Before adjourning for the year, Congress approved a fiscal year 2021 omnibus appropriations & coronavirus relief bill (H.R.133). The nearly 5,600-page bill funds the federal government through September 2021, provides $900 billion in new coronavirus aid, renews expiring tax provisions, and includes a package of bipartisan energy and environmental reforms. Below is a summary outline of key provisions that may be of interest.
- Coronavirus (COVID-19) Relief
Paycheck Protection Program Loans
The bill provides $284 billion in additional relief under the Paycheck Protection Program (PPP). Another round of PPP loans up to $2 million for businesses with less than 300 employees, provided it can show a 25% quarter-on-quarter decline in gross receipts from 2019 to 2020. Loan applications under $150,000 would be streamlined. This second round of PPP loans could be available within 1-2 weeks of enactment.
The bill sets-aside $35 billion for first-time borrowers, $15 of which is dedicated for first-time borrowers with 10 or fewer employees or loans less than $250,000 in low-income areas. An additional $25 billion is set-aside for second draw PPP loans for borrowers with 10 or fewer employees or loans less than $250,000 in low-income areas.
Other notable PPP changes included in the bill:
- Repeals IRS decision that would have prohibited businesses from deducting expenses covered by forgiven PPP loans (see “Tax Provisions” below).
- Allows 501(c)(6) organizations with less than 300 employees to apply for PPP loans if they meet certain additional criteria, primarily related to lobbying expenses and activities.
- Similarly, prevents PPP loan proceeds to be used by any recipient for lobbying activities.
- Publicly traded companies are now ineligible for a PPP loan.
- Group insurance (life, disability, vision, dental, etc.) benefits are included in payroll costs.
- Retroactively repeals requirement that borrowers deduct the amount of the Economic Injury Disaster Loan (EIDL) advance grant from their PPP loan forgiveness amount.
- Expands eligible and forgivable expenses to include certain operational expenses and supplier costs, property damage from public unrest not covered by insurance, personal protective equipment (PPE), and expenditures to comply with COVID-19 health protocols including air ventilation or filtration systems.
- Extends covered period for all PPP loans through March 31, 2021. This applies to loans made before, on, or after date of enactment, including the forgiveness of such loan.
SBA 7(a) Loan Program Enhancements
Loan guarantees under 7(a) are increased to 90% through October 1, 2021; increases the express loan amount from $350,000 to $1 million on January 1, 2021 and lowering to $500,000 on October 1, 2021. The Express Loan guaranty amount for loans of $350,000 or less is temporarily increased from 50% to 75%, and for loans above $350,000 the guarantee remains at 50%. On October 1, 2021, the guarantee reverts to 50% for all Express Loans. All lender and borrower fees are to be waived.
SBA Microloan Program Enhancements
The bill increases access to micro capital and technical assistance under the Microloan program for businesses impacted by the COVID-19 pandemic. It temporarily increases (1) the amount of time that borrowers can repay their loans from 6 to 8 year; and (2) the outstanding aggregate amount each intermediary may borrow from $6 million to $10 million to expand their capacity to deploy more capital to small businesses.
Additional Small Business Provisions
- $20 billion for a round of Targeted Economic Injury Disaster Loan (EIDL) Grants of up to $10,000 for businesses in low-income communities.
- Extends, expands, and clarifies the debt relief program for the payment or principal and interest on SBA 7(A), 504, and Microloan programs. $43.5 billion is provided for this.
- 100% deduction is allowed for business food and beverage expenses in 2021 and 2022. This is intended to help both small businesses and struggling restaurants.
Support for Individuals & Families
- Extends federal pandemic unemployment benefits through March 14 and provides an additional $300 per week “bonus” payment, or half of the original CARES Act amount.
- Provides a $600 stimulus check to every American, down from the $1,200 checks provided in the first round. $600 will be provided for each eligible child with no cap on household size. The value of the check phases-out based on income starting at $75,000 for single filers, $112,000 for heads of household, and $150,000 for joint filers. It reduces to zero at $99,000 for single filers and $198,00 for joint filers. Treasury Secretary Steven Mnuchin said the first checks could be issued within a week of enactment.
- Extends eviction moratorium through January 31, 2021 and creates a rental assistance program that may be used to cover home energy costs (see “Energy Provisions” below).
- Other Tax Provisions
Deduction of Business Expenses Covered by PPP Loans
The bill reverses an IRS decision that would have prohibited business from deducting expenses paid for with forgiven Paycheck Protection Program (PPP) loans. This correction applies to both PPP loans issued earlier this year and new PPP loans under the new legislation.
Payroll Tax Deferral
Allows employers that opted to defer payroll taxes under President Trump’s August 8, 2020 Executive Order to repay tax liabilities without penalties or interest through December 31, 2021. Penalties and interest will not accrue until January 1, 2022.
Tax Credits for Paid Sick & Family Leave
Extends tax credits for coronavirus paid sick and family medical leave through March 2021 and modifies the credits as if the corresponding employer mandates were extended through the end of March 2021 as well.
