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Volume X, Number 269

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Coronavirus Impact on Construction of Energy Projects

The U.S. Renewable Energy Industry, including its construction market, like every sector of the economy, is being affected by the outbreak of coronavirus. A number of announcements have been made beginning mid-March imposing some local and state restrictions on commercial activities, which in some cases have included limitations on construction activities. While no one knows how long these orders will remain in place, it is clear that the situation is changing constantly. However, the energy industry is a critical infrastructure industry for the nation, and was designated as such by the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) on March 19, 2020.  

On March 23, CISA updated the guidance regarding essential services (the CISA Advisory).  The update to the CISA Advisory describes essential workers within the electricity industry as “Workers who maintain, ensure, or restore, or are involved in the development, . . . expansion, or operation of the generation, transmission, and distribution of electric power. . .” 

As a result, at the moment, two things are clear:

First, operations and maintenance of energy infrastructure, including renewable energy, have not been limited anywhere in the country.

Second, very few local governments or states have attempted to limit construction in the energy industry, because it is federally designated as a critical infrastructure industry, and its workers are designated as essential critical infrastructure workers.   

The following resource is meant to track state-level orders that could impact construction in the renewable energy industry, and does not include local orders unless specifically noted. Our updates will serve as a resource for owners, contractors, laborers, suppliers, and financing parties attempting to understand the current landscape. We are planning to monitor many states of special interest to the renewable energy industry, and will seek to stay abreast of developments in those states.

We provide links to government orders and guidance. Every reader should understand that these orders are being drafted quickly to address a national emergency. They may not have the precision of carefully crafted legislation, and many of them leave room for interpretation. However, their intent is generally clear.  If a state wanted to prohibit construction in the energy industry, which appears to have happened in only one state (Pennsylvania) as of today, we anticipate it would be addressed clearly. The decisions are made at the state level, but every state should be aware of the CISA Advisory’s designation of the energy industry as a critical national industry and the updated guidance regarding essential services that specifically defines essential workers as workers who maintain, ensure, or restore, or are involved in the development of electric power.  If you review an order for a particular state, and you are in any doubt, you should call a state government regulatory body, or your legal counsel, for clarification.

 

 




 State

Issued Orders

Summary/Analysis 

 Arizona

• On March 23, the Governor issued Executive Order 2020-12 which prohibits the closure of essential services.

•  The order states that no county, city or town may make or issue an Order, rule or regulation that restricts or prohibits any person from performing any function designated as an essential function.

•  Essential Infrastructure Operations are listed as an essential function. These operations include construction, operation and maintenance of utilities, electrical (including power generations and distribution).

No prohibition on construction work for renewable energy projects has been issued.

 California

•  Order issued by Governor on March 19

•  Order requires all persons to stay at home except as needed to maintain continuity of 16 infrastructure sectors, identified in the CISA Advisor, as vital to the security, public health and safety of the state.

•  Energy is listed as one of the critical infrastructure sectors. 

•  The federal guidance includes construction workers as workers that are “essential to continued critical infrastructure viability.” 

No state-wide prohibition on construction work for renewable energy projects has been issued.

 Connecticut

• On March 20, the Governor issued an Order ordering all workers at “nonessential” businesses to stay home.

•  The Department of Economic and Community Development (“DECD”) issued lawfully binding guidance on March 22, about which businesses are essential.

•  The following construction categories are considered essential: (i) all skilled trades such as electricians, HVAC, and plumbers, (ii) general construction, both commercial and residential, (iii) other related construction firms and professionals for essential infrastructure or for emergency repair and safety purposes, (iv) planning, engineering, design, bridge inspection, and other construction support activities.

No prohibition on construction work for renewable energy projects has been issued.

 Florida

• On March 24, the Governor issued Executive Order 20-83 implementing protective measures for vulnerable populations, gatherings of private citizens, and density of the workforce.

•  The Order directs the State Surgeon General and State Health Officer to issue a variety of public health advisories including an advisory against all social or recreational gatherings of 10 or more people and urging those who can work remotely to do so.

No prohibition on construction work for renewable energy projects has been issued.

 Georgia

•  On March 23, 2020, the Governor issued an Executive Order that ordered: 1) the closure of bars; 2) that no businesses shall allow more than 10 persons to gather at a single location if such gathering requires persons to be within six feet of another person; and 3) certain at-risk populations to isolate, quarantine or shelter in place  This order will remain in effect for 14 days, beginning on March 24, 2020 and continuing until April 6, 2020.

No prohibition on construction work for renewable energy projects has been issued.

 Illinois

•  Order issued by Governor on March 20, 2020.

•  Order requires all persons to stay home unless leaving for “essential activities,” including performing work providing essential products and services at Essential Businesses or Operations (which includes “Essential Infrastructure” and “Manufacturing” or supplying essential products and services for the energy industry). 

