National emergencies. Pandemic. Lockdown. Emergency assistance. Government help.
As business owners, investors and organizational leaders, we are all facing uncertainty and challenges like we've never had to manage before. COVID-19 has the potential to dramatically impact your business or nonprofit in both mundane and profound ways. I will be providing a series of concise and substantive updates as the situation evolves.
I’ll get more specific in future posts. This first update is intended to provide an overview of what a "Peacetime Emergency" means in terms of governmental powers and the impact on your rights and your opportunity to get help from local, state and federal governments – and why some actions can be taken quickly, and others take longer than we’d like - including grants, loans and other support for businesses.
Substantively, most organizations have been rightly thinking first and foremost of employee and team member health and safety. My Avisen Legal colleague Bill Egan is a leading resource for your Employment Law-related questions – it’s worth reviewing his excellent COVID-19 Workplace Legal Issues memo.
For quick background, I’ve served in the State Legislature during the 2008-09 global economic collapse; written my state’s Energy Emergency Plan and on other emergency preparedness policies, and been a business owner for 12 years. As a CEO and entrepreneur, I found it really helpful to have experienced advisors during times of uncertainty. Please feel free to call or email me - or anyone else at Avisen - for quick advice, basic questions or challenging questions.
WHAT DOES A "PEACETIME EMERGENCY" MEAN FOR MY BUSINESS?
On March 11, the World Health Organization (WHO) declared the coronavirus that causes the COVID-19 disease a global pandemic. Within a matter of hours, both the federal government and most states moved quickly to declare a National Emergency, or a state emergency.
The declarations of emergencies unlock a series of specific powers already specified under federal or state law; they also empower the President or a Governor to fill in the gaps where existing laws do not quite fit the specific emergency.
Even in a massive, widespread emergency like COVID-19, Executives tend to seek a path that is “the least inefficient” way of mobilizing assistance. For this reason, the President and Governors are taking limited steps themselves, through Executive Orders, and empowering agencies and departments to use as much of existing powers to address the emergency. Even with the Congressional and State Legislative action, we see lawmakers choosing to expand existing programs like Unemployment Insurance and SBA Loans, rather than try to create entire new programs.
BALANCE OF POWERS vs RIGHTS IN AN EMERGENCY:
Both the U.S. Constitution and State Constitutions grant to the Executive - be it the President or a Governor - significant emergency powers. Congress and State Legislatures have provided legal authority to the Executive to act quickly in cases of legitimate emergency, thinking that the Legislature or Congress might act too slowly to respond, or even not be in session and able to act. But the steps taken by the Executives need to be directly related - and in line with - the scale and scope of the emergency.
But any action taken in an Emergency must also balance the due process rights of individuals and businesses, as well as the "takings" clause that does not allow the government to take private property for public purposes absent clear and compelling public purposes.
Any individual or business harmed by an emergency action could ask a Court to overturn that individual action, because of the balance between "securing liberties" granted in the US Constitution, and the protection of the "common defense... and [provision of] general welfare." Further, Legislatures and Congress often cite the Separation of Powers principle in requiring Executives to use legislation, rather than executive orders, on everything but the most time-sensitive matters; we are seeing the first signs of this in a few states, including in my home state of Minnesota.
As a result, Executive declarations of emergencies tend to be include explicit and well-documented rationale for the emergency - and concrete rationale for each specific action. These actions are most often made through Executive Orders, or Emergency Executive Orders.
EMERGENCY DECLARATIONS: FEDERAL and STATE
On March 13, 2020, President Trump declared a national emergency that started March 1, citing his Constitutional authority as the chief Executive and the National Emergencies Act and other related Acts of Congress. You might hear this referred to generally as the "Stafford Act" as a general term.
This blanket declaration provides the President and Executive Agencies - such as the Department of Health and Human Services (HHS) - to begin taking a series of discrete actions. Many actions require explicit direction from the President, through further Executive Orders, and other actions can be taken by Federal Agencies because of prior Congressional authority.
The March 13 order included allowing HHS to relax HIPAA privacy rules and to waive some requirements of Medicare, Medicaid and the State CHIP to provide greater flexibility in responding to this global pandemic. At a federal level, during the first days following the emergency declaration, President Trump has issued only two other orders or proclamations – a day of prayer and a travel ban. All other federal actions are being taken in reliance on i) existing law; ii) the expanded flexibility under the first Executive Order on March 13, or iii) the Families First Coronavirus Response Act, enacted March 18, 2020.
STATE EMERGENCY DECLARATIONS:
Each State has specific emergency authorities, delineated in law and implied in their State Constitution. I’ll focus on Minnesota, briefly.
On March 13, 2020, Minnesota Governor Tim Walz declared a Peacetime Emergency and issued Emergency Executive Order 20-01 in response to the COVID-19 infectious disease, which the World Health Organization declared a global pandemic on March 11. Gov. Walz has clear legislative authority to declare this Peacetime Emergency, in Minnesota laws, specifically Section 12.31.
In addition to proceeding cautiously to maintain and build public confidence, Gov. Walz has also issued a several specific Emergency Executive Orders, each time providing clear rationale that connects the peacetime emergency conditions with the actions taken. You can read all of those Executive Orders on the Governor’s website.
For instance, on March 14, 2020, Gov. Walz issued Emergency Executive Order 20-02, directing the Commissioner of Education to temporarily close schools in Minnesota. And on March 16, 2020, Gov. Walz issued a Emergency Executive Order 20-05 to allow laid-off workers to submit Unemployment Insurance immediately.
I expect that in coming days, we will see substantial further action – via legislation, Executive Orders and existing authority for federal and state agencies – on business support; worker support; tax filing deadlines, and especially in relaxing regulations on medical providers, medical equipment manufacturers and the supply chain supporting food and medical supplies.
I will focus on each of these areas in coming updates. In the meantime, please call or email me - or anyone else at Avisen – for everything from a quick check-in to a deep dive on a specific problem.
Stay safe and healthy, and #StayHome.