USDA to Raise Payment Caps Under Coronavirus Food Assistance Program
On April 17, President Trump and Secretary of Agriculture Sonny Perdue announced the Coronavirus Food Assistance Program (CFAP), an economic aid package for farmers and ranchers impacted by the market fallout from the COVID-19 pandemic. CFAP includes $16 billion in direct relief payments to farmers and ranchers, including $5.1 billion earmarked for cattle ranchers.
While few details have been released about CFAP, we do know that USDA was previously contemplating capping relief payments for any given producer at $125,000 per commodity and $250,000 overall. Alarmed by that news, CCA joined other cattlemen’s groups nationwide in calling on USDA to remove those payment caps. Likewise, at the urging of CCA and other agricultural groups, a bipartisan group of Senators and Representatives asked the Administration to remove payment caps under CFAP.
On Thursday, in an interview with Brownfield Ag News, Secretary Perdue announced that USDA would be increasing those payment caps.
“We’ve heard from many members of Congress on both sides of the aisle indicating they think those payment limits are too stringent,” Perdue said. “We agreed with them and we’ve adjusted those payment limits–and we’ll see those when the rules come out.”
Secretary Perdue did not clarify what the new payment caps would be. Nor have further details of the CFAP program been released to date (including how USDA will calculate price losses for producers). USDA has submitted its proposed CFAP rule to the Office of Management and Budget, however, and CCA expects that details on the program could be released this week.
Of course, there is a risk that larger payment caps for producers could deplete the available $16 billion before some producers are able to access the relief funding. Congress is already working to provide additional ag relief funding to ensure producers are properly made whole. For instance, on April 23, Rep. Austin Scott (R-GA) introduced H.R. 6611, which would provide USDA with $50 billion “to prevent, prepare for, and respond to the COVID–19 pandemic by providing support for agricultural producers impacted by the COVID-19 pandemic, provided that the Secretary shall not apply any limitation on payments made to producers using funding provided under” the bill. As of press time, the bill is co-sponsored by a bipartisan group of 31 Congresspeople.
CCA will keep you apprised of any developments regarding CFAP or further Congressional relief for the agricultural industry.
Governor Newsom Expands Workers Compensation Access for COVID-19 Sufferers
On Wednesday, Governor Gavin Newsom issued an executive order easing access to workers compensation benefits for employees who contract COVID-19.
Under existing law, injured employees bear the burden of proving that an injury occurred on the job when seeking workers compensation benefits. Governor Newsom’s Executive Order shifts the burden of proof in instances of COVID-19, requiring an employer or the employer’s workers compensation insurance provider to prove that the employee contracted the disease outside the workplace.
The Executive Order is retroactive to March 19—the date on which the Governor’s statewide stay-at-home order was issued—and will remain in effect until July 5. Under the Executive Order, if an employee tests positive for COVID-19 or is diagnosed by a physician as afflicted with COVID-19 (and that diagnosis is confirmed by a test within 30 days of diagnosis), that employee will be presumed to have contracted the disease on the job if the positive test or diagnosis is made within 14 days of the employee performing “labor or services at the employee’s place of employment at the employer’s direction…on or after March 19.”
It should be stressed that the Executive Order is not limited to front-line workers or even merely essential employees but extends to all circumstances in which an employee performs “labor or services at the employee’s place of employment at the employer’s direction.”
The move could prove quite costly to employers and insurers. The Workers’ Compensation Rating Bureau of California estimates that the change could cost anywhere between $2.2 billion to $33.6 billion (though it should be noted that these estimates are based on a full-year time period, whereas the Governor’s Executive Order is effective for less than one-third of that period).
There are two minor silver linings to the Governor’s decree. First, the order falls short of the “conclusive presumption” that some labor groups had advocated; under the Executive Order, an employer or insurer can seek to prove the employee contracted the virus outside of work. Second, the Executive Order could preclude civil litigation against employers, as workers compensation is an exclusive remedy for injured workers.
Governor Issues Executive Order Providing Property Tax Relief
On Wednesday, Governor Gavin Newsom issued an Executive Order extending property tax deadlines and forgiving penalties for late payment under certain conditions.
Under the Executive Order, if a taxpayer “demonstrates to the satisfaction of the tax collector that the taxpayer has suffered economic hardship, or was otherwise unable to tender payment of taxes in a timely fashion, due to the COVID-19 pandemic, or any local, state, or federal government response to COVID-19,” the taxpayer will not be assessed penalties, costs or interest until May 6, 2021.
The Executive Order applies to “residential real property occupied by the taxpayer” and “real property owned and operated by a taxpayer that qualifies as a small business under the Small Business Administration’s Regulations.” Under SBA’s regulations, a “Beef Cattle Ranching and Farming” operation or a “Dairy Cattle and Milk Production” operation is a small business if annual receipts do not exceed $1 million. “Cattle Feedlots” qualify as small businesses so long as annual receipts do not exceed $8 million.
