The oil and gas markets have suffered historically low prices in recent weeks. On March 30, 2020, the price of West Texas Intermediate crude oil closed at $20.09 per barrel, the lowest since February 2002. And in the last six months, the price of Henry Hub gas has fallen by more than 30 percent, and more than 40 percent since its recent peak on November 5, 2019 at $2.89 per MMBtu.

For many operators, these prices are economically prohibitive—it may make more business sense to shut-in a well or look for other relief until the pricing environment improves. But operators should proceed with caution when considering such measures, as their legal viability will depend on the jurisdiction, the specific lease language, and the relevant factual circumstances.

Whether a lease will permit a lessee to shut-in all of the wells located on the lands covered by the lease, or pooled therewith, because of depressed market conditions, yet maintain the lease in effect by paying shut-in royalties, will depend upon the particular language of the lease’s shut-in royalty clause. There is no industry standard shut-in royalty clause, and the language of these clauses widely varies.

As a gating question, operators will need to consider whether the well is capable of producing in paying quantities. Even where the shut-in royalty clause is silent about production in paying quantities, most courts will imply a requirement that the well be capable of “producing in paying quantities” at the time of shut-in for an operator to invoke the shut-in royalty clause. “Paying quantities” is generally understood to mean a profit in excess of certain operating expenses, however, the costs to be included in the calculation of operating expenses and the length of time over which “production in paying quantities” is to be measured, are fact intensive and vary by state. Note also that in the absence of express lease language, a strict application of this principle may prevent a lessee from invoking the shut-in royalty clause where a well has been drilled but not yet completed, or a recently completed well has increasing—but not yet profitable—production.[1] While this may seem like a logical requirement, the states are divided on this question: some equate “production” with actual production and sales, while others hold the term to mean “capable
of producing in paying quantities” and do not require sales of the product.[2]

A second threshold consideration is determining whether the shut-in royalty clause has a triggering event. Certain shut-in royalty clauses provide for a payment of shut-in royalties while there is a gas well on the premise, “but gas is not being sold or used,” other clauses have a more specific reference to the reason for shutting-in the well. These can include, among other things, lack of market, force majeure, executive orders, or government restrictions.

Take, for example, a shut-in royalty clause that allows a shut-in “if . . . oil or gas be discovered on said land which cannot be profitably produced for lack of a market at the well or wells.” The term “lack of a market” could be interpreted as lack of an acceptable or economically rational market.[3] Historically, an available gas market was often limited to only a single potential purchaser. Today, in many basins, it is more common to see multiple purchasers, including even multiple midstream providers. Thus, depending on the specific lease language and the particular geographic market, an operator who decides to shut-in a well because of low commodity prices may find it more difficult to argue that no market exists.

Even for shut-in royalty clauses that do not include a “lack of market” provision, some courts may still require the lessee to prove that no market exists. Where a lessee claimed “it would not be able to recover its costs of repair” given the limited and depressed market, the Kansas Supreme Court found that even a “limited” and uneconomical market did not allow the lessee to invoke the shut-in royalty clauses.[4]

Continued payment of shut-in royalties that allow for a well to be shut-in for a lack of market by a force majeure, or another triggering event such as a government issued order, may be a viable way to keep the lease alive until a market becomes available.[5]

The shut-in royalty clause may also contain certain limitations to which the lessee must adhere. For example, many leases limit the applicability of the shut-in royalty clause to wells producing only gas, and therefore wells producing oil or a combination of both oil and gas may not qualify. There is no clear authority on what constitutes a “gas well” or an “oil well,” thus reference to state specific statutory or regulatory provisions is necessary. In addition, the shut-in royalty clause in a lease of more recent vintage may expressly limit the length of time that the lease may be extended solely by virtue of the shut-in royalty clause. If so, at the end of the specified time period, the well must be returned to production or the lease must be maintained in effect by some means other than the shut-in royalty clause.

Even separate from a shut-in royalty clause, a lease may offer other options to cease production without resulting in termination of the lease. Some leases may have a “price trigger,” such as a clause that states that if, in the event oil or gas prices fall below a certain threshold, a lessee may be excused from continuing unprofitable production. Such clauses are conceptually related to the common law defense of commercial impracticability to nonperformance of a contract: because of factors outside of the control of the lessee, it is no longer practicable to produce under the circumstances. Some leases may also provide for alternative “triggering” events, such as force majeure, that allow for a lessee to extend the term of a lease. A lessee should make a careful examination of these clauses, as well as the law of the governing jurisdiction. For a more detailed analysis of force majeure and impracticality, see this recent Davis Graham Legal Alert.

