Every time we've helped someone research these, we've found the same thing:

The Feds consider it part of Business income, and it goes on the Sched C. Yes, that makes it subject to SE, as well. And the costs that are offset are still allowed as business costs for reporting as usual. That's the point of these grants.

For your State, they might have different treatment.

The only CARES business grants that are not taxable are specifically stated as exempt in the law for the State (and for Feds). This would include, for instance, HVAC improvement grants, Food Bank grants, and Shuttered Venue grants, just to name a few.

They're reports on 1099-G when they are from a governmental unit; the 1099-Misc is in use from those entities that are not governmental direct grantors, such as a City Health Dept or DNRC program would have gotten the funding to disburse from the State, which got it from the Feds.

It seems this would be the article for these grants:

https://www.fisheries.noaa.gov/feature-story/commerce-secretary-announces-allocation-300-million-car...

As you can see, they are directed at businesses, meant to compensate for reduced revenue (not due to tariff pressure, for instance), and paid not to individual taxpayers, but Business.

This is the IRS treatment:

https://www.irs.gov/newsroom/cares-act-coronavirus-relief-fund-frequently-asked-questions

"Q. If governments use Fund payments as described in the Fund Guidance to establish a grant program to support businesses, would those funds be considered gross income taxable to a business receiving the grant under the Internal Revenue Code (Code)?

A. Yes. The receipt of a government grant by a business generally is not excluded from the business's gross income under the Code and therefore is taxable. However, a grant made by the government of a federally recognized Indian tribe to a member to expand an Indian-owned business on or near reservations is excluded from the member's gross income under the general welfare exclusion."