the Suspension Clause, and the omission is presumed intentional.¹³² A letter that decides a suspension claim by reference to gross receipts decides a claim the employer did not make.

This analysis cites as orders only instruments with operative clauses and enforcement mechanisms, and it describes agencies' service announcements as the context of the orders they implemented, never as orders (the layers and quarters sections). The instruments relied on are executive orders, proclamations, public health orders, regulations in the Federal Register and State registers, statutes, security directives, emergency orders and court orders, each carrying a sanction: the conveyance order under 42 U.S.C. § 271 with TSA civil penalties (Ex. FED-020; Ex. FED-050); the FRA order with a penalty of $118,826 per day (Ex. AGY-AVIATION-SURFACE-014); Hawaii's quarantine as a misdemeanor (Ex. HI-003; Ex. HI-031); Alaska's Mandate 010 with a $25,000 fine or a year's imprisonment (Ex. AK-012); Connecticut's travel order with a $1,000 civil penalty (Ex. CT-023); New York's EO 205 with a penalty up to $10,000 (Ex. NY-006); Maine's quarantine as a Class E crime (Ex. ME-013); Virginia's face-covering order as a Class 1 misdemeanor (Ex. VA-012); Oregon's school face-covering rule at $500 per day (Ex. OR-045); Texas's GA-29 with $250 fines (Ex. TX-022); New York's regulations under Public Health Law § 12 (Ex. NY-072); Illinois's EO 2021-18, which its Superintendent told every district "has the force of law" (Ex. AGY-ST-EDUCATION-HIGHER-ED-032). Where a State converted its orders to guidance, this analysis says so and does not rely on the guidance (Alaska from May 22, 2020; Arkansas from February 26, 2021; Texas from March 10, 2021; Mississippi from March 3, 2021; Arizona from March 25, 2021). The Notice itself provides that whether an instrument is a governmental order "is determined without regard to the level of enforcement."¹³³ The Service's "guidance" label, applied to instruments that recite their statutory authority and carry criminal or civil sanctions on their face, cannot be squared with the instruments' own text; the Service does not say what record it consulted before applying it.

"The Notice ... is merely guidance ... lacks the force of law."

Doc. 44 at 19

"Whether Notice 2021-20 exists or not, the statute will control whether a refund is warranted."

Doc. 44 at 24

Agreed. An order is "[a]n authoritative indication to be obeyed; a command or direction," and in March 2020 usage a governmental order is a directive issued by a governmental authority under its legal power that requires or forbids conduct.¹³⁴ Applied to the instruments listed in the layers and quarters sections, every one is an order in that sense: each is issued by an authority reciting its statutory power, each requires or forbids conduct (close, stay home, quarantine, wear a mask, refuse boarding, cap capacity, maintain scheduled service, cease sailing, limit entry to essential travel, test weekly, vaccinate), and each carries a sanction. The Notice's own definition, which the District Court called "a natural interpretation of the plain meaning of the statutory text," is "orders, proclamations, or decrees from the Federal government or any State or local government" that limit commerce, travel or group meetings, "determined without regard to the level of enforcement."¹³⁵ The ordinary meaning of "order" is the meaning this analysis applies, and it applies it to instruments that satisfy it on their face.

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