Davis Graham attorneys are applying their best-in-market energy expertise to counsel clients through these issues, as they have in previous downturns in oil and gas pricing.

Please contact a Davis Graham partner if we can assist you in any way.

[1] See, e.g., Rogers v. Osborn, 261 S.W.2d 311 (1953).

[2] Compare Freeman v. Magnolia Petroleum Co., 171 S.W.2d 339 (Tex. 1943), with Pack v. Santa Fe Minerals, 869 P.2d 323 (Okla. 1994).

[3] Martin & Kramer, 3 Williams & Meyers Oil and Gas Law, § 632.4.

[4] Tucker v. Hugoton Energy Corp., 855 P.2d 929, 936 (Kan. 1993).

[5] McDowell v. PG&E Res. Co., 658 So.2d 779 (La. App. 1995).

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The enactment of the CARES Act is the latest action taken by the U.S. Government to assist individuals, families, and businesses impacted by the COVID-19 pandemic and the damage it has inflicted on the U.S. economy. This Davis Graham Legal Alert summarizes the key business-related tax provisions contained in the CARES Act and other COVID-19 legislation, as well as the tax implications of actions taken by the President and the Internal Revenue Service (“IRS”) in response to the COVID-19 pandemic.

As discussed in more detail below, the key business-related tax developments are:

• CARES Act:
  • For taxable years beginning before January 1, 2021, net operating loss carryovers (“NOLs”) are no longer subject to an 80% taxable income limitation, and NOLs from 2018, 2019, or 2020 can be carried back five years;
  • For taxable years beginning in 2019 or 2020, the interest expense limitation in Code section 163(j) is increased from 30% to 50% of adjusted taxable income, and taxpayers can use 2019’s adjusted taxable income for purposes of the 2020 calculation;
  • The forgiveness of loans under the “Paycheck Protection Program” will not create cancellation of indebtedness income;
  • Excess business loss limitations for individual taxpayers have been eliminated for 2018, 2019 and 2020;
  • Corporate AMT credits are 100% refundable as of 2019;
  • The creation of an employee retention credit of up to $10,000 per employee (subject to certain limitations);
  • The deferral of employer payroll taxes due for the rest of 2020 (50% due at the end of 2021 and the other 50% due at the end of 2022); and
  • Corrected the so-called “retail glitch” so that businesses may immediately deduct amounts spent on certain improvements to property.

• Families First Act: Certain amounts paid as wages under the emergency expansion of the Family Medical Leave Act and Paid Sick Leave Act are available as refundable payroll tax credits.

• National Emergency Declaration: Allows employers to make payments to employees to reimburse expenses related to COVID-19 that are tax free to the employee and fully deductible by the employer.

• Notice 2020-18:
  Delayed tax filing and payment deadlines from April 15 to July 15.

CARES Act

Net Operating Losses

Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), NOLs generated after 2017 generally could only be carried forward to future years and could not be carried back to previous years. Additionally, such NOLs could only be used to offset 80% of a taxpayer’s otherwise taxable income. Under the CARES Act, NOLs that arise in 2018, 2019, or 2020 can now be carried back up to 5 years, and the 80% limitation will not apply for all tax years that begin before January 1, 2021.

These changes will allow businesses to obtain immediate and critical cash flow by utilizing NOLs resulting from the current COVID-19 crisis (or the preceding two years) by filing amended tax returns for prior years to obtain refunds. In addition, these changes allow a corporation to carryback NOLs to years in which the corporate tax rate was 35%, increasing the value of such NOLs.

Limitation of Business Interest

Section 163(j) of the Code limits the ability of certain taxpayers to deduct business interest in a given taxable year. Prior to the CARES Act, the limitation for a taxable year was generally equal to the sum of (i) the business interest income of the taxpayer, and (ii) 30% of the adjusted taxable income of the taxpayer. Under the CARES Act, the calculation of the business interest deduction limitation for tax years beginning in 2019 and 2020 now includes 50% (rather than 30%) of the taxpayer’s adjusted taxable income.