The bill includes a package of expiring tax provisions, known inside the beltway as “tax extenders.” Among the tax extenders of potential interest to MEMA members:
- The Commercial Buildings Deduction (Section 179D) is made permanent, indexed to inflation, and updated to the latest ASRAE standards.
- The Railroad Track Maintenance Credit (Section 45G) is made permanent at 40% of expenditures paid or incurred or 50% through December 31, 2022, subject to limits. This tax credit is important to energy distribution infrastructure in the Northeast.
- The $1.01 per gallon second generation biofuel producer credit is extended through 2021. The biodiesel blenders’ tax credit, which currently expires in 2022, was not addressed in this legislation and will likely be taken-up in the next Congress.
- The Production Tax Credit for wind power projects is extended for one year and offshore wind tax credits are extended through 2025. The solar investment tax credit, which was scheduled to drop from 26% to 22% in 2021, will stay at 26% for two more years.
- The $0.09 per barrel Oil Spill Liability Trust Fund Rate is extended through 2025.
- The Carbon Oxide Sequestration Credit (Section 45Q) is extended through 2025.
- The Biomass Stove Credit (Section 25D) is modified and extended at the current 26% rate through 2022 and lowers to 22% for 2023.
- The following tax credits are extended unchanged through 2021:
- The Alternative Fuels Credits under 6426(d) and 6426(e), including propane used as a transportation fuel, in forklifts, and certain other qualified equipment.
- Qualified non-business (residential) energy efficiency upgrades and retro fits under Section 25C. Biomass stoves are now prohibited due to the Section 25D credit.
- The Alternative Fuel Refueling Property Credit (Section30C).
- Energy Provisions
Use of Rental Assistance for Home Energy Costs & Arrearages
The bill creates a new $25 billion program that offers rental assistance program to certain eligible households through December 31, 2021. Notably, the bill also allows benefits under the rental assistance to be used to cover “utility and home energy costs”, including arrearages.
Alternative Fuel Infrastructure Grants
The committee summary of the bill indicates that alternative fuel infrastructure and mass transit projects would be made eligible for Surface Transportation Block Grant funding.
Support for Biofuel Producers
Among COVID-19 relief provisions targeting specific industries is $26 billion in agriculture and nutrition funding, half of which will be used for direct payments to farmers who suffered losses due to the coronavirus. The bill includes language supported by the National Biodiesel Board and other renewable fuel associations that specifically authorizes payments to producers of advanced biofuel, including biodiesel and renewable diesel.
Support for Advanced Energy Research
The bill provides $427 million for Advanced Research Projects Agency – Energy (ARPA-E), an increase of $2 million. This program is based on the successful Defense Advanced Research Projects Agency (DARPA).
Promotion of Forest Biomass & Bioenergy
Supports inter-agency coordination on forest biomass and bioenergy. Requires that agencies establish clear and simple policies for use of forest biomass as a carbon-neutral energy solution. This pivot in policy focus could enhance federal support for ethyl levulinate (EL) and other advanced biofuels produced from forest products, by-products, and residues.
Pipeline Safety Improvements
The bill includes numerous pieces of legislation designed to enhance pipeline safety, including the requirement of new regulations to mandate operators of regulated non-rural gas gathering lines, new and existing gas transmission pipeline facilities, and new and existing gas distribution pipeline facilities, to conduct leak detection and repair programs that meet the need for gas pipeline safety and protect the environment.
Other Energy Provisions of Interest
- Directs the EPA to create a cap-and-trade program to phase-down production and consumption of hydrofluorocarbons (HFCs) by 85 percent over 15 years.
- Reauthorizes the Diesel Emissions Reduction Program DERA) through FY2024.
- Directs the EPA to establish a competitive prize program that awards funds to direct air capture research projects designed to reduce CO2 from stationary sources.
- Expands the scope of various federal research projects to include carbon capture, utilization, and sequestration (CCUS) projects and carbon dioxide pipelines.
- Authorizes the Weatherization Assistance Program through FY2025 and provides $330 million for FY2021 and $350 million for each year thereafter. Expands the definition of “weatherization materials” to include “renewable energy technologies.”
- Other Relevant Funding Measures
Notably, the bill provides:
- $3.8 billion for the Low-Income Home Energy Assistance Program (LIHEAP), a small increase of $10 million (Note: Coronavirus legislation enacted in March 2020 included $900 million in emergency funding that can be used in either fiscal years 2020 or 2021).
- $2.86 billion for the research into energy efficiency and renewable energy programs at the Department of Energy (DOE), a 34% funding increase.
- $750 million in funding for fossil energy research and development at DOE, same as previous fiscal year.
- $9.24 billion for the Environmental Protection Agency (EPA), a 2% funding increase.
- $748 million for the Federal Motor Carrier Safety Administration (FMCSA), a 10% funding increase.
- $10 billion in emergency funding to support state departments of transportation and certain local transportation agencies during the coronavirus pandemic.
Links to full bill text and comprehensive legislative summaries:
Full Bill Text
COVID-19 Relief Provisions:
One Page Fact Sheet
Tax Provisions & Authorizing Matters:
One Page Fact Sheet
One Page Fact Sheet