The interconnected economy and the broken leg
Retail is the last link of an interstate and international chain, and an order anywhere in the chain limited the commerce at its end. The plant orders of Michigan, Pennsylvania, New York and New Jersey, the border and entry orders of the United States, the school and child-care orders of every State, the traveler quarantines of two dozen States, the transit orders of the federal government, the court and clerk orders of every jurisdiction and the health-care orders on every clinic were orders limiting commerce, travel or group meetings, and the retailer whose shelves, workforce, customers and licenses depended on them was suspended in part because of them. Those counterparty orders are treated as orders under the statute's words, which name no addressee, and under the logic of the Notice's own Q&A-12, which the United States confirmed to the Ninth Circuit reaches an order "addressing a third party." The second half of this section states continuing suspension from the text and from the orders' own terms: a retailer whose sales floor was closed in March 2020 and released from its last capacity step between March 10 and July 1, 2021 was, on the day of that release, at the beginning of a restoration the orders themselves had made necessary, and the third quarter of 2021 sat inside it.
The mechanisms
Supply chain and borders (SC, ST, CB)
Retail inventory is bought months ahead from plants and through ports the retailer does not control. In the spring of 2020 the plants were closed by order: Michigan's non-essential manufacturing from March 24 to May 11, 2020 (Exs. MI-011, SEC-07-022); Pennsylvania's durable-goods manufacturing and non-food warehousing from March 19 (Exs. PA-002, PA-004); New York's non-essential in-person workforce from March 22 (Ex. NY-002); New Jersey's manufacturing and warehousing capped at 50 percent from April 10 (Ex. SEC-07-011); Washington's from March 25 (Ex. WA-016). The Federal Reserve recorded in April 2020 that "[s]ome other manufacturing industries, such as autos, mostly shut down" and that Districts "reported widespread mandatory closures" and "supply chain disruptions"; the Census Bureau found in the first week of May 2020 that 65.8 percent of retailers reported supply-chain disruption, the highest share of any sector.194 The borders were closed to non-essential travel from 11:59 p.m. March 20, 2020 through November 8, 2021 by a chain of monthly DHS notifications (Exs. FED-216 to FED-235, FED-239 to FED-258), and the entry of foreign nationals from China, Iran, the Schengen Area, the United Kingdom, Ireland, Brazil, South Africa and India was suspended by proclamation through the same date (Exs. FED-200 to FED-209); the buying trip, the vendor's visit and the cross-border shopper were each the object of those orders. The Defense Production Act orders, the HHS designation and FEMA's export rule allocated designated goods away from retail accumulation and export from March 2020 through November 15, 2021 (Exs. FED-070 to FED-073, SEC-07-006, SEC-07-031, FED-075, FED-079). By the third quarter of 2021 the Federal Reserve's own account was that "[c]ompanies 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 massive influx of goods combined with COVID-19-related staffing issues have overwhelmed U.S. ports," and that "[s]upply-side disruptions became more widespread, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods"; the Census Bureau found that 59.8 percent of small retailers reported domestic supplier delays in the week ending July 18, 2021; the White House's 100-day review of June 8, 2021 and the Commerce Department's semiconductor notice of September 24, 2021 are the Executive's own findings of the same condition (Exs. LAW-221, LAW-220, LAW-243, SEC-07-043, ECO-A-077).195 The foreign closures of China, India, Mexico, Malaysia, Vietnam and the Ningbo terminal are the facts and circumstances in which those United States instruments operated, cited as such and not as orders.196
Workforce, schools and child care (WF, HR)