For 2020, any taxpayer can elect to utilize its 2019 adjusted taxable income rather than its 2020 adjusted taxable income in calculating its 2020 business interest deduction limitation, increasing the deductible business interest expense for taxpayers with higher adjusted taxable income in 2019 than in 2020.

Paycheck Protection Program Loans with Loan Forgiveness

The Small Business Administration is to provide $349 billion in loans to eligible recipients including small businesses, self-employed individuals, and nonprofits. The loan proceeds may be used for payroll, rent, mortgage payments, and utility costs. To the extent such funds are so used within the 8-week period beginning on the date the loan is originated, such amounts may be forgiven without the recognition of cancellation of indebtedness income. The amount forgiven is determined by reference to the number of employees retained (without significant reduction in salary or wages).

Excess Business Loss Limitation

TCJA capped the amount of “net business losses” that an individual could take against other sources of income at $250,000 for single filers ($500,000 if married filing jointly). Any excess business losses were converted to net operating losses, subject to additional limitations. The CARES Act eliminates the excess business loss limitation for 2018, 2019 and 2020.

Refundable AMT Credits

While TCJA eliminated the alternative minimum tax (“AMT”) for corporations, corporations that were previously subject to the AMT received refundable credits. Fifty percent of any available credits not used for each of the tax years 2018, 2019 and 2020 were to be refunded to the taxpayer, and 100% percent of any remaining excess credits were to be refunded to the taxpayer in 2021.

The CARES Act accelerates the refundability of the AMT credits by providing for 50% refundability in 2018 and 100% refundability for any remaining tax credits in 2019.

Employee Retention Credit

The CARES Act provides a refundable employee retention credit for employers against the 6.2% Social Security tax on employee wages. Eligibility for the credit is restricted to employers whose business operations (i) were fully or partially suspended during any quarter of 2020 due to orders from a government authority resulting from COVID-19, or (ii) remained open in 2020 but had gross receipts in any quarter that were less than 50% of the gross receipts from the corresponding quarter in 2019. Under the second of the preceding conditions, the employer would be entitled to a credit for each quarter until their business operations produce gross receipts that exceed 80% of gross receipts from the corresponding 2019 quarter.

The credit will be calculated quarterly and will be an amount equal to 50% of the qualified wages paid to each employee after March 12, 2020 and before January 1, 2021 up to $10,000 per employee. This is intended to provide an incentive for employers to continue to pay employees that are not working due to a full or partial business shutdown or a significant decrease in gross receipts.

For eligible employers with more than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to COVID-19-related circumstances. For eligible employers with 100 or fewer full-time employees, all employee wages are qualified wages, whether such employer is open for business or subject to a shut-down order. Amounts paid by an eligible employer to provide and maintain a group health plan are also included in qualified wages.

If, during any calendar quarter, the amount of the employee retention credit exceeds the applicable employment taxes during such calendar quarter, the excess will be treated as an overpayment and refunded to the employer.

An employer may not include any employee for which the employer is allowed a credit under any other section of the Code. Furthermore, any wages taken into account in determining the employee retention credit cannot be taken into account for purposes of determining the employer credit for emergency Family Medical Leave Act and Paid Sick Leave Act (discussed below under the Families First Act). Also, an employer is not eligible for this employee retention credit if the employer receives a covered loan under the Small Business Act, as added by Section 1102 of the CARES Act.

Delay of Payment of Employer Payroll Taxes

Under the CARES Act, payroll taxes that are due between March 27 and December 31, 2020, may be deferred with 50% of the deferred payroll taxes payable on December 31, 2021 and the other 50% payable on December 31, 2022. This deferral will also apply to 50% of self-employment taxes for self-employed individuals.

Technical Correction of the “Retail Glitch”

Although not related to the COVID-19 pandemic, the CARES Act provides a much-anticipated technical correction to TCJA. TCJA intended to accelerate the depreciation of “qualified improvement property” (“QIP”), which is generally defined as any improvement made to the interior portion of a nonresidential building any time after the building was placed in service. As a result of a drafting error in the TCJA, however, the depreciable life of QIP defaulted to a term of 39 years, instead of the intended term of 15 years. The CARES Act provides a technical amendment to correct the foregoing drafting error by reducing the depreciable life of QIP from 39 years to 15 years, making QIP also eligible for 100% bonus depreciation applicable to assets with a recovery period of 20 years or less. The change is retroactive to the enactment of TCJA in 2017, and thus, taxpayers should be entitled to file amended tax returns to receive the benefits of accelerated depreciation for QIP.