•  Essential Infrastructure includes “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);”

•  The Order notes that, “Essential Infrastructure shall be construed broadly to avoid any impacts to essential infrastructure, broadly defined.”

•  Manufacturing includes companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as energy.

No prohibition on construction work for renewable energy projects has been issued.

 Louisiana

•  On March 22, the Governor issued Proclamation Number 33 JBE 2020, implementing a statewide Stay at Home Order.

•  The Order will be in effect from March 23, 2020 at 5:00PM until Monday, April 13, 2020, unless terminated sooner.

•  The order makes reference to critical infrastructure workers outlined in the CISA Advisory, which includes energy industry workers.

•  The Office of the Governor posted Illustrative Examples of Critical Infrastructure Businesses, which includes construction in connection with Critical Trade, Manufacturing, and Essential Infrastructure.  

No prohibition on construction work for renewable energy projects has been issued.

 Maryland

• On March 23, the Governor issued Executive Order 20-03-23-01, to close all non-essential Maryland businesses, effective at 5 PM the same day, and to announce a $175 million business relief program for state business and workers. The Governor adopted the federal guidelines issued in the CISA Advisory about “critical infrastructure sectors” to define those businesses that would be deemed essential and not subject to closure.  

• The “non-exhaustive” list of businesses, organizations and facilities in the Interpretive Guidance identified 89 industries/businesses in the fifteen sectors including Commercial Facilities, which includes commercial construction, and Energy.

No prohibition on construction work for renewable energy projects has been issued.

 Massachusetts

•  On March 15, 2020, the Governor issued an Order prohibiting the assemblage of people in groups of over 25 people.  

•  The related Guidance issued with the Order specifies that the Order does not apply to normal operations at airports, bus and train stations, medical facilities, libraries, shopping malls and centers, polling locations, grocery or retail stores, pharmacies, or other spaces where 25 or more persons may be in transit. 

•  On March 23, the Governor issued an Order requiring all businesses and organizations that do not provide “COVID-19 Essential Services” to close their physical workplaces and facilities to workers, customers and the public as of Tuesday, March 24th at noon until Tuesday, April 7th at noon.  

•  The list of “COVID-19 Essential Services” includes construction related to critical or strategic infrastructure, which includes energy services.

•  Boston and Cambridge have halted all construction in their respective cities. All projects must be stopped and the work zones secured for at least two weeks (until April 5). 

No prohibition on construction work for renewable energy projects has been issued other than local restrictions in Cambridge and Boston.

 Michigan

•  The Governor issued a “Stay Home / Stay Safe” Order, effective On March 24, at 12:01 AM, which exempted Critical Infrastructure Workers as defined by the federal government, which includes energy workers. Previously on March 16, the Governor had issued an Order which temporarily prohibited large assemblages and events and school closures, but had exempted construction activities from the Order.

•  The Stay Home/Stay Safe Order is in effect from March 24, 2020 at 12:01 AM through April 13, 2020 at 11:59 PM.

No prohibition on construction work for renewable energy projects has been issued.

 New Jersey

•  On March 21, the Governor issued an Order ordering all residents to stay home and all nonessential retail businesses to close by 9 PM on March 21. 

•  To the extent a business or non-profit has employees that cannot perform their functions via telework or work-from-home arrangements, the business or non-profit should make best efforts to reduce staff on site to the minimal number necessary to ensure that essential operations can continue.

•  Examples of employees who need to be present at their work site in order to perform their job duties include construction workers.

No prohibition on construction work for renewable energy projects has been issued.

 New York

•  The Governor issued an Order mandating that 100% of the workforce must stay home, but excludes those providing essential services from the order. 

•  A previous order had defined essential services generally, and further Guidance provided additional detail on what constitutes an “Essential Service,” which specified that Construction, including skilled trades such as electricians and plumbers and other related construction firms and professionals for infrastructure or for emergency repair and safety purposes are included as essential services. 

 No prohibition on construction work for renewable energy projects has been issued.

 North Carolina

•  On March 23, the Governor issued an Order adding additional limitations on mass gatherings. The Order is effective at 5:00 PM on Wednesday, March 25, 2020, and shall remain in effect for 30 days unless rescinded or superseded.

•  A mass gathering is defined as any event or convening that brings together more than 50 persons (down from 100 in the previous order) in a single room or single space at the same time, such as an auditorium, stadium, arena, large conference room, meeting hall, or any other confined indoor or outdoor space. 

• A mass gathering does not include normal operations at airports, bus and train stations, medical facilities, shopping malls and centers. It also does not include office environments, factories, grocery stores, and child care facilities.

• As of Friday, March 20, 2020, the Governor stated that a shelter in place order was not being considered. 

No prohibition on construction work for renewable energy projects has been issued. It is reported that local authorities are encouraging special safety measures at construction sites to minimize group interactions.

 Ohio

•  On March 9, 2020, the Governor issued an Executive Order declaring a State of Emergency and ordered all citizens to heed the advice of the Department of Health.  

