NJ Bill Looks To Repay Restaurants For 'False' Reopenings

By Joyce Hanson
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Law360 (July 20, 2020, 2:59 PM EDT) -- Proposed bipartisan legislation in New Jersey would reimburse restaurateurs who made cash outlays when preparing for a "false" return to indoor dining during the COVID-19 pandemic before Gov. Phil Murphy reversed his July 2 reopening order, three state senators said Monday.

The bill, S2704, introduced in the state Senate on Thursday proposes to appropriate $30 million to the New Jersey Economic Development Authority from federal block grants allocated to the Garden State from the Coronavirus Aid, Relief and Economic Security, or CARES, Act, according to a statement released by the measure's three sponsors.

Democratic Senate President Steve Sweeney, Sen. Anthony Bucco, R-Morris/Somerset, and Sen. Vin Gopal, D-Long Branch, said the EDA would then provide direct financial support in the form of either loans or grants to restaurants, bars and catering businesses that had shelled out money for reopening supplies ahead of the July Fourth weekend before Murphy pulled the plug.

"Many restaurant owners had already spent money they didn't have, often on personal credit cards, to buy food, obtain PPE for staff and renovate their dining rooms to serve customers safely," Bucco said in a statement. "They incurred unnecessary losses through no fault of their own, in compliance with the governor's orders, and deserve to be compensated through the $2 billion in federal financial aid that remains unspent by the state."

Murphy had originally given the go-ahead for a return to indoor dining on July 2, but the governor reneged on his authorization after "knucklehead" crowds who refused to wear face masks at eateries and bars along the Jersey Shore and in trendy venues elsewhere around the state caused him to rethink his decision.

"We know that the majority of bars and restaurants have been doing the right things and enforcing social distancing among their patrons, but even one knucklehead bar can ruin it for everyone," Murphy said July 1, according to a transcript of his coronavirus briefing on that day. "It only takes one match to start a wildfire, and it only takes one infected bargoer to ignite a COVID-19 flareup that then shuts everything else all back down."

Hospitality businesses are among the hardest hit by the pandemic, and many that spent thousands of dollars to reopen are at risk of permanently going out of business, Sweeney said in a statement.

"This false start severely affected the food establishments that hired additional staff and spent money on equipment in anticipation of reopening," he said. "This [measure] will help reimburse the restaurants, bars and catering businesses that have followed the rules to protect the public's health but are now paying the price."

The governor asserted in his briefing that scientific data shows the risk of a flare-up in infections is significantly higher in an indoor setting than outdoors.

While he reversed his July 2 indoor dining reopening order, he said New Jersey would continue down the road to recovery by allowing casinos, outdoor amusement parks and recreational businesses to reopen, as well as some indoor recreational and cultural facilities, "where activities can be enjoyed while both social distancing and wearing a face covering."

A New Jersey Senate committee on June 12 approved a separate bill sponsored by Sweeney and Sen. Paul Sarlo, D-Wood-Ridge, to help hospitality businesses including restaurants and bars overcome financial challenges by skirting "red tape" requirements they usually face when opening outdoors, according to the Greater Atlantic City Chamber of Commerce.

S2522 would let the businesses provide outdoor service on their decks, patios, yards and parking lots without filing an application with local planning or zoning boards. It would also allow licensed establishments to extend liquor licenses to outdoor spaces without making a separate application to the Division of Alcoholic Beverage Control, the chamber said.

--Editing by Marygrace Murphy.

For a reprint of this article, please contact reprints@law360.com.

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