Families First Act

The Families First Coronavirus Response Act (“Families First Act”) was signed by President Trump on March 18, 2020. The Families First Act, among other things, provides employees access to: (i) 12-weeks of job-protected leave under an emergency expansion of the Family and Medical Leave Act (“Emergency FMLA”), and (ii) 2-weeks of paid sick leave pursuant to adoption of new paid sick leave requirements (“Emergency PSLA”). These provisions apply only to (a) private employers with fewer than 500 employees, and (b) covered public employers. Although the details of these programs are beyond the scope of this Davis Graham Legal Alert, the Families First Act also provides employers certain payroll tax credits to offset the cost of the Emergency FMLA and Emergency PSLA and provides that the amounts paid under the Emergency FMLA and the Emergency PSLA are not subject to the employer’s portion of the Social Security tax.

Expanded Paid Family Leave Credit

Employers are eligible for a refundable credit against the employer’s portion of the Social Security tax for amounts paid by an employer each quarter under the Emergency FMLA. The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters. The credit is refundable if the credit exceeds the employer’s total liability for the Social Security portion of its payroll taxes.

Eligible self-employed individuals (individuals who would be entitled to receive paid leave pursuant to the Emergency FMLA if the individual was an employee of an employer other than itself) receive a credit against their income tax for 100% of the qualified family leave equivalent amount. The qualified family leave equivalent amount is capped at the number of days the benefit is paid (up to 50) multiplied by the lesser of $200 per day or 67% of the average daily self-employment income for the taxable year (net earnings from self-employment divided by 260). Only days that the individual is unable to work for reasons that would entitle the individual to receive paid leave pursuant to the Emergency FMLA can be taken into account.

Paid Sick Leave Credit

Employers receive a refundable credit against the employer’s portion of the Social Security tax for the sick leave wages paid each quarter under the Emergency PSLA. The credit is limited to $511 per day for employees who are unable to work in order to:

• Comply with a public quarantine or isolation order;
• Self-quarantine based on the advice of a healthcare provider; or
• Obtain medical care for COVID-19 symptoms (collectively, the “Personal Requirements”).

The credit is limited to $200 per day for employees who are:

• Caring for an individual who is under quarantine or isolation;
• Caring for a child, if the child’s school or daycare closed or the childcare provider is unavailable due to COVID-19; or
• In any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor (collectively, the “Caregiver Requirements”).

The credit is further limited to an aggregate of 10 days of paid benefits. The credit is refundable if the credit exceeds the employer’s total liability for the Social Security portion of its payroll taxes.

Eligible self-employed individuals (individuals who would be entitled to receive paid leave under the Emergency PSLA if the individual was an employee of an employer other than itself) who satisfy the Personal Requirements or Caregiver Requirements are entitled to a qualified sick leave equivalent amount for an aggregate of 10 days. The qualified sick leave equivalent amount for self-employed individuals who satisfy (i) the Personal Requirements is equal to the lesser of $511 per day or 100% of their average daily self-employment income for the taxable year, and (ii) the Caregiver Requirements is equal to the lesser of $200 per day or 67% of the average daily self-employment income for the taxable year.

National Emergency Declaration

President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act on March 13, 2020. The IRS thereafter issued Notice 2020-18, which delayed April 15th tax filing and payment deadlines until July 15th based on its authority to do so when there is a “federally declared disaster.” The IRS’s position that the President’s emergency declaration constitutes a federally declared disaster provides support for employers to provide certain benefits to employees impacted by COVID-19 in the form of “qualified disaster relief payments.” Under Section 139 of the Code, these payments will be tax-free to the employee, but fully deductible by the employer.

Reimbursable Expenses

Section 139 allows for tax-free payments to reimburse or pay the employee for the expenses that are not otherwise compensated for by insurance that are (i) reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster, or (ii) reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that the need for such repair, rehabilitation, or replacement is attributable to a qualified disaster. Certain COVID-19 related expenses should clearly qualify as reimbursable expenses under Section 139 of the Code, such as

• Medical expenses not compensated for by insurance related to COVID-19, including co-pays and deductibles;
• Other health-related expenses including over-the-counter medication or hand sanitizer; and
• Funeral expenses of the employee’s family as a result of COVID-19.

