Analysis

5 Questions Facing Texas Construction Industry During Virus

By Katie Buehler
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Law360 (March 31, 2020, 10:20 PM EDT) -- Texas Gov. Greg Abbott on Tuesday deemed construction an essential business that can continue during the COVID-19 pandemic, giving some statewide consistency to an industry that has been rushing to make sense of localized restrictions.

But major cities and counties in Texas have set their own limits on how the industry can operate, some more strict than what the state order sets forth. Dallas County rolled out specific health and safety requirements for construction workers that took effect Monday, requiring portable toilets on job sites and temperature checks for workers, for example.

The patchwork of restrictions had mirrored the national patchwork, which includes states like New York and Pennsylvania that have halted practically all construction projects. The mixed bag of regulations along with the uncertainty of COVID-19's progression has the construction industry turning to legal counsel to help it navigate the pandemic.

Here, Law360 breaks down five questions facing the Texas construction industry.

Do Local or State Rules Apply?

The statewide order landed Tuesday afternoon, forcing cities and counties that had passed their own rules to weigh whether their local limits have been preempted.

Dallas County is now reviewing a March 29 order that set forth specific health and safety requirements for the construction industry to determine how it is affected by Abbott's order, a county spokesperson said late Tuesday.

Austin and Travis County had halted all construction that didn't relate to public works, affordable housing, essential businesses, social services facilities, facilities required to respond to the coronavirus pandemic or construction for maintenance.

Houston and Harris County had limited construction projects to essential or critical infrastructure, like Dallas County did, but had not instituted further requirements.

What Is Essential Critical Infrastructure?

Dallas County's order defined essential critical infrastructure as "all public and private facilities and assets, including both physical and cyber systems, and other functions and sectors vital to the security, governance, and public health, safety of Dallas County." It also references a list of sectors established by the U.S. Department of Homeland Security's Cybersecurity and Infrastructure Security Agency that includes chemical, commercial facilities, energy, financial services, information technology and transportation systems.

But Abbott's executive order added a new list of qualifying sectors to the mix, including hygiene products and services, hazardous materials, and law enforcement and public safety.

To find answers, Scott Greer, who heads King & Spalding LLP's energy and construction transaction practice, said he has told clients to write letters to the governor or public officials who authored the order. Texas has made that step easier for contractors by including a submission form on the state Division of Emergency Management website.

Dallas County prohibited "elective additions and maintenance" along with new construction projects that would have begun on or after Monday, according to the order. But not every municipality includes that.

And the list of allowed construction projects may shrink depending on the progress and effect of the pandemic, so it's important to keep an eye on local restrictions, Jones Day partner Roy Powell said.

What Does Compliance Look Like?

Dallas County laid out detailed restrictions for construction work, requiring employees to check their temperatures before leaving home and before beginning work at job sites, limiting the number of subcontractors working at one time and providing 15-minute breaks every four hours so employees can follow the Centers for Disease Control and Prevention's hand-washing guidelines, among other rules. The county order made noncompliance punishable by a fine of up to $1,000 or a 180-day jail sentence.

According to the order, the health requirements apply to any construction of critical or essential infrastructure, including residential, commercial and school projects.

Dallas-area contractors are racing to stock up on forehead thermometers, bottled water and extra portable toilets in order to comply with the health requirements. Most of the other guidelines had already been implemented once Dallas County issued its stay-at-home order, said Meloni Raney, president and CEO of TEXO Association, an affiliate of Associated Builders and Contractors and Associated General Contractors of America.

Employers will have to establish a point person to take and record workers temperatures before their shifts, Raney said. Workers with temperatures of 99.6 degrees Fahrenheit must stay home or be turned away from the job site, according to Dallas County's order. And gatherings during meals and breaks are prohibited.

The order also calls for mandatory hand-washing before workers begin work, after workers remove their gloves, before and after workers use shared tools and equipment, before and after meal and restroom breaks, and after a worker's shift ends.

Raney said supplies are drying up and construction companies are facing the challenge of working with suppliers they never had before to find portable toilets and other equipment. The Dallas County order requires each work site to have either one flushing toilet for every 15 workers or one portable toilet for every 10 workers.

"It's hard to implement quick standards overnight," she said.

What Are the Short-Term Effects?

Powell said some projects may have to temporarily halt for a day or two in order to get all the equipment needed for compliance. But once the infrastructure is in place, he said he believes the requirements will have "minimal impact" on productivity.

The most impact will come from the limiting of subcontractor crossover and the use of shift work, Powell said.

"Those affect productivity," he said.

Under the Dallas County order, companies are required to implement shift work to limit the number of employees working at one time and to allow for maximum social distancing while they are on the job. The order also prohibits subcontractor crossover, so electricians can't install lights while plumbers set up the pipe system, Powell explained.

The impacts will be felt differently on a case-by-case basis, and interior work will experience a greater toll than exterior work, he said.

With an outdoor project, Greer said the most important requirement to pay attention to is limiting the number of workers congregating at lunchtime.

"One thing is that contractors work more outside than inside, so it tends to be a little bit easier for safe distancing," Greer said. "When you need to pay attention is when you have workers sitting down and having lunch, in closer confinements."

What Are the Possible Long-Term Effects?

Managers may have to reorder their timelines and spread tasks out to comply with Dallas County's requirements. For example, workers finishing the interior of a high rise might have to be spread out among multiple floors instead of working on one or two floors at a time, Powell said.

"There is no question [the regulations] will have a significant impact on the progress of construction, costs, completion times, et cetera," he said.

Powell said he expects there to be a "lagging series" of litigation claims requesting compensation for the additional work and time projects will take because of the regulations. He also expects there to be fights over loan documents and force majeure claims, which have already become a topic of discussion.

But Raney said she believes that even with slight delays, the projects will continue because of the industry's quick response to changing regulations. No matter what, though, the workers' health and their families' health comes first, she said.

"There will be ramifications to this, but we have to balance it with the health and safety of our workers," she said.

--Editing by Jill Coffey.


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