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Construction Industry Update: New March 31, 2020 Bay Area Shelter-In-Place Orders Impose Stricter Limits on Construction Activities

On Tuesday, March 31, 2020, San Francisco and six other Bay Area counties and one city each issued a virtually identical Shelter-in-Place Order (collectively, the “Order”) that is, in many ways, more restrictive than (i) Governor Newsom’s March 19, 2020 Stay-Home Executive Order N-33-20, and (ii) San Francisco’s March 16, 2020 Shelter-In-Place Order.

In particular, the Order limits the scope of certain construction-related activities previously exempt under those prior orders, and mandates the implementation of new “Social Distancing Protocols” for Essential Businesses still operating, which must be in place by April 2, 2020.

Who issued the Order? The Order was issued by the following seven counties—Alameda, Contra Costa, Marin, Santa Clara, City and County of San Francisco, San Mateo, and Sonoma (who issued the Order late Tuesday evening, after the other six counties)—and one city—City of Berkeley. Although the counties and cities each independently issued an Order, the text is nearly, if not completely, identical.

What does the Order do? The Order establishes stricter limits on business operations, including a narrower scope of construction authorized to continue under the Order, and requires a business to “cease all activities” in Bay Area locations subject to the Order, unless the business qualifies as an “Essential Business”. (Although non-Essential Businesses are allowed to continue “Minimum Basic Operations” necessary to maintain certain activities such as payroll.)

How are construction materials companies affected? Construction materials companies may qualify as “Essential Businesses,” as long as those companies “support or supply” other “Essential Businesses” with “supplies necessary to operate”.

For example, a construction materials company could qualify as an “Essential Business” allowed to continue operating notwithstanding the Order, if the company is supplying necessary materials (such as ready mixed concrete) to a construction project that qualifies as an “Essential Business”. However, as discussed below, the scope of construction projects that qualify as “Essential Businesses” has been strictly limited relative to the prior state and local orders.

What types of construction projects may qualify as “Essential Businesses”? The Order specifically identifies eight categories of construction projects that may qualify as “Essential Businesses”—the complete list is available in Section 13.f.v of the Order.

Of particular relevance to the construction materials industry are the following categories of construction projects:

  • Qualifying “Essential Infrastructure” projects, including airports, utilities, oil refining, roads and highways, public transportation, and telecommunication projects.
  • Affordable housing projects with at least 10% income-restricted units; and
  • Public works projects deemed “essential” by local administrators.

When did the Order go into effect and when will it expire? The Order became effective at midnight on March 31, 2020, and is presently scheduled to last until at least May 3. However, the Order is subject to extension beyond May 3. The Order directly supersedes the prior March 16, 2020 San Francisco Order.

What do qualifying “Essential Businesses” need to do in order to maintain operations? All “Essential Businesses” (or other qualifying businesses) that continue to operate under the Order must implement, by April 2, 2020, a “Social Distancing Protocol” that meets specific requirements. The Social Distancing Protocol is included at the end of the Order.]

The “Social Distancing Protocol” must (i) follow the format prescribed in the Order; (ii) be posted at or near the entrance of qualifying facilities; and (iii) be issued to all employees working at qualifying facilities.

In addition, “Businesses that include an Essential Business component at their facilities alongside non-essential components must, to the extent feasible, scale down their operations to the Essential Business component only”.

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Unlike Governor Newsom’s March 19, 2020 Executive Order N-33-20 (and the subsequent updates thereto), the Bay Area Order does not include explicit exceptions that directly apply to the California construction materials industry, as discussed in our recent blogs:

  • March 20 blog re: Executive Order N-33-20:
  • March 23 update re: construction materials industry; and
  • March 31 update re: industrial materials industry.

Accordingly, and because the Order is more restrictive than Governor Newsom’s Order, particularly with respect to the range of allowable construction activities, it is likely that operations of Bay Area construction materials companies will be more restricted under the Order, even though such operations would otherwise have been allowed to continue under the Governor’s Order.

The ongoing impacts of COVID-19 on business operations and related governmental orders are rapidly changing. The foregoing analysis is our understanding of the subject matter discussed above at the time of publication and is subject to further update and amendment.

If you have questions about the Order, or the effect of COVID-19 on business operations, please contact Kerry Shapiro at KShapiro@JMBM.com.

This Update is provided to our clients, business associates and friends for informational purposes only. Legal advice should be based on your specific situation and provided by a qualified attorney.

Kerry Shapiro
Kerry Shapiro chairs the Natural Resources & Mining Practice Group at Jeffer Mangels Butler & Mitchell LLP. He has represented the mining, construction and building materials industries on mineral extraction and land development projects for more than 25 years. Kerry also serves as General Counsel to the California Construction and Industrial Materials Association (CalCIMA). Contact Kerry Shapiro at KShapiro@jmbm.com.

Martin Stratte
Martin Stratte is a land use and environmental attorney at Jeffer Mangels Butler & Mitchell LLP. He assists with the entitlement of complex projects throughout California in accordance with CEQA, NEPA, and California’s greenhouse gas emission and climate change regulations. He also represents clients in related litigation. Contact Martin at MStratte@jmbm.com.

JMBM’s Natural Resources & Mining Practice Group
Jeffer Mangels Butler & Mitchell LLP has one of California’s leading natural resources and mining practice groups. The group is comprised of lawyers with over 25 years of practice in law firms, government, and consulting, and provides companies and trade associations with unparalleled counseling, compliance, and litigation services in nearly every area of federal and California natural resources and mining law.