In addition, absent future IRS guidance to the contrary, an employer should be able to make payments to employees to reimburse the following types of expenses related to COVID-19:

• Child care for workers whose normal source of child care is unavailable due to COVID-19;
• Tutoring expenses for employees’ children;
• Increased telecommuting costs such as computers, printers, or supplies;
• Any increased utility costs associated with the employee and his or her family being quarantined or otherwise confined to the home;
• Housing for additional family members; and
• Increased commuting costs related to the employee’s inability to commute via the usual means of transportation (e.g., using a personal car in lieu of public transit.)

Plan Design and Implementation

Section 139 payments may be made to all of a company’s employees, regardless of length of service. There is also no limitation on the amounts that can be paid to any individual employee or to all employees in the aggregate and be deductible to the employer. In addition, these payments are excluded from gross income and wages for payroll tax purposes and are not subject to information reporting on Forms W-2 or Forms 1099-MISC.

Although an employer does not need to adopt a formal written plan or policy, Davis Graham recommends adopting a written program containing certain key aspects of the program. For example, a written program document will help ensure that the program is administered fairly and equitably to avoid potential claims of discrimination. Employers should also consider providing notice of the program to employees to ensure those in need of assistance are aware of its availability. Other aspects of a disaster relief program that an employer should consider adopting in a written plan include the following:

• Limiting the program to those affected by the current COVID-19 pandemic;
• The class of employees eligible under the program;
• Any aggregate or per-employee dollar limits on assistance;
• The types of expenses that will be reimbursed or paid;
• The process for employees to request assistance (e.g., written application, telephone, email);
• Identification of who will be granted the discretion to determine whether to pay a claim;
• The date, which may be retroactive, on which expenses will be eligible for reimbursement/payment; and
• The date by which claims must be submitted (e.g., 30 days following the end of the declared emergency).

Notice 2020-18

Notice 2020-18 was released on March 20, 2020 and restated and expanded Notice 2020-17 that had been released two days earlier. These notices provided that for all taxpayers:

• The due date for filing U.S. federal income tax returns due April 15, 2020 is automatically postponed to July 15, 2020 without need for the taxpayers to file an extension.
• The due date for making U.S. federal income tax payments (including estimated income tax payments and payments of self-employment tax) due April 15, 2020 is automatically postponed to July 15, 2020.
• The period beginning on April 15, 2020 and ending on July 15, 2020 will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file any U.S. federal income tax return or pay any U.S. federal income tax postponed by Notice 2020-18. Interest, penalties, and additions to tax with respect to such tax return filings and payments will begin to accrue on July 16, 2020.

For more information on these developments, please contact Davis Graham tax professionals Michael Snider and David Weil.

A force majeure clause provides contractual relief related to events (such as war, a labor strike, or extreme weather) or effects that cannot be reasonably anticipated or controlled. In the context of the spread of the novel coronavirus and the associated economic downturn, you will want to review your oil and gas leases to determine if they contain a force majeure clause and whether that clause will maintain your lease in effect in light of the developments relating to the COVID-19 pandemic.

Issues to Consider When Reviewing Your Force Majeure Clauses:

1. Identify the events covered by the force majeure clause.

• • Review how force majeure events are defined and triggered. Consider whether the COVID-19 situation fits the definition of a force majeure event.
  • Epidemics and pandemics generally will not be specifically defined as a force majeure event. The clause could still be triggered where it (i) covers labor and supply shortages (which are caused by COVID-19); (ii) broadly defines events as exceptional, beyond one party’s control, unavoidable, and not attributable to the other party; or (iii) includes broad catch-all language.
  • Most force majeure clauses frequently list government rules or actions as a triggering event. Governmental orders, such as shelter-in-place orders, should be examined to determine if they trigger the force majeure clause.
  • Courts generally find that economic hardship is not enough to constitute a force majeure event.

2. Consider how your clause links COVID-19 and non-performance.

• • Consider what the link is between the failure to perform and COVID-19.
  • A force majeure clause usually requires performance of contractual obligations to be “prevented,” “impeded,” “hindered,” or “delayed.” To rely on the clause, the event must be the only one affecting contractual performance (unless clearly stated otherwise). In other words, “but for” COVID-19, a party must have been willing and able to perform.

