Tomorrow, the U.S. House of Representatives is expected to vote on the HEROES Act, or CARES Act 2.0. The Senate will reportedly wait to take up any potential legislative package offering additional COVID-19 relief funds.
While the HEROES Act addresses a wide range of issues spanning 1800 pages of text, the following provisions are relevant to WG members and the agriculture industry:
- Direct Payments: Provides $16.5 billion for USDA to make direct payments to specialty crops, livestock, and other commodities, to cover COVID-related losses. [NOTE: The CARES Act provided $9.5 billion.]
- For eligible losses incurred during the first quarter of the calendar year (January 1 to March 31), USDA must compensate for 85% of the second quarter actual losses estimated by USDA (April 1 to June 30).
- For producers that incurred losses that are ineligible in the previous context, USDA must compensate equal to 85% for the first and second calendar quarters for their commodity (January 1 to June 30). In this case, USDA shall look at price differentiation factors based on location, varieties, and farming practices, using RMA data and/or data from other USDA agencies or educational institutions.
- Waives existing AGI limitations if at least 75% of a recipient’s AGI comes from farming.
- State Block Grants: Provides $100 million for state grants through the existing Specialty Crop Block Grant Program, with the purpose of supporting the specialty crop sector impacted by COVID-19. The SCBG program, is currently funded at $85 million/year. The amount allocated to each state is based on a formula that considers specialty crop acreage and production value within the state.
- Nutrition: Provides $25 million for states to pay for harvesting, processing, packaging or transportation costs incurred in the process of food donations.
- Defines a “priority agricultural product” as a dairy, meat, or poultry product, or a specialty crop, that is intended for food service, has experienced decreased demand due to COVID-19, and can’t reasonably be repurposed for retail.
- Commodity Credit Corporation (CCC): Creates new Congressional notification and oversight requirements on spending conducted through the CCC. The CARES Act authorized a partial CCC replenishment of $14 billion that will be available July 1.
- Requires written notification from USDA to Congress at least 90 days prior to spending activities, with details on the targeted commodities, benefit level, benefit type, expected beneficiaries, intended goals, justification, and expected market impacts.
- Net Operating Losses: Strikes Subsection J from IRC Section 461, allowing for farming losses even if subsidies have been received.
- Tax Deductions: No limit to state and local tax deductions for years 2020 and 2021.
- Payroll Tax Credits [Employer-Paid Expenses for Employees]: “Qualified disaster relief payments,” as defined in IRC Section 139, include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster. 50% up to $5,000 deductible for employee benefits paid during the pandemic.
- Payroll Tax Credits [Certain Fixed Expenses]: “Qualified fixed expenses’’ include the payment or accrual, in the ordinary course of the eligible employer’s trade or business, of any covered mortgage obligation, covered rent obligation, or covered utility payment. [NOTE: This provision partially duplicates the PPP program.]
- Employee Retention Credit: Amends the CARES Act employee retention credit, increasing the credit from 50% to 80%.
- Paid Sick and Family Leave Credits: Extends to the end of 2020.
- Paid Family Leave Credits: Increases from $10,000 to $12,000.
Small Business Provisions
- Paycheck Protection Program (PPP): Extended from June 30 to December 31, 2020.
- Deferment of PPP loans required for at least a year.
- PPP max loan is $10,000,000
- Main Street Lending Program: Expanded to include smaller businesses. Would wave current minimum loan size of $500,000, which would make smaller businesses eligible.
- Family Care: Provides $850 million for states to reimburse for day care of dependents of essential workers. [NOTE: Doesn’t explicitly say “agriculture” workers are essential, rather says if state or local officials deem industry essential.]
- Medical Equipment: Requires a report in 7 days from the administration to Congress regarding the need for PPE for critical infrastructure workers. Also requires a plan to fill the need.
- Emergency Leave: Extended by one year to December 31, 2021.
- Emergency Paid Sick Leave: Employer may ask for certification after employee comes back to work for 7 days if the employee takes 3+ days off for emergency sick leave.
- Worker Protections: Within 7 days, the DOL shall develop industry standards to protect workers from COVID-19; in 24 months the DOL shall promulgate long-term prevention standards.
- Expansion of Federal Emergency Sick Leave: Applies to employers with more than 500 employees. [NOTE: CARES Act applied the law to employers under 500.]
- Hero Fund: Creates a $190 billion grant program to be used for essential employee premium pay.
- Defines essential worker to include those regardless of immigration status.
- Provides one-year grace period of status for those who were here legally before January 26, 2020.
- Provides a 90-day extension of expired/expiring visas.
- States that the hiring of an undocumented worker, or the working of an undocumented worker in a critical infrastructure sector, shall not be unlawful. It’s deemed a deferred action until 90 days after the public health emergency terminates.