The Service's Positions, Answered
The Service's letters and examination reports rest on fourteen grounds. Each is answered below from the statute's text, from Tri-State, from the instruments with their exhibit identifiers, and from the United States' own representations, which are collected on the Government's own words page. None survives the public record for education and child care.
1. No orders in effect
"There were no government orders related to COVID-19 in effect during the quarter which could have fully or partially suspended your trade or business."
For every quarter, the six-quarters section above lists the orders in force on the quarter's first and last day, by issuer, date and terms, with exhibit identifiers, and the tables on this page tabulate them. For the third quarter of 2021 alone the list runs to the federal conveyance order on every school bus, the entry and student-visa orders, the federal workplace and contractor orders, the school and child care face-covering and exposure-control orders of at least eighteen States and the District of Columbia, the staff vaccination-or-testing orders of ten jurisdictions, the face-covering-mandate prohibitions of eight States and the injunctions, stays and judgments that decided them inside the quarter, the county and district orders of every large metro and the quarantine standing orders that sent every exposed class home (Ex. FED-020; Ex. FED-207; Ex. SEC-15-024; Ex. SEC-15-023; Ex. WA-079; Ex. OR-045; Ex. IL-040; Ex. SEC-15-074; Ex. NJ-055; Ex. NJ-057; Ex. CT-050; Ex. KY-052; Ex. PA-042; Ex. NY-073; Ex. SEC-15-047; Ex. FL-063; Ex. TN-036; Ex. SEC-15-045; Ex. IA-057; Ex. SC-041; Ex. MET-PHX-006; Ex. MET-DFW-030; Ex. MET-HOU-038; Ex. MET-DEN-024; Ex. MET-NYC-040; Ex. RI-060).160 A form sentence that no orders were in effect is not the "case-by-case" determination the United States described to the District Court.161 The sentence describes a school year that did not open, and the Service's records, whatever they contain, do not contain the Federal Register, the fifty State registers or a single school's opening-day handbook of August 2021.
2. Designated essential and remained open
"The employer operated an essential business and remained open."
The word "essential" is not in the statute. The child care centers that the States permitted to operate in the spring of 2020 were permitted to operate for one set of families only, the children of essential workers, under emergency ratios, in groups of ten or fewer, after certification, and every other family they had served was ordered away (Ex. SEC-15-012; Ex. SEC-15-071; Ex. MA-006; Ex. MD-034; Ex. DE-011; Ex. OR-013; Ex. CA-046).162 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 the same.163
"[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
The Notice's own Example 4 is the hospital that remained open for emergency care while its elective services were closed by order and was partially suspended; a child care center open to nurses' children and closed to everyone else's is that example.164 The designation was a permission to operate under the orders, not an exemption from them. The position mistakes a permission to operate under conditions for an exemption from them; a center ordered open to nurses' children and closed to every other family it served was not "open" in any sense the Suspension Clause recognizes, and it was suspended by the order that drew that line.
3. Orders directed to the public
"Stay-at-home orders directed to the public are not considered; only orders directed at business operations count."
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 "An 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."165 The orders that reached this industry were, moreover, directed at its operations in terms and by name: "All public, private, and parochial preschool program premises, and elementary and secondary schools ... shall be closed to students"; "All K-12 school buildings or facilities[,] whether public or private[,] used for student instruction are to close"; "This requirement includes all public, nonpublic, and boarding schools in the state"; "all public and private schools in Illinois serving pre-kindergarten through 12th grade students must close"; "Cessation of all in-person instruction at K-12 schools, public and private"; "All schools identified in this Order must verify vaccine status of all workers"; "All public, private, and parochial preschool programs and elementary and secondary schools ... must maintain a policy regarding mandatory use of face masks" (Ex. SEC-15-011; Ex. SEC-15-057; Ex. SEC-15-048; Ex. SEC-15-025; Ex. SEC-15-056; Ex. SEC-15-023; Ex. SEC-15-015).166 The position rewrites the statute and misdescribes the orders.
4. Comparable operations through telework
"The employer could have continued comparable operations through telework."