The retail workforce is hourly, part-time, young and disproportionately female, and it has school-age children in large proportion. Every public school building in the country was closed by order by March 25, 2020, and forty-eight States kept them closed for the year; child care was confined to essential workers' children; the fall 2020 remote and hybrid orders and the winter closures followed; and in the 2021-22 year the mask, quarantine and classroom-closure orders of more than twenty States and of the counties and cities named in the third quarter of 2021 above governed every parent on the floor (Exs. LAW-229, ECO-B-016 to ECO-B-019, ECO-B-026, ECO-B-028, ECO-B-049, NJ-055, KY-052, CT-050, RI-055, NY-073, IL-040, PA-042, CA-034, DE-044, LA-036, MA-071, NV-042, NM-067, WA-075, OR-045, HI-043, VA-044, DC-057).197 The FFCRA leave mandate paid the parent who stayed home from April 1 to December 31, 2020 and defined the qualifying "quarantine or isolation order" to include a stay-at-home order (Exs. FED-170, FED-171); the quarantine and isolation orders of the health officers removed the exposed employee from the floor for a fixed period in every quarter (Exs. MET-LA-021, MET-LA-022, MET-SAN-024, IN-092, RI-049, KS-057). The Bureau of Labor Statistics counted 5.0 million persons "unable to work because their employer closed or lost business due to the pandemic" in September 2021 and the Federal Reserve attributed the summer's "extensive labor shortages" in part to "childcare needs."198
Travel, tourism and gatherings (CB, MK)
Retail in the tourist and border markets sells to the traveler. New York's EO 205 quarantined arrivals from designated States from June 25, 2020 and the tri-State list reached thirty-five States and territories by October 20, 2020; Connecticut, New Jersey, Hawaii, Alaska, New Mexico, Rhode Island, Massachusetts, Maine, Vermont, Kentucky, Kansas, Pennsylvania, the District and Chicago ran their own regimes; Hawaii's Safe Travels governed every arrival through the third quarter of 2021 and Kansas's list ran to September 23, 2021 (Exs. ECO-C-001, ECO-C-002, ECO-C-005, ECO-C-006, ECO-C-010, ECO-C-014, ECO-C-016, ECO-C-018, ECO-C-019, ECO-C-021, ECO-C-028, ECO-C-031, KS-057, LAW-235).199 TSA throughput fell 95.2 percent between March 1 and April 14, 2020, and the airlines carried 557 million fewer passengers in 2020 than in 2019.200 The gathering caps of every State barred the in-store event in every quarter through the spring of 2021, and Hawaii's, Nevada's, Los Angeles County's, Pasadena's, New York City's, San Francisco's and New Orleans's orders conditioned the large event and the venue on the airborne-transmission controls of masking or proof of vaccination in the third quarter of 2021 (Exs. HI-025, NV-043, NV-044, MET-LA-019, MET-LA-054, MET-LA-056, MET-NYC-017, MET-SFO-011, MET-MSY-029). The Library's meetings records for this industry set out, event by event, the markets, shows, conventions and fairs that those caps and venue orders displaced in 2020 and 2021 and the instruments under which the returns of the third quarter of 2021 were staged.
Courts, clerks and public offices (HR, CB, ML)
The motor-vehicle, recorder and licensing offices through which retailers license dealers and alcohol, tobacco and firearms sales closed or went appointment-only from March 2020 under the States' emergency and closure orders (Exs. IN-006, CA-007, ECO-B-025), as the agencies' own announcements record (Exs. AGY-ST-DMV-SOS-RECORDERS-002, AGY-ST-DMV-SOS-RECORDERS-018, AGY-ST-DMV-SOS-RECORDERS-019, cited as context); every State and federal court suspended jury trials and in-person proceedings in 2020, and the Supreme Court of Texas's Thirty-Eighth and Fortieth Emergency Orders, the judicial emergencies of Virginia, Georgia, Alabama and Hawaii and the courthouse mask and vaccination orders of a dozen States and the federal districts ran through the third quarter of 2021 (Exs. ECO-C-069, ECO-C-070, VA-041, VA-042, GA-051, AL-064, HI-068, AZ-059, KY-058, MD-091, NM-066, UT-053, FED-285, FED-297, FED-302, FED-307, FED-337, ECO-C-136); the eviction stays of the CDC and of New York, Washington, California, Illinois and New Jersey suspended the landlord's and the mixed-use retailer's remedies (Exs. FED-022 to FED-026, ECO-C-084, ECO-C-101, ECO-C-091, ECO-C-081).
