Coronavirus: executive summary – key highlights from Washington (March 20, 2020) (United States)

As the White House, Congress and federal government agencies scramble to address the coronavirus disease (COVID-19) crisis, DLA Piper’s Federal Law and Policy team is providing regular updates on the latest developments from the nation’s capital. The following update summarizes key highlights from Washington over the past 24 hours.

In this summary we provide updates on the status of negotiations over the proposed $1 trillion stimulus bill, the DHS list of essential services, major elements of the Senate GOP stimulus bill, student loan leniency, a new Federal Reserve program to expand credit flow to municipal debt markets, and new travel restrictions with Canada and Mexico.

Details of $1T Senate GOP Stimulus plan emerge; McConnell seeks bipartisan deal by Friday night. Late in the day on Thursday (March 19), Senate Majority Leader Mitch McConnell (R-KY) officially introduced The Coronavirus Aid Relief and Economic Security Act (CARES Act, S.3548), also known as Corona III. McConnell acknowledged that “this legislation will not be the last word.” He has instructed bipartisan task forces to reach a deal in principle on the various components of the $1 trillion-plus stimulus package by the end of today (Friday, March 20), in the hope of holding floor votes on a finalized package Monday. Senate Democrats earlier in the week advanced a counterproposal and House Democratic leaders are also developing their own proposal.  McConnell has vowed that the Senate will remain in session until an agreement is reached and a bill is voted on.

DHS and the Administration release guidance on essential services for state and local governments. The Cybersecurity and Infrastructure Security Agency (CISA) on March 19 released guidance to help state and local jurisdictions and the private sector identify and manage their essential workforce while responding to COVID-19. The list of Essential Critical Infrastructure Workers was developed in coordination with federal agencies and the private sector as a guide to help decision-makers within communities understand how to ensure continuity of essential functions and critical workforce. It spells out the sectors and critical functions that should continue normal operations, including those that support healthcare personnel, the food industry, communication providers, defense systems support, law enforcement, public works, and other essential operations. CISA, a stand-alone agency under Department of Homeland Security (DHS) oversight, was established in 2018 as the successor agency to the National Protection and Programs Directorate (NPPD). The CISA guidance can be found here.

• In a related development, Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment Defense Department, on March 20 issued guidance reiterating that the Defense Industrial Base (DIB) is identified as a Critical Infrastructure Sector by DHS. This includes workers who support the essential products and services required to meet national security commitments, and includes people working for companies and their subcontractors.

Major elements of the CARES Act. The Senate Republican proposal is divided into the following main sections. The details of the bill are likely to change this weekend as negotiators finalize the bill.

• Small Business Interruption Loans: Eligible small businesses would be generally defined as those with 500 employees or less (unless the SBA’s size standard for a particular industry allows for more employees). The maximum 7(a) Loan Guarantee Program would be increased to $10 million.
• Relief for Individuals, Families and Businesses: Proposes recovery checks of up to $1,200 to be put into the hands of most taxpayers, providing cash immediately to individuals and families.Married couples who file a joint return are eligible for up to $2,400. Those amounts increase by $500 for every child. The benefit would begin to phase down above $75,000 in adjusted gross income for individuals and $150,000 for couples. Income thresholds are based on 2018 tax returns. Corporations would be allowed to postpone estimated tax payments until October 15.
• Assistance to Severely Distressed Sectors of the US Economy: Proposes $208 billion to the Exchange Stabilization Fund (ESF) to provide sufficiently collateralized loans and loan guarantees to eligible entities in the following amounts:
  • Up to $50 billion for passenger air carriers;
  • Up to $8 billion for cargo air carriers; and
  • Up to $150 billion for other eligible entities.

• Health Care Response: Aid to the health care sector, particularly focuses on addressing supply shortages of drugs and medical equipment such as respirators, increasing the number of hospital beds, improving access to treatment and support for health care providers.

Student loan leniency to be provided, testing requirements waived. President Trump announced today (Friday, March 20) that federal student loan payments will be suspended without penalty for at least the next 60 days, and possibly beyond that. The move follows the President’s March 13 announcement that he will waive interest on all federal student loans held by federal government agencies. The Education Department this week indicated that it would set the interest rates on all federally held student loans at zero, at least until May 12. Borrowers who have federally- held loans must make a request to their loan servicers over the phone or online to receive the 60-day reprieve, which will also be applied to borrowers who are already more than a month behind on their loan payments. The president also announced today that states will be allowed to waive federal testing requirements for elementary and high school students.

Federal Reserve expands credit flow to municipal debt markets through new money market fund. In an effort to help local governments facing a credit crunch in the wake of the coronavirus crisis, the Federal Reserve Board today (Friday, March 20) expanded its program of support for the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets. On Wednesday, the Fed established the Money Market Mutual Fund Liquidity Facility (MMLF) to support the flow of credit to households and businesses. Under MMLF, the Federal Reserve Bank of Boston will make loans available to eligible financial institutions secured by high-quality assets purchased by the financial institution from money market mutual funds. The move comes as Treasury yields are falling at the expense of the muni bond market. Many of the currently most distressed industries (e.g., aviation, hospitality and transportation) depend on infrastructure financed by state and local government debt. More information on the MMLF can be found here.

US restricts travel across borders with Canada and Mexico. Seeking to reduce the spread of the coronavirus, the US has reached mutual agreements with Canada and Mexico to restrict non-essential travel across the northern and southern borders. Secretary of State Mike Pompeo said the restrictions will go into effect tonight at midnight and be review after 30 days. Acting Homeland Security Secretary Chad Wolf said the restrictions will not apply to lawful trade and commerce and that exceptions would be made for people traveling for medical purposes and emergency responders. The joint statement with Mexico can be found here, and the joint statement with Canada here.

Please reach out to any members of the Federal Law and Policy team or your DLA Piper relationship attorney if you have any questions.

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