Rental and Leasing

For every quarter, the six-quarters section lists the orders in force on the quarter's first and last day, by issuer, date and terms, with exhibit identifiers, and the State, metro, federal and quarter tables on this page tabulate them. For the third quarter of 2021 alone the list runs to the federal conveyance, security, entry, border, Title 42, testing, minimum-service, workplace and site-access orders, Hawaii's proclamations, quarantine and gathering caps, Kansas's quarantine, the workplace standards of seven States, the universal indoor face-covering orders, with the exposure-control duties they carried, of seven States and the District and of the local jurisdictions listed in the third-quarter section, subpart B-10, in twenty-three of the forty metropolitan areas, the courthouse, government-building, school and personnel orders of the metros listed there (eight of which imposed face-covering and screening conditions on entry to their courthouses and government buildings), the vaccination-proof conditions of four cities, the school and quarantine orders of at least eighteen States, and the sector orders issued under thirty-five continuing emergencies.²³⁶ A form sentence that no orders were in effect is not the "case-by-case" determination on "facts and circumstances" the United States described to the District Court.²³⁷ The sentence describes a quarter that did not occur, and the Service's records, whatever they contain, do not contain the Federal Register.

The word "essential" is not in the statute. The designations that named "vehicle rental services" essential in Illinois, Ohio, Hawaii, Montana, Colorado and Alabama sat inside orders that confined the public to essential travel and permitted the counter to serve "Essential Activities" and no others; they were the premise of the conditions the orders imposed, never an exemption from them, and where the designation was withheld (Michigan, New Jersey, New York) the counter closed.²³⁸ Pennsylvania's list marked the rental yard "Yes" and its construction customers "No," so the yard stayed open in a Commonwealth in which the job sites its machines earn on were ordered to cease.²³⁹ The Notice itself provides that an employer so designated "may be considered to have a partial suspension of operations if, under the facts and circumstances, more than a nominal portion of its business operations are suspended by a governmental order," 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."²⁴⁰ The industry's own filings state the point: "Our business was deemed essential and was allowed to remain open, however, many industries in which our customers operate were required to temporarily close their facilities or delay or cancel projects and events."²⁴¹ An employer that "remained open" under orders that closed its customers' sites, confined its customers to their homes, prohibited its customers' events and closed the offices through which its fleet is titled was partially suspended by those orders. The position reads a label the statute does not mention as an exemption the orders did not grant.

The statute says nothing of the source or addressee of the order; it asks whether the order limited "commerce, travel, or group meetings." The Notice's own list of qualifying orders includes "[a] State's emergency proclamation that residents must shelter in place" and "[a]n order from a local official imposing a curfew on residents," both addressed to the public, and the United States quoted that list to the District Court as the statute's meaning and told the Ninth Circuit that a business "may be suspended 'due to' a government order addressing a third party."²⁴² The stay-at-home orders that reached this industry were, moreover, directed at its commerce in terms: "All travel ... except Essential Travel and Essential Activities ... is prohibited" is an order on the customer of every vehicle renter in Illinois, and "cease participation in public or private gatherings ... regardless of the number of people involved. This includes, but is not limited to, weddings, faith gatherings, graduations, and funeral events" is an order on the customer of every event renter in Alaska.²⁴³ Kauai's Rule 15 was addressed to rental car companies by name.²⁴⁴ The position rewrites the statute and misdescribes the orders.

"Comparable operations" and "telework" are not in the statute; Tri-State defines a partial suspension as a temporary delay, interruption or termination of a portion of the business.²⁴⁵ A rental yard cannot deliver an excavator, wash a car, erect a tent or hand over a set of keys by telephone; the Notice's own Q&A-15, Example 2, finds partial suspension where "employees cannot access specific equipment or tools that they typically use" and where not every customer can be served remotely, and Q&A-16's third factor makes physical work space "so critical" that "this factor alone indicates that the employer is not able to continue comparable operations" wherever central tasks cannot be performed remotely.²⁴⁶ The reservation desk that took bookings by telephone from a closed counter continued the portion of its operations the orders left it; the counter, the yard, the delivery and the set-up crew were the portion the orders suspended. The comparable-operations sentence with which Q&A-15 opens is not in the statute, has no force of law by the United States' own account, and is not applied here.²⁴⁷ The position substitutes a word Congress did not write for the one it did.

Q&A-13 addresses an employer that "responds to the lack of demand by suspending some or all of its operations." This analysis relies on no response to demand. It relies on orders that closed the job sites on which rented equipment earns, confined and quarantined the travelers who rent vehicles, prohibited the events for which tents and staging are booked, closed the retail partners' stores in which consumer agreements are written and closed the offices through which every fleet vehicle is titled, and it treats those orders as orders limiting commerce, travel and group meetings under the statute's text, Q&A-12's logic and the United States' admission that a third-party order counts.²⁴⁸ A stay-at-home order on the traveler is itself an order limiting travel and commerce, and the commerce it limited was this industry's. The exclusion Q&A-13 states was, moreover, confined in April 2020 to "an essential business that is not required to close its physical locations" claiming a suspension "for the sole reason" of its customers' order, and was extended to every employer and to any "reduction in demand" only on March 1, 2021.²⁴⁹ Q&A-13 does not describe an employer whose job sites, travelers, events and title offices were closed by order, and its invocation against this industry misdescribes both the orders and the industry.