• On March 22, 2020, the Ohio Department of Health issued a Director’s Stay At Home Order that requires businesses to cease all activities except minimum basic operations, and encourages all “Essential Businesses and Operations” to remain open.

•  The Director’s Order defines construction and power generation and distribution as Essential Infrastructure, and Essential Infrastructure is a subset of Essential Business and Operations.

• The Director’s Order went into effect on March 23, 2020 at 11:59 p.m. and will remain in place until April 6, 2020 unless it is rescinded or modified.

No prohibition on construction work for renewable energy projects has been issued.

 Oregon

•  On March 23, the Governor issued Executive Order 20-12, ordering individuals to stay at their place of residence and avoid non-essential social and recreational gatherings, regardless of size, and requiring certain businesses to close, for which close personal contact is difficult or impossible to avoid.

•  The order also requires all businesses to implement work-from-home strategies to the extent possible. If impossible, the business must establish appropriate social distancing policies.

No prohibition on construction work for renewable energy projects has been issued.

 Pennsylvania

•  On March 19, the Governor issued an Order that prohibits operation of business that is not a “life sustaining business regardless of whether the business is open to members of the public”

•  Order includes a list of life sustaining businesses that may remain open (updated on March 20, 2020)

•  No construction industries are deemed life sustaining per such list, except that emergency repairs are permitted

•  Enforcement actions will be taken against non-compliant businesses beginning March 23, 2020 at 8:00 A.M.

•  On March 24, the Governor published a list of frequently asked questions regarding what constitutes a life-sustaining business.  The guidance suggests that any industry not included on the Governor’s prior list of life-sustaining businesses should suspend operations.  Any business that is not considered “life sustaining”, but is included in any “critical infrastructure category” on the CISA Advisory should submit a waiver to the Pennsylvania Department of Community and Economic Development to seek an exemption from the Governor’s order.

Construction work on renewable energy projects must be suspended until further notice. Construction of renewable energy projects may fall into a critical infrastructure category and may be entitled to a waiver from the state; however, construction should remain suspended until a waiver is obtained.

A Department of Community and Economic Development spokesperson has reported receiving over 15,000 such waiver requests (state-wide for all sectors) as of March 24.

 Texas

•  On March 19, the Governor issued Executive Order No. GA-08 relating to COVID-19 preparedness and mitigation.

•  The Order is effective on a statewide basis at 11:59PM on March 20, and continuing until 11:59PM on April 3, subject to extension.

•  The order states that all critical infrastructure will remain operational.

No prohibition on construction work for renewable energy projects has been issued.

 Wisconsin

• On March 24, the Governor issued an Order that requires the closure of all businesses in the state except those deemed “Essential Businesses and Operations.”

• The Order defines energy as a critical infrastructure sector, and considers construction as an essential business.

• The Order went into effect on March 25, 2020 at 8:00 a.m. and will remain in place until April 24 unless suspended by a subsequent order.

No prohibition on construction work for renewable energy projects has been issued.

For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the CDC and the World Health Organization.

© 2020 Foley & Lardner LLPNational Law Review, Volume X, Number 87

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About this Author

Darin M. Lowder Partner Foley Energy Finance Corporate
Partner

Darin Lowder is a partner and business lawyer with Foley & Lardner LLP. He is a member of the firm’s Finance Practice. Although Darin’s practice extends to all aspects of business law, he currently focuses his practice on energy, project finance, project development, and related tax and public financing. Darin is also a member of the Energy Industry Team.

Darin has experience with numerous project technologies including commercial, utility-scale, and residential-scale solar photovoltaic systems; onshore and offshore wind development; biomass and biofuel projects; and other...

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Legal, Business, Jeffery Atkin, Foley Lardner, Environmental Attorney
Partner

Jeffery R. Atkin is a partner and business lawyer with Foley & Lardner LLP. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, private placements, mergers and acquisitions, joint ventures, real estate development and equipment procurement and leasing. Mr. Atkin is chair of the Solar Energy Team, co-chair of the Energy Industry Team, and a member of the Latin America Practice.

Mr. Atkin’s experience in renewable energy and project finance includes representing developers, investors, lenders and landowners in the construction, development, acquisition and financing of renewable energy generation facilities, including wind, solar, hydro, geothermal and biomass facilities.

213.972.4557
Legal, Business, Annie Tsai, Environmental Attorney, Foley Lardner Law Firm
Special Counsel

Annie Tsai is a business lawyer and special counsel with Foley & Lardner LLP. She assists clients on various stages of solar project development. Ms. Tsai is a member of the firm’s Energy Industry Team and the Transactional & Securities and Finance & Financial Institutions Practices.

Prior to joining Foley, Ms. Tsai worked for Southern California Edison’s Energy Procurement Group. She optimized the utility’s multi-billion dollar conventional and renewables portfolio as a part of the energy trading team. Ms. Tsai advised negotiation...

213.972.4547