3. Identify contractual notice requirements.

• • The failure to notify in compliance with the terms of the force majeure clause could cause a waiver or limitation of your rights.
  • Consider whether supporting details and evidence of the event and its effects must be provided with the notice.
  • By when and in what form should notices (initial and subsequent) and supporting documents be served.
  • Determine when the COVID-19 starts to affect your contract. If unsure, consider notifying your counterparty of the force majeure event at the earliest opportunity, followed by further periodic notices or updates regarding the continuing disruption so your claim is not time-barred.

4. Understand the tolling effects of a force majeure event.

• • The force majeure clause may limit the term of the suspension or you may need to seek an extension of time.

5. Document evidence which supports your claim.

• • You will have the burden of proof to support your claim of force majeure.
  • Properly record and retain evidence of communications with your counterparties about the disruption and its effects, including order or service cancellations.
  • You must mitigate the effects of a force majeure event. Document reasonable steps taken to do so.

6. Respond to force majeure notices.

• • Failure to respond to a notice within stipulated time limits may constitute acceptance of the counterparty’s force majeure claim.

Application to the Habendum Clauses in Oil and Gas Leases.

• • Some courts have held that a force majeure clause in an oil and gas lease applies to the covenants in the lease but does not apply to extend the term of a determinable fee interest, such as the habendum clause.
  • You will have a stronger argument for an extension of the oil and gas lease if the force majeure clause specifically references the habendum clause and the operations or production related thereto.
  • Many courts have supported an extension of the oil and gas lease even though the force majeure clause does not make specific reference to the habendum clause.
  • A more favorable force majeure clause would be the following:
    When drilling, reworking, production, or other operations are prevented or delayed, whether before or after the expiration of the primary term, by such laws, rules, regulations, or orders, or by inability to obtain necessary permits, equipment, services, material, water, electricity, fuel, access, or easements, or by fire, flood, adverse weather conditions, war, sabotage, rebellion, insurrection, riot, strike, or labor disputes, . . . this lease shall not terminate because of such prevention or delay, and the period of such prevention or delay shall be added to the term hereof.

If you have any questions, please contact Lamont Larsen, Greg Danielson, Sam Niebrugge, or Craig Gleaton.

Last updated August 21, 2020

COVID-19 has forced the closure of many businesses throughout the country, and the courthouses where Davis Graham clients frequently litigate are subject to these same pressures. The limitations and closures of courts in Colorado and elsewhere vary widely from state to state and even within each state. Davis Graham attorneys continue to monitor these closures and limitations. Please contact David Holman if you would like Davis Graham to monitor additional states or courts.

Colorado

Federal Courts in Colorado

• U.S. Court of Appeals for the Tenth Circuit
  • Operational Response to COVID-19 Pandemic
  • General Order, June 12, 2020
    Effective June 15, 2020, the Byron White Courthouse will reopen only to members of the public who have pending business with the court.
• District of Colorado
  • General Order 2020-14
    Modifies General Order 2020-10. All civil and criminal trials scheduled to commence now through September 4 are continued.
  • General Order 2020-11
    Guiding jury operations in Grand Junction and Colorado Springs beginning August 3, 2020.
  • General Order 2020-10
    Requiring non-employee entrants to Courthouses and Probation Offices to wear a face covering. The Clerk’s Office and Probation Offices remain closed to public entry. Supersedes General Orders 2020-1, -3, -8, and -9.
  • General Order 2020-9
    Modifying certain dates in General Order 2020-6.
  • General Order 2020-8
    All civil and criminal trials scheduled to commence through July 6, 2020 are continued subject to further order of the presiding judicial officer.
  • General Order 2020-7
    Appointing the Federal Public Defender to decide whether defendants are eligible to petition the Court for compassionate release under the First Step Act.
  • General Order 2020-6
    All civil and criminal trials scheduled to commence though May 29 are continued. All grand jury proceedings are suspended through May 29.
  • General Order 2020-5
    Provides for electronic transmission of bond reports
  • General Order 2020-4
    Provides for video/telephonic conferencing of certain criminal proceedings.
  • General Order 2020-3
    Until May 1, 2020 only persons with official court business may enter the courthouses and U.S. Probation Offices of the U.S. District Court for the District of Colorado. The Clerk’s Office and Probation Offices are closed to public entry. All civil and criminal trials scheduled to commence through May 1 are continued. All grand jury proceedings are suspended through May 1.
  • General Order 2020-2
    All civil, criminal petit, and grand jury selections and jury trials scheduled to commence March 13 through April 3 are continued pending further order of the assigned judge.
  • General Order 2020-1
    Certain visitors, including persons who recently traveled abroad or have been exposed to COVID-19, are prevented from entering courthouses or courtrooms.