Transit (WF, CB)
From February 1, 2021 through September 30, 2021 and beyond, every employee and every customer who rode a bus, train, ferry or rideshare did so under a federal order enforced by criminal fine, an airborne-transmission control on every conveyance, and every transit agency was under a directive to refuse boarding to the unmasked (Exs. FED-020, FED-050, FED-051, FED-052, FED-056; the transit agencies' own notices implementing the order and the directives, cited as context, Exs. MET-BAL-107, MET-CLE-042, MET-MKE-044, MET-DEN-034, MET-SLC-090, MET-NYC-046, MET-SAT-062); in 2020 the transit agencies of Indianapolis, Cincinnati, Boston and others cut service and moved to rear boarding under emergency orders (Exs. MET-IND-070, MET-CIN-016, MET-BOS-091).201
Health care as a counterparty (WF, HR, SF)
The retailer's employees needed testing, care and vaccination from providers governed by the elective-procedure suspensions of 2020, the OSHA Healthcare Emergency Temporary Standard from June 21, 2021 and the health-care-worker vaccination orders of August and September 2021; the in-store clinic and pharmacy vaccination service were themselves governed by the Standard outside its retail-dispensing exception (Exs. FED-080, CA-030, CA-031, NY-071, NJ-056, CT-051, IL-042, WA-077, MD-058, DE-064, RI-072, ME-061, MET-LA-023, MET-PHL-021).202
The counterparty orders are orders
The Suspension Clause asks whether the operation was partially suspended "due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings." It names the instrument, its source, its effect and its predicate; it names no addressee. An order that closed the plant that makes the goods on the shelf limited commerce; an order that closed the school of the cashier limited group meetings; an order that quarantined the tourist limited travel; an order that placed every bus under airborne-transmission controls limited travel; an order that closed the recorder's office limited commerce. Each is an order of the authority with power over the plant, the school, the traveler, the bus or the office, and each is therefore an order "from an appropriate governmental authority" in the District Court's own reading of "appropriate" as "fitting."203 Whether the retailer was suspended "due to" it is a question of but-for causation, which Tri-State fixed on the United States' agreed definition; where the shelf was empty, the parent absent, the tourist quarantined and the license unissued because those orders required it, the retailer's operation was suspended in part because of them.204
The Notice's own logic and the United States' admission
Q&A-12 makes an employer eligible where its "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 finds "Employer A" eligible "because its operations have been suspended due to the governmental order that suspended operations of its supplier."205 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)" and that the supplier rule "never even mentions a 'physical[ ] clos[ure]' order against the supplier"; it told the District Court that an employer is eligible where its operations are suspended "because of the supplier's inability to deliver."206 The logic of Q&A-12 is the statute's causation logic, and it does not stop at suppliers; the Service's own list of qualifying orders begins with an order addressed to residents, not to any business.207 The Chief Counsel memorandum that would confine Q&A-12 to "a narrow, limited exception" and demand the supplier's own order from the employer's files "may not be used or cited as precedent" by its own legend, adds words to Q&A-12 that Q&A-12 does not contain, and is answered in the fourteen grounds below.208 The counterparty orders are treated here as orders under the statute and confirmed by the Service's own guidance.