A showroom closed because Executive Order 107 closed it, a job site idled because Executive Order 122 ceased it, a counter that refused a quarantined renter because Rule 15 required it and a yard that adopted an exposure-prevention plan because Labor Law § 218-b required it are not voluntary. Q&A-14 describes an employer that closes without any order; every modification described here is traced to an order with an exhibit identifier.²⁵⁰ Where a multi-State operator adopted a nationwide policy to comply with the orders of the jurisdictions that bound it, Q&A-20 makes it eligible "with respect to all of its operations in all locations."²⁵¹ Tri-State accepted, over the United States' motion, the hospital's allegation that the changes it made "to ensure compliance with the Proclamation" "were not voluntary," and held the allegation sufficient to plead a suspension caused by the order.²⁵² The position describes an employer this analysis does not address.

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 that "chooses not to" continue comparable operations and is "voluntarily suspending its own operations, not being ordered to do so."²⁵³ No employer in this industry answered that description. The reopening orders permitted a yard, counter or showroom to operate only on conditions with the force of law (Ex. TX-021, Ex. TX-022, Ex. DUT-TX-012; the standing duties above). The standing statutes commanded the same conduct independently: "Each person shall act responsibly to prevent and control communicable disease" (Health and Safety Code § 81.002, Ex. DUT-TX-001); the workplace-safety duty of Labor Code section 411.103 (Ex. DUT-TX-013); and the general duty clause, enforced by citation from September 2020 (Ex. DUT-FED-001, Ex. LAW-487). The legislatures then fixed the standard of care as compliance with governmental standards, guidance and protocols (Ex. DUT-TX-015, Ex. DUT-KS-015, Ex. DUT-FL-012). The safe-workplace statutes had no COVID-19 content until the health authorities said what a safe workplace 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.²⁵⁴ 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.²⁵⁵ An owner's later description of compliance as a choice is not an element of the statutory test and not evidence of the counterfactual: the clause has no intent element, a lay characterization of a legal question is not evidence of it, the Service's own doctrine looks to substance and not to labels, and compliance under threat of penalty is duress, not choice.²⁵⁶ 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, in every State and in every quarter, one did.

The ten percent figure is, in the United States' words, "not determinative," "[e]ffectively ... a safe harbor," "not an eligibility requirement," "a quintessential safe harbor," "a safe harbor rather than a hard floor"; the District Court held it "is 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" and that reading it as a requirement "would read requirements into the statute that do not exist."²⁵⁷ The figure did not exist in any guidance until March 1, 2021.²⁵⁸ The Service nonetheless administers the figure as the definition: its FAQ page tells the public that "[t]he IRS considers 'more than nominal' to be at least 10% of your business," and AM 2023-007 tells examiners that the employer "needs to substantiate" a reduction "of not less than 10 percent to fall within the provisions of Notice 2021-20," while the United States told two federal courts in the same period that the figure "isn't an eligibility requirement" and is "a safe harbor rather than a hard floor."²⁵⁹ The showing for this industry exceeds the safe harbor many times over: the industry's own filings record United States rental-car revenue down seventy percent and utilization "to 28% from 82%," equipment rental revenue down 19.6 percent because customers "were closed throughout a significant portion of the quarter," "the temporary closure of all Company-operated store showrooms," and industry employment down twenty-one percent between February and April 2020 and still fifteen percent below its pre-pandemic level in September 2021.²⁶⁰ The position applies as a floor a figure the United States has told two federal courts is not one.

The modifications described here are closure of the customer's site, confinement and quarantine of the customer, prohibition and capping of the event, closure and capped occupancy of the showroom, closure of the title office, a bar on renting to the quarantined, and, in the third quarter of 2021, the workplace infection-prevention and exposure-control requirements that placed a face covering on every worker and customer at every counter and event, vaccination proof at every indoor venue in four cities and a cap of ten in Hawaii; the face-covering orders are described as what they are, occupational-health and airborne-transmission controls ordered by appropriate governmental authorities, enforced by fine and in several States against the business itself, that conditioned every yard, counter and event in the States and metros that issued them. Q&A-18 itself lists "limiting occupancy to provide for social distancing," "requiring services to be performed only on an appointment basis" and "requiring employees and customers to wear face coverings" among the modifications "required by a governmental order as a condition of reopening a physical space for business or service to the public," provides that a modification "that results in a reduction in an employer's ability to provide goods or services in the normal course of the employer's business of not less than 10 percent will be deemed to have more than a nominal effect," and the United States told the District Court that "employees having to wear face masks may impact business operations."²⁶¹ The categorical sentence on which this ground rests, that mask requirements and one-way aisles "will not result in more than a nominal effect on the business operations," first appeared on March 1, 2021, in the same Q&A-18 that first announced the ten percent deeming rule; no FAQ posted while the 2020 quarters ran contained it, and the document that carries it, by the United States' own account, "lacks the force of law."²⁶² Tri-State held that "the required protocols and procedures to comply with the Proclamation" were suspensions the order caused and refused the argument that they were nominal.²⁶³ A wedding capped at ten is not a modification with a nominal effect on the tent renter; it is the cancellation of the tent.