State Courts in Colorado

• Colorado Supreme Court
  • Important Announcements Page
  • Updated Order Regarding COVID-19 (July 24)
    No person shall be required to report for jury service before August 3, 2020.
• Colorado Supreme Court’s Message to Colorado Attorneys
• Colorado Court of Appeals
  • Order
    All oral arguments scheduled for March 2020 and April 2020 have been vacated.
  • Oral Arguments Via Web Ex Through Fall 2020
    All oral arguments are currently conducted remotely via Web Ex.

• Colorado Judicial Districts
  • 1^st
    Judicial District
    Courts have limited operations through July 5; all appearances except for matters concerning public safety have been vacated and continued.
  • 2^nd
    Judicial District
    The 2^nd Judicial district will resume jury calls in progressive phases.
    • Joint Administrative Order 2020-05
    • Administrative Order 2020-08
      Between August 3^rd and August 28^th, the 2^nd district will conduct two jury calls for District Court each Monday and Tuesday, two County Court jury calls each Wednesday and Thursday, and one jury call for District Court Juvenile.
  • 3^rd
    Judicial District
    All court hearings set through May 31 will be continued for 60 days, with listed exceptions. The court is operating on an emergency basis, open Monday through Friday 8 a.m. to noon and 1 p.m. to 4 p.m. for essential functions.
    • Administrative Order 20-04
    • Administrative Order 20-05
    • Administrative Order 20-07
    • Administrative Order 20-09
    • Notice Regarding COVID-19
• • 4^th
    Judicial District
    The El Paso County Courthouse and Teller County Courthouse are open to the public on a limited basis from August 1 through August 31.
    • Chief Judge Order 20-25
    • Chief Judge Order 20-21
    • Chief Judge Order 20-20
    • Chief Judge Order 20-19
• • 5^th
    Judicial District
    The 5^th Judicial District is seeking a waiver to permit jury trials to proceed between July 6 and August 3, 2020.
    • Amended Administrative Order 2020-102A-4
• • 6^th
    Judicial District
    • Second Amended Administrative Order No. 2020-3
    • Administrative Order 2020-07
    • Administrative Order 2020-08
    • Administrative Order 2020-09
• • 7^th
    Judicial District
    Certain visitors are requested not to come to the courthouse.
  • 8^th
    Judicial District
    Although Chief Justice Coats’ June 15, 2020 order precludes summoning people for jury service prior to August 3, a decision has not yet been made as to whether to request a waiver from the Chief Justice for jury trials scheduled to begin on or after July 13, 2020.
    • Third Amended Administrative Order 2020-2
    • Fort Collins Temporary Operation Procedures
    • Loveland Temporary Operation Procedures
    • Administrative Order 2020-7 Regarding Prohibited Conduct in Court Facilities
• • 9^th
    Judicial District
    Courthouse access is limited to listed matters concerning public safety.
    • Administrative Order 20-01.A
    • Administrative Order 20-02 (WebEx Procedures)
    • Administrative Order 20-03
    • Administrative Order 20-05
• • 10^th
    Judicial District
    Certain departments are closed to in-person activity until further notice. For docketed matters beginning March 23, each division shall initiate rescheduling or hearing by phone conference.
    • Administrative Order 20-02
• • 11^th
    Judicial District
    By June 1, it is anticipated that most judicial employees will have returned to work. Criminal cases will resume; civil cases may be heard but hearings may be limited or delayed.
    • Second Amended Chief Judge Directive
• • 12^th
    Judicial District
    Matters scheduled after June 1 and through July 5 will primarily be heard through audio or video means. All civil jury trials scheduled between now and August 31, 2020 shall be vacated.
    • Administrative Order No. 2020-03 (amended May 11)
• • 13^th
    Judicial District
    The court is attempting to maintain normal operations to the fullest extent possible. Certain visitors are requested not to come to the courthouse.
    • 13^th
      Judicial District COVID-19 Response and Continuity of Operations Guideline
• • 14^th
    Judicial District
    Except for matters concerning public safety, all other appearances, hearings, and trials will likely be continued at a later date. Parties or counsel shall contact the court to reschedule.
    • Chief Judge Order 2020-08
    • Amended Administrative Order 2020-04
    • Chief Judge Directive 2020-05
• • 15^th
    Judicial District
    Except for listed matters concerning public safety, all appearances set from March 17 to May 1 are vacated and continued.
  • 16^th
    Judicial District
    Trial courts are operating on a limited basis.
    • Administrative Order 2020-05
    • Amended Administrative Order 2020-05A
    • Second Amended Administrative 2020-05B
    • Administrative Order Regarding D&N Proceedings
    • Third Amended Administrative Order 2020-05C
• • 17^th
    Judicial District
    The courts will continue to operate with primarily virtual dockets for the month of August 2020.
    • Sixth Amended Administrative Order 2020-01 A6
• • 18^th
    Judicial District
    • Fourth Amended Chief Judge Order 20-06
      Limited jury trials have resumed in specified circumstances.
    • Chief Judge Order 20-08 Regarding Court Operations in Arapahoe County
    • Chief Judge Order 20-09 Regarding Court Operations in Douglas County, Elbert County, and Lincoln County
• • 19^th
    Judicial District
    It is not anticipated that the Court will be in a position to resume normal operations on August 3, 2020; therefore, it is likely that matters scheduled after August 3, 2020 will primarily be heard through audio or video means.
    • Fourth Revised Administrative Order 2020-06
• • 20^th
    Judicial District
    If you have a court date at the Boulder County Jail at 1:30pm, Monday through Friday, you are required to appear at the Boulder County Jail on the date and time scheduled.
  • 21^st
    Judicial District
    All felony criminal trials scheduled to commence prior to October 6, 2020 shall be continued. Judges may submit a written request to the Chief Judge for approval to conduct civil and misdemeanor criminal jury selections for trials scheduled to begin on or after August 31.
    • Administrative Order 2020-16
    • Administrative Order 2020-15
    • Administrative Order 2020-14
    • Administrative Order 2020-10
• • 22^nd
    Judicial District
    Except for matters concerning public safety, most other appearances, hearings, and trials set through July 5 will be by video or telephone.
    • Administrative Order 2020-04
    • First Amended Administrative Order 2020-02
    • Administrative Order 2020-03