The Executive Order also gives business owners until May 31, 2020 to file business personal property (BPP) statements without penalty.
While some county tax assessors had previously waived penalties and interest for late property tax payments, those determinations had not been made uniformly statewide. Governor Newsom’s Executive Order was issued in recognition that the 10% penalty for failure to pay property taxes by the April 10 deadline were quite harsh for many taxpayers impacted by COVID-19.
Senate Returns to Session as Governor Prepares May Budget Revise
The state Senate returns to session today after recessing in the third week of March in response to the COVID-19 emergency. The Assembly returned to session last week. Some senators are expected to participate in committee hearings remotely. While rules adopted by the Senate prior to the March recess allow for remote voting, Senate President Pro Tem Tony Atkins has said that “at this time, remote participation does not include remote voting.”
The truncated legislative session will be far from normal. Authors and committee chairs have pulled hundreds of bills, focusing their limited time (and state resources) primarily on bills that relate to urgent crises such as COVID-19, homelessness and wildfire.
The two houses of the legislature have issued differing legislative schedules for the beginning of session and will be out of sync regarding deadlines for passing bills out of committee and out of the house of origin. The chambers’ calendars should sync up again upon return from summer recess on July 13.
Some committees have taken drastic measures in response to the shortened session and COVID-19 emergency: Last week, the Senate Rules Committee stopped accepting most bill amendments, and Assembly Agriculture Committee Chair Susan Eggman (D-Stockton) canceled the only house-of-origin hearing for that committee, determining that “none of the bills demonstrated an urgent need for this year.”
Meanwhile, on Thursday Governor Gavin Newsom is expected to release the May Budget Revise, a document which will look remarkably different from the initial budget proposed on January 10. Newsom’s administration has previously stated that the revised budget will be a ‘workload budget’ in light of the significant budget shortfalls resulting from the COVID-19 shutdown. Under the California Constitution, the State Legislature must advance a budget framework no later than midnight June 15.
Last week, Governor Newsom forecasted that California could see a $54.3 billion deficit over the next 14 months. A report out Friday from the Legislative Analyst’s Office is rosier than Newsom’s projection, but still rather dire, forecasting a deficit between $18 billion and $31 billion.
SBA to Accept EIDL Applications for Agricultural Businesses
As reported in Legislative Bulletin, the Paycheck Protection Program and Health Care Enhancement Act signed into law on April 24 infused the Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program with an additional $50 billion in funding. Importantly, the Act also mandated that the EIDL program be made available to agricultural enterprises as defined in the Small Business Act (“businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries”).
Prior to the Paycheck Protection Program and Health Care Enhancement Act, SBA had been prohibited by law from providing disaster assistance to farmers and ranchers under EIDL for nearly 30 years.
Last week, SBA announced that it has resumed processing EIDL applications that were submitted before the program stopped accepting new applications on April 15. Those prior applications will be processed on a first-come, first-served basis. SBA also announced that it has begun accepting new EIDL applications, and that SBA will initially accept new applications only from agricultural businesses. The move is an acknowledgement of the high demand for disaster assistance loans within the agricultural sector, the fact that agriculture was previously denied COVID-19 relief under EIDL and the unprecedented need for relief to U.S. agricultural businesses.
The EIDL program provides eligible small businesses with up to $2 million to help cover costs that could have been covered by the business had the disaster not occurred. Loan proceeds can only be used to alleviate the specific economic injury claimed and to enable the business to resume normal operations.
There are also EIDL Advances offered through SBA. EIDL Advances are capped at $10,000 per business and $1,000 per employee. If the advances are used to fund permissible COVID-19-related expenses, the advance will be deemed a grant and the advance will no longer need to be paid back. Note, however, that this forgiveness only applies to the EIDL Advance amount and is not applicable to the full loan availability under the EIDL program of up to $2 million.
Information regarding EIDL and EIDL Advance is available here, and the application—which must be submitted directly via the SBA—is available here.
READ THIS: How to apply for the PPP if you Don’t Have Employees
The Small Business Administration (SBA) has been clear that the Paycheck Protection Program (PPP) is available even to small businesses which do not have employees. Despite these assurances, CCA has received numerous calls and emails from ranchers concerned that they are not eligible for the program, or wondering how a sole proprietorship, a partnership or another enterprise lacking employees should file an application for the PPP.
In prior issues of Legislative Bulletin and email releases, CCA has pointed members to USDA’s COVID-19 FAQ webpage, which includes a “Paycheck Protection Program” drop-down menu with advice for businesses without employees.
Late last month, the SBA and Department of the Treasury released a document titled “How to Calculate Maximum Loan Amounts—By Business Type.” The document details how numerous business types—including sole proprietorships and partnerships without employees—should go about calculating their maximum loan amounts and what documentation will be needed for their loan applications.
If the above resources do not answer your questions regarding applying for the PPP, CCA encourages you to contact your lending institution for further clarification.