"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, and a school whose classrooms were closed by order has had its in-person portion terminated for the duration of the order.167 The Notice's own words confirm it. Q&A-15 provides that where "the closure of the workplace causes the employer to suspend business operations for certain purposes, but not others, it may be considered to have a partial suspension of operations due to the governmental order," and its Example 3 treats a research company's laboratory operations, which "cannot continue in a comparable manner," as partially suspended although its modeling staff teleworked; Q&A-16 provides that where the physical work space is so critical that central tasks cannot be performed remotely "this factor alone indicates that the employer is not able to continue comparable operations," and that a delay "beyond 2 weeks" in moving to telework is itself a partial suspension; Q&A-17 provides that a compelled modification with more than a nominal effect is a partial suspension.168 A kindergarten, a chemistry laboratory, a dance studio, a football season, a dormitory, a dining hall, a school bus and a room of two-year-olds are the laboratory of Example 3; none of them continues in a comparable manner on a screen, and a child care center does not continue at all. 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.169 A school that delivered by video what it had sold as a classroom did not continue "comparable operations"; it continued the portion of its operations the orders left it, and the Bureau of Labor Statistics measured the difference at 544,400 jobs in private educational services and 372,000 in child day care between February and April 2020 (Ex. SEC-15-009). Telework was the modification the orders compelled, and a compelled modification of a more than nominal portion is a partial suspension, which is what Q&A-17 also says.170 The position substitutes a word Congress did not write for the one it did.
5. Orders that affected customers, not the employer
"The orders affected the employer's customers, not the employer (Q&A-13)."
Q&A-13 addresses an employer that suspends operations because of "a reduction in demand." This analysis relies on no reduction in demand. It relies on orders that closed the classrooms in which the industry teaches, confined the child care rooms in which it cares for children, closed the districts that contract for its buses, meals and tutoring, closed the consulates and borders through which its students come, and placed its own staff under face-covering, testing and quarantine requirements, and it relies on 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.171 Q&A-13 describes an employer that "responds to the lack of demand by suspending some or all of its operations"; this analysis describes an employer forbidden by name to open its doors. As posted on April 29, 2020, the Service's own FAQ 32 confined the customer exclusion to "an essential business that is not required to close its physical locations or otherwise suspend its operations" and to a suspension claimed "for the sole reason" of the customers' stay-at-home order; the Notice of March 1, 2021 extended the exclusion to every employer and to any "reduction in demand," a change the United States has represented carries no force of law.172 A stay-at-home order on the family is itself an order limiting commerce, and the commerce it limited was this industry's; the Service's invocation of Q&A-13 against an industry whose premises were closed by name misdescribes both the orders and the industry.
6. Voluntary measures
"The employer's measures were voluntary (Q&A-14)."
A classroom closed because Executive Order 104 closed it, a child care room confined to essential workers' children because Executive Order 110 confined it, a face covering on every child because Executive Order 251 required it, a weekly test of every unvaccinated teacher because Executive Order 2021-22 required it, and a fourteen-day quarantine of every exposed class because the Harris County Local Health Authority ordered it are not voluntary (Ex. SEC-15-011; Ex. SEC-15-012; Ex. SEC-15-015; Ex. SEC-15-027; Ex. MET-HOU-038). Q&A-14 describes an employer that closes without any order; every modification described here is traced to an order with an exhibit identifier.173 Where an employer with schools or centers in several States adopted a uniform 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."174 A modification traced to an order with an exhibit identifier is not voluntary, and the position that it was describes an employer this analysis does not address.
