Is Your Construction Project “Essential”?

Governor Edwards’ executive order in response to the coronavirus pandemic directs individuals to stay at home unless they are performing an essential activity.  The order exempts job functions necessary to provide food, medicine and other vital services, and refers to guidance from the Department of Homeland Security, Cyber & Infrastructure Security Agency (CISA) regarding work activities that may be deemed “essential”.

CISA’s guidelines are designed to protect “essential critical infrastructure” and “ensur[e] continuity of functions critical to public health and safety, as well as economic and national security.”  The guidelines do not independently identify construction as an essential business.  Instead, construction, maintenance and repair are mentioned as part of several other industries, including the energy, chemical, public health, communication and transportation sectors.  This has led many to question whether construction activities are exempt from Louisiana’s stay at home order only if they relate to “essential critical infrastructure” projects.

The state appears to have taken an expansive approach.  The Governor’s office has issued a list of “Additional Illustrative Examples of Critical Infrastructure Businesses Consistent With Cyber and Infrastructure Security Agency Guidance”, which generally defines “Essential Infrastructure” to encompass “Construction, including, but not limited to, construction required in response to this public health emergency, hospital construction, construction of long-term care facilities, public works construction, and housing construction.”  This indicates that the construction industry as a whole is considered essential and therefore exempt from the stay at home mandate.  Local authorities, however, have issued their own directives which appear to be more restrictive.  For example, the City of New Orleans has released guidelines narrowly exempting “Businesses necessary for required construction and/or infrastructure projects; ports and maritime, railroads, solid waste collection and removal, utilities, on- and offshore energy production, energy transmission, refineries and chemical plants, pipeline, and telecommunications systems”. The situation is less than clear.

Texas is struggling with similar issues under Governor Abbott’s executive order in response to COVID-19, which also references CISA’s guidance. Dallas, Houston and San Antonio have interpreted Abbott’s order to allow commercial construction to continue, but Austin has stated that construction activities are prohibited “except in very limited circumstances” such as public works and the construction of facilities that provide social services.

Resolution of these issues will have a significant impact on claims for delay damages and extended general conditions costs due to the coronavirus outbreak. In light of the unprecedented stay at home orders being issued throughout the country (and the varying interpretations of those orders), the construction industry can expect to face a plethora of disputes.  Owners and contractors would be wise to review provisions in their contract documents governing suspensions, work stoppages, compensable delays and force majeure.


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