This analysis cites no bare declaration as a suspending order. Each instrument in the layers and quarters sections limited commerce, travel or group meetings in terms. Where an emergency declaration is cited, it is cited as the instrument under which those orders were issued and continued, or as proof of a period, which the Notice's own text allows.²⁶⁴ Hawaii's proclamations are not bare declarations; each was adopted "as rules that shall have the force and effect of law," each quarantined every arriving traveler, and each was enforced as a misdemeanor.²⁶⁵ The ground answers an argument this analysis does not make.

Chief Counsel memoranda "may not be used or cited as precedent," by their own legend, which Tri-State quoted in declining to rely on the Chief Counsel advice the United States offered there.²⁶⁶ The counterparties of this industry are the construction site, the traveler, the event, the retail partner, the manufacturer's plant and the title office, and each was closed, confined or conditioned by an order with a date and an exhibit identifier; nothing here is attenuated. Michigan's Executive Order 2020-21 closed the plants that build the fleet; Executive Order 122 closed the sites on which the fleet earns; Rule 15 named the rental company itself. The United States told the Ninth Circuit that the supplier rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier," and told the District Court that an employer is eligible where its operations are suspended "because of the supplier's inability to deliver."²⁶⁷ Causation is but-for on the United States' own agreed definition: absent the order closing the site, no law kept the excavator idle; absent the order quarantining the traveler, no law kept the counter empty.²⁶⁸ A Chief Counsel memorandum that cannot be cited as precedent is not the statute, and a customer's site closed by executive order is not a supply-chain effect.

For the third quarter of 2021 the orders had not lifted: the third-quarter section, subpart B, lists, with dates, the orders in force on July 1 and September 30, 2021, and the paragraph that follows it names the expired instruments on which the proof does not rest. Where the position means that a suspension compelled by an order that expired on June 30 ended at midnight, it misreads the clause, which asks whether the operation "is fully or partially suspended during the calendar quarter," and it contradicts Tri-State's definition of a suspension as a "delay," Q&A-22's whole-quarter rule and Q&A-16's transition rule.²⁶⁹ Congress re-enacted the clause for this quarter on March 11, 2021 and, in the same Act, appropriated $800,000,000 of relief from the airport rental counter's rent and minimum annual guarantees, while the entry proclamations, the land-border notices and the Hawaii and Kansas quarantines were in force.²⁷⁰ The position mistakes the date an order lapsed for the date the suspension it compelled ended; the clause asks about the second.

The gross-receipts prong is not relied on. The statute makes an employer eligible on either prong, and the United States admitted in Tri-State that the gross-receipts test is "another method to qualify," on which the court held "the fact an employer can be eligible and affected without partial or full suspension is reasonable."²⁷¹ The suspension prong asks about operations, not revenue, and it is satisfied in every quarter. The ground answers a prong this analysis does not invoke; Congress joined the two prongs with "or."

Every instrument this analysis relies on as a suspending order is an order, proclamation, rule, directive, statute or administrative order with the force of law, issued under a recited statutory or constitutional power and enforced by penalty, license or contract.²⁷² Where a State made a federal guidance document binding by incorporating it into an order, the binding instrument is the order, and it is the order that is cited: Texas's GA-14, Florida's Executive Order 20-91 and Georgia's Executive Order 04.02.20.01 are relied on, and the advisory list they incorporated is described as what it was.²⁷³ Where the record of a closure is an agency's own announcement, the announcement is cited as the record of the closure the agency imposed under the governor's order, and the order is cited.²⁷⁴ The Notice itself provides that whether an instrument is a governmental order "is determined without regard to the level of enforcement."²⁷⁵ An instrument enforced by fine, misdemeanor, license suspension or contract clause is not a recommendation, and the position that it is misdescribes every instrument this analysis names.

Agreed. An "order" is "[a]n authoritative indication to be obeyed; a command or direction," and the Service's own Chief Counsel defines it as "a command or mandate delivered by a government official"; the United States agreed in Tri-State that the clause is read by "plain meaning."²⁷⁶ Every instrument in the findings below is a command from a competent authority to do or refrain from doing something on pain of sanction. That is the ordinary meaning, and it is satisfied.

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