The standing duties inventoried above answer the ground on the Notice's own terms. Q&A-14 reaches, by its own words, only a suspension "not due to a governmental order" (Notice 2021-20, Q&A-14, at 929), and the United States and the District Court have defined the excluded employer as one "not being ordered to do so" (Doc. 49 at 18) and as one that "could nonetheless, with telework, 'continue operations comparable to its operations prior to the closure' but chooses not to" (Br. for Appellees at 42).175 No employer in this industry in the eight principal States answered that description in any of the six quarters. The reopening orders permitted operation only on conditions with the force of law (Ex. PA-010; Ex. CO-041; Ex. WA-075). The standing statutes commanded the same conduct independently: Texas's "Each person shall act responsibly to prevent and control communicable disease" and its command that "Each employer shall" provide a "reasonably safe and healthful" workplace with "methods of sanitation and hygiene" (Ex. DUT-TX-001; Ex. DUT-TX-013), the order-violation offenses and safe-workplace statutes of the other seven, and the general duty clause, 29 U.S.C. § 654(a)(1), enforced by citation from September 2020 (Ex. DUT-FED-001; Ex. LAW-487). The legislatures of Texas, Florida and Michigan then fixed the standard of care as compliance with governmental standards, guidance and protocols (Ex. DUT-TX-015; Ex. DUT-FL-012; Ex. DUT-MI-015).176 The safe-workplace statutes had no COVID-19 content until the health authorities said what a safe classroom and child care room required; the cohorts, the screening at the door and the face coverings were adopted because those directives defined the duty and would not have been adopted without them. "Due to" is but-for causation (Tri-State at 17-19), and here it runs from the command to the measure without an intervening choice. The Notice confirms it: a modification "required by a governmental order as a condition of reopening" is a partial suspension due to the order (Q&A-18, at 930).177 A statute that commands conduct is an order from an appropriate governmental authority no less than a proclamation, and the Service's premise, that no command reached the employer, fails wherever one did.
7. The ten percent figure applied as a floor
"The portion of the business affected was not more than nominal (the 10 percent figure applied as a floor)."
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."178
"Effectively, this is a safe harbor ... Properly understood, it isn't an eligibility requirement."
Doc. 44 at 14
The figure also has a date. As posted on April 29, 2020 the Service's FAQs contained no "nominal" test and no percentage; "more than a nominal portion" first appeared on June 19, 2020; the two ten percent deeming rules first appeared in the Notice on March 1, 2021, after every 2020 quarter had closed; and the Service's current FAQ page and its Chief Counsel memorandum of October 18, 2023 administer the figure as the definition of "more than nominal" while the United States tells two courts it is a safe harbor.179 The showing for this industry exceeds the safe harbor many times over: every classroom in the country closed for a quarter; every child care room confined or cut to emergency ratios; every season cancelled; every dormitory emptied; and, in the third quarter of 2021, every classroom in at least eighteen States under face-covering and exposure-control requirements and every adult in ten jurisdictions tested.180 The position applies as a floor a figure the United States has told two federal courts is not one, and applies it to quarters in which it did not exist.
8. Modifications of only nominal effect
"The required modifications (masks, gloves, spacing, screening) had only a nominal effect (Q&A-18)."
The modifications described here are closure, confinement to one set of families, emergency ratios, a State-fixed reopening date, cohorts, metrics, remote and hybrid instruction, quarantine of every exposed class, exclusion of unvaccinated staff and, in the preemption States, a prohibition on the school's own rule; the face-covering orders of July through September 2021 are described as what they are: workplace infection-prevention and exposure-control requirements imposed by orders from appropriate governmental authorities, enforced by fine, misdemeanor, recognition status and injunction, that conditioned every classroom and child care room in the States and metros that issued them. Q&A-18 itself 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 as much.181
"[E]mployees having to wear face masks may impact business operations."
Doc. 44 at 30
The masks sentence on which the ground rests first appeared on March 1, 2021 and speaks of a bare mask rule standing alone; no instrument on this page is a bare mask rule standing alone, and each of the 2021 school orders arrived with quarantines, staff testing, exclusion rules and, in nine States (Texas, Florida, Tennessee, Arkansas, Iowa, Oklahoma, South Carolina, Arizona and Kentucky), a court order or legislative act that changed the rule in force in the school's first month.182 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.183 A child care room cut from ten children to six is not a modification with a nominal effect; it is a forty-percent closure.
9. A declaration of emergency is not an order
"A declaration of emergency is not an order (Q&A-10)."
This analysis relies on no bare declaration as a suspending order. Each instrument in the layer and quarter inventories above limited commerce, travel or group meetings in terms: it closed a building, fixed a date, cut a ratio, placed a room under face-covering and exclusion rules, tested a teacher or excluded a class. 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 (Ex. FED-001; Ex. FED-016; Ex. SEC-15-038; Ex. AL-004; Ex. AL-079; Ex. AL-052; Ex. MET-STL-020; Ex. MET-SAN-041).184 The ground answers an argument this analysis does not make.