Continuing suspension
The clause's grammar
The clause makes an employer eligible where the operation "is fully or partially suspended during the calendar quarter due to orders." The phrase "during the calendar quarter" modifies the verb "suspended"; it fixes when the suspension must exist, not when the order must be in force. Congress did not write "due to orders in effect during the calendar quarter," and the disparate wording of the same subparagraph, which measures the gross-receipts prong by "the same calendar quarter in the prior year," shows that Congress knew how to tie a test to a quarter's dates when it meant to.209 A suspension is, on the United States' own agreed definition, "[t]he act of temporarily delaying, interrupting, or terminating something," or "[t]he state of such delay, interruption, or termination"; a delay caused by an order continues after the order lapses for as long as the delay lasts, and it is "due to" the order because, but for the order, no law required the dismantling that must now be reversed.210 Tri-State holds both halves: a partial suspension is "a temporary delay, interruption, or termination of a portion an employer's business," and "due to" is but-for.211
The Notice's own recognition
Q&A-22 provides that "[a]n 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 Service reads "during the calendar quarter" as modifying the suspension, and it treats a suspension that existed on some days of the quarter as eligibility for the whole of it.212 Q&A-16(4) provides that where an employer's operations "did not previously allow for telework ... some adjustment period is expected" and that "a significant delay ... in moving operations" is itself "a partial suspension during that transition period"; the Service recognizes that the suspension an order causes persists for a period after the order operates, and it offers its two-week illustration "for example."213 The Service's own guidance therefore recognizes that the question is the suspension's dates, not the order's, and that a compelled change carries a transition period the Service does not fix. The Chief Counsel sentence that "residual delays caused by a governmental order in place during a prior calendar quarter will not constitute a governmental order in subsequent calendar quarters once the order has been lifted" answers a question the statute does not ask; the statute does not ask whether the lifted order "constitute[s] a governmental order" in the later quarter, it asks whether the operation "is ... partially suspended during the calendar quarter due to" orders, and AM 2023-005 "may not be used or cited as precedent."214
What the orders compelled this industry to dismantle
A retailer ordered closed to the public in March 2020 did what the order required: it sent its floor staff home, cancelled its spring and summer purchase orders, ran down the inventory it could not sell, closed its fitting rooms and returns desk, withdrew from every event and promotion, surrendered or renegotiated the mall tenancies whose anchors had closed, converted its floor staff to curbside runners and its buyers to remote work, and stopped hiring. A retailer reopened at 25 or 50 percent in May or June 2020 staffed, stocked and scheduled to that ceiling; a retailer cut to 20 or 25 percent in November and December 2020 did the same on the eve of its peak season; a retailer whose garden, furniture, carpet and paint departments were cordoned by order stopped ordering for them; a retailer whose mall was closed lost the anchor traffic on which its lease economics turned. Retail employment fell by 2,272,300 in two months and had not recovered nineteen months later; retail's supply-chain disruption rate was the highest of any sector in May 2020 and 59.8 percent of small retailers still reported supplier delays in July 2021.215 Each of those changes was made because an order required it, and none was reversed on the day the order lapsed.
