May 7, 2020
Federal:
Earlier this week, the Senate passed a $484 billion federal relief package dedicated to reviving loan programs to small businesses and providing funds for hospitals and coronavirus testing. The House is expected to vote and pass the legislation today. The legislation includes $321 billion for the Paycheck Protection Program and $60 billion for the SBA’s Economic Injury Disaster Loan (EIDL) program. While these funds are much needed after both loan programs were depleted at the end of last week, it is anticipated that these funds will be spent within days, making it critical that businesses who are in need apply immediately.
Additionally, following coverage around larger businesses receiving significant loans via the PPP funding, the Small Business Administration has issued guidance warning companies about their eligibility. More here.
President Trump issued an executive order limiting immigration. For a 4/29 webinar on employer compliance with this order, you can visit here.
International:
With transmission of the virus intensifying in Mexico, the Federal Government declared the start of phase 3 of COVID-19 earlier this week. As a result, stay at home orders and the suspension of non-essential activities will remain in place until May 30th. The restrictions have led to the closure of several cross border businesses located in the State of Baja but that are considered essential and currently operating in California resulting in disruptions in our supply chains. The Chamber is working with a coalition of business organizations in Baja tasked with assisting the State Government in identifying which are essential and should be granted authorization to resume operations. The group meets routinely with Baja State government and created an official process for businesses to submit their requests. For more information, please contact us. As safety of our workforce is paramount, employers have implemented health and safety measures to ensure their employees stay healthy both. Best practices and examples of health and safety protocols are been shared among businesses. We have also advocated for uniformity and alignment of essential operations across Mexico and the U.S. and our San Diego Congressional delegation sent a letter to the Secretary of State and Mexican Ambassador to the U.S.
The U.S. government has issued the Version 3 on guidance to support state, local, and industry partners in identifying the critical infrastructure sectors and the essential workers. This most recent update clarifies the description of a small number of essential services and functions in the list. There is also a Version 3 in Spanish. If you have feedback or additional questions, please reach out to: CISA.CAT@cisa.dhs.gov.
USMCA Implementation: The United States, Mexico, and Canada have all successfully passed the USMCA through their national legislatures. The USMCA requires each country subsequently certify their preparedness to implement the Agreement. On April 2, 2020, Canada and Mexico both performed this certification but the United States’ certification is pending. The U.S. Trade Representative performs this role for the United States. The USMCA will enter into force on the first day of the third month subsequent to the last country certifying their preparation. As of now, an entry-into-force date has not been determined. NAFTA rules apply until the USMCA enters into force. Register here for Dickinson Wright’s new webinar series on USMCA implementation.
The temporary restrictions on non-essential travel across shared land ports of entry between Canada, the U.S. and Mexico have been extended for an additional 30 days to May 21st. Essential travel and trade will continue unimpeded. Please visit the official DHS web and social media pages for updates on port operations.
State:
The Governor announced a robust group of individuals, business leaders, and former elected officials charged with economic recovery planning. Notably, he has named Tom Steyer as the Chief Advisor to the Governor on Business and Jobs Recovery.
The role of business interruption insurance remains uncertain. Insurance Commissioner Lara has requested data from insurers, while businesses and their advocates (including the Chamber) are requesting guidance to allow for claims to be granted. Litigation has begun in a number of states including California. Of the states who have proposed legislation to clarify, California is not yet one.
The Legislative Analyst’s Office published a preliminary look at the economic impact of coronavirus here. It has also made available a list of state funding actions here.
The Assembly is currently targeting May 4 as its resume-work date for policy committees, although it’s unclear if that will remain the case. Tentatively, plans indicate that bills will not be double-referred and adjusted processes will be adopted for in-person attendance. Each committee has set forth criteria to legislators about how they will determine legislation is “essential” and coronavirus related, which will narrow which bills are heard and will progress. It’s expected that we’ll learn what the final bills will be in the next week or two.
The Senate and the Assembly held special committee meetings to review spending thus far on the virus and to better understand next steps. While some questions regarding the full impact, the long-term planning, and the future of unemployment assistance are still outstanding, it was clear that some questions remain regarding the Governor’s use of executive orders without consulting legislators.
In the CARES Act, $150B was set aside for states and local governments. Not surprisingly, there has been confusion about how that money can be spent. This week, the Department of the Treasury issued this clarifying document.
Local:
This week, SANDAG published its employment analysis for the region. It can be reviewed here. Of note, it cites over 300,000 of our region’s residents are now unemployed.
San Diego estimates that the city could receive nearly $250 million of the $150 billion earmarked for state and local governments in the CARES Act. The federal government requires that these funds be used to pay for coronavirus-related costs and expenses and funds may not be used to make up for lost revenue from the pandemic to cover previously budgeted expenses.
On Tuesday, the City of San Diego reopened over 300 neighborhood parks, fields, and trails for passive use (walking, jogging, or biking). Beaches, boardwalks, golf courses, and the majority of Balboa Park remain closed. View the full list of reopened parks here.
Facial coverings are now required in public in the City of Chula Vista and National City. While it is not yet mandated in the City of San Diego, officials are recommending covering your face when in parks and other public settings.
A motion to reopen nonessential businesses in the County failed by a 3-2 vote. The County has stated it is tracking five different metrics as established by the federal government in regard to reopening considerations. Those include a downward trajectory of COVID-like syndromes and a downward trajectory of positive tests of the total tests within a 14 day period, according to County officials.
On Tuesday, the County Board of Supervisors unanimously approved a $5 million loan program for small businesses in the unincorporated areas of San Diego County. Applicants can request up to $50,000 with an interest rate no higher than 2% for a two-year term. The County will be working with The San Diego Foundation, who will be the distributor of the funds. Applications are not yet available but are expected to be open by next month.
The County of San Diego will be postponing the adoption of its budget until August.