10. The supplier was not itself closed by order
"The supplier was not itself closed by order; supply-chain effects are too attenuated (AM 2023-005)."
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 memorandum the United States offered there.185 The suppliers and counterparties of this industry are the families, the districts, the carriers, the consulates, the licensing agencies and the contract health providers, and each was closed or conditioned by an order with a date and an exhibit identifier; nothing here is attenuated. 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."186 Causation is but-for on the United States' own agreed definition: absent the order closing the district, no law idled the bus contractor's routes; absent the proclamation suspending entry from India, no law kept the graduate student out of the dormitory.187 The position describes an attenuated chain this analysis does not present; a school district closed by order is not a supply-chain effect, and a Chief Counsel memorandum that cannot be cited as precedent is not the statute.
11. The orders had lifted before the quarter began
"The orders had lifted before the quarter began; any effect was a lingering effect."
For the third quarter of 2021 the orders had not lifted: subpart B of the third-quarter section above lists, with dates, the orders in force on July 1 and September 30, 2021, and the paragraph that follows the finding names the expired instruments on which the proof does not rest. In California, Connecticut, Illinois, New Jersey, Louisiana, Virginia, Washington and the District of Columbia a State school or child care instrument was in force on July 1 and the second round attached before it lapsed; in North Carolina, Delaware, Nevada and Kentucky the interval between the last 2020-21 school condition and the first 2021-22 condition ran for the days subpart D states; and on no day of any interval was a school in any of those jurisdictions free of the federal conveyance order on its buses, the entry and student-visa orders on its international students and the quarantine standing orders on its exposed classes. 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.188 The position mistakes the date an order lapsed for the date the suspension it compelled ended; the clause asks about the second.
12. No decline in gross receipts
"The employer did not experience the required decline in gross receipts."
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."189 The suspension prong asks about operations, not revenue, and it is satisfied in every quarter; a school whose tuition was paid for a closed classroom was suspended no less than one whose tuition was refunded. The ground answers a prong this analysis does not invoke; Congress joined the two prongs with "or."
13. Guidance, recommendations or best practices
"The instruments relied on are guidance, recommendations or best practices, not orders."
Every instrument this analysis relies on as a suspending order is an order, proclamation, rule, directive, statute, regulation, resolution or judgment with the force of law, issued under a recited statutory or constitutional power and enforced by fine, misdemeanor, license, recognition status, contract or injunction.190 Where a State made a guidance document binding by incorporating it into an order (California's Beyond the Blueprint order and its K-12 guidance; Connecticut's Executive Order 9 and its reopening plan; Illinois's Executive Order 2020-47 and its Phase 4 guidance; Washington's Proclamation 20-09.4 and the Department of Health's requirements; New York's Executive Order 202.60 and the Department of Health's interim guidance), the binding instrument is the order, and it is the order that is cited (Ex. CA-036; Ex. SEC-15-024; Ex. CT-026; Ex. CT-072; Ex. IL-020; Ex. AGY-ST-EDUCATION-HIGHER-ED-011; Ex. WA-075; Ex. NY-035; Ex. NY-122).191 The guidance documents of the period are described on this page as guidance and ground no finding. The Notice itself provides that whether an instrument is a governmental order "is determined without regard to the level of enforcement."192 An instrument enforced by fine, misdemeanor, license or injunction is not a recommendation, and the position that it is misdescribes every instrument this page names.
14. The ordinary meaning of "order"
"'Order' must be given its ordinary meaning."
Agreed. An "order" is "a command, direction, or instruction" and "a rule or regulation made by a competent authority"; the United States agreed in Tri-State that the clause is read by "plain meaning," and the Service's own Chief Counsel defined "order" as "a command or mandate delivered by a government official."193 "All public, private, and parochial preschool program premises, and elementary and secondary schools ... shall be closed to students" is a command; "schools shall temporarily close" is a command; "[a]ll schools identified in this Order must verify vaccine status of all workers" is a command; "[n]o governmental entity ... may require any person to wear a face covering" is a command. 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.