How long the orders' own steps took
The restoration was itself ordered in steps, and the steps fix the period. In New Jersey the door closed at 9:00 p.m. March 21, 2020, reopened at 50 percent June 15, 2020, and the percentage cap came off May 19, 2021 and the public face-covering requirement May 28, 2021: fourteen months from closure to the last step.216 In New York the workforce went to one employee March 22, 2020, curbside returned May 15, in-store at 50 percent May 29, 2020, the malls July 10 and September 9, 2020, and the caps came off May 19, 2021, with Subpart 66-3 masking the unvaccinated to August 27, 2021: fourteen months to the last cap step and seventeen to the last unvaccinated-masking control.217 In Pennsylvania the door closed March 19, 2020, reopened at 50 percent April 19 (essential) or in May and June 2020 (yellow phase), was cut to 50 percent again December 12, 2020 to January 4, 2021, and was released 12:01 a.m. May 31, 2021: fourteen and a half months.218 In California the door closed March 19, 2020, reopened for curbside May 8 and in-store by tier at 25 or 50 percent August 31, 2020, was cut to 20 percent December 6, 2020 to January 25, 2021, and was released June 15, 2021 into a verification regime: fifteen months, and Los Angeles County's universal face-covering order, an airborne-transmission control with the operator as enforcer, returned thirty-two days later.219 In Washington the floor went to minimum basic operations March 25, 2020, reopened at 30 percent, was cut to 25 percent November 17, 2020, ran at 50 percent from March 22, 2021 and was released June 30, 2021: fifteen months and one week, and the universal face-covering order with its business duty of admission returned fifty-four days later.220 In New Mexico the door closed March 24, 2020, reopened at 25 percent May 16, closed again November 16 to December 1, 2020, ran under county levels to June 30, 2021 and was released July 1, 2021, the first day of the third quarter, into mandatory practices with $5,000 penalties, and the universal face-covering control within the mandatory practices returned August 20.221 In Michigan the door closed March 24, 2020, the open store was cut to four customers per 1,000 square feet with departments cordoned April 9, in-store returned at 25 percent June 4, 2020, was cut to 30 percent November 18, 2020, ran at 50 percent from March 5, 2021 and was released June 22, 2021: fifteen months.222 In Ohio the door closed March 23, 2020, reopened May 12 under checklists, was conditioned on a compliance inspection with a closure sanction from November 16, 2020 and closed nightly from November 19, 2020 to February 11, 2021, and was released June 2, 2021: fourteen and a half months.223 In Illinois the door closed March 21, 2020, was confined to remote orders May 1 to 29, reopened at 50 percent May 29, 2020, was cut to 25 percent November 20, 2020, ran at 60 percent from May 14, 2021 and was released June 11, 2021, and the universal face-covering order, the airborne-transmission control of the Delta period, returned August 30.224 In Massachusetts the door closed noon March 24, 2020, reopened June 8, was cut to 25 percent December 26, 2020 to February 8, 2021, ran at 40 percent and was released May 29, 2021, and Boston's face-covering order, with its operator's duty to enforce, returned August 27.225 The twenty-five jurisdictions whose caps, and the four whose binding retail conditions, were in force on April 1, 2021 took their last steps on dates from April 4 to July 1, 2021; the third quarter began between one day and thirteen weeks after the last of them and inside the restoration each had begun.
What was still in force when the general restrictions ended
On the day each State's last cap lapsed the following remained in force and are inventoried in the third quarter of 2021 above: the federal designation to November 15, 2021; the conveyance order and transit directives; the entry proclamations and land-border notices to November 8, 2021; the OSHA Healthcare Emergency Temporary Standard from June 21, 2021 and the National Emphasis Program; the State emergencies of thirty-five jurisdictions on July 2 and twenty-five on September 21, 2021; the workplace standards of California, Oregon, Virginia, Washington and New York; the unvaccinated-patron masking and verification rules of California, New York, Connecticut, Rhode Island, Washington, New Mexico and Nevada; Hawaii's entire regime; the school, child-care and quarantine orders of the 2021-22 year; the eviction stays of New York, Washington, California, Illinois and New Jersey; the court orders; and, from July 17, 2021 onward, the seven statewide and dozens of local face-covering reinstatements, airborne-transmission controls with the business as enforcer.226
The four pathways, restated
Continuing suspension reaches every later quarter, and the third quarter of 2021 in particular, by four independent routes: the clause's grammar and Tri-State's definitions, under which the suspension an order caused continues because of it for the restoration period the order's own steps compelled; the orders actually in force in the quarter; the counterparty orders in force in the quarter; and the arithmetic of the restoration period stated from the orders' own phase steps and sunset dates. This analysis never says that an expired order suspended anyone by its own force; it says that the suspension the order caused continued because of it, and it lists, in the six-quarters section, the orders that were in force. The point stated at the close of the third-quarter section holds for every retailer in the country: the last capacity step and the first day of the third quarter were, in most of the largest States, within weeks of each other, and the restoration the orders had compelled was not complete on either date.