Montana

Montana State Courts (no updates since 5/22)

• Montana Supreme Court
  • March 27 Order
    All civil jury trials shall be suspended until after April 10, 2020.
  • April 27 Memo from Chief Justice McGrath
    Extending the March 27 order until May 4.
  • COVID-19 Memo from Chief Justice McGrath 5-22-2020
• District Courts
  • Local Rules on COVID-19

Nevada

Nevada State Courts

• Nevada Supreme Court and Court of Appeals
  • In Re COVID-19 Emergency Oral Argument Procedures
• District Courts
  • Public Portal for Orders Imposing COVID-19 restrictions

New Mexico

New Mexico State Courts

• New Mexico Courts – COVID-19 Page
  People entering New Mexico courthouses are required to wear a face covering.
• New Mexico Supreme Court
  • June 16 Order
    Setting plea and settlement deadline for cases in which jury selection or bench trial is scheduled to begin on or after July 1.
  • July 6 Order
    Adopting health emergency protocols related to judicial buildings and proceedings.

North Dakota

United States District Court for the District of North Dakota

• Administrative Order 5/12
  All jury trials presently scheduled between March 16, 2020 and July 3, 2020 are continued.

North Dakota State Courts

• Coronavirus Response Guidance
• Compiled Emergency Orders
• North Dakota Supreme Court Order 25. Coronavirus Pandemic (amended April 15)
  Civil and criminal jury trials are suspended through July 1 unless otherwise ordered by the Court.

Ohio

Ohio State Courts

• Coronavirus Resources
• Supreme Court of Ohio Guidance to Local Courts
• Responsible Restart Ohio Court Access

Oklahoma

Oklahoma State Courts

• Supreme Court and Court of Criminal Appeals
  • March 16 Order
  • March 23 Order
  • March 25 Order
  • March 27 Order
  • April 29 Order
    In all cases, the period from March 16 to May 15 will be treated as a tolling period. Beginning on May 16, all rules and procedures, and all deadlines, shall be enforced.

Texas

Texas State Courts

• Emergency Orders for COVID-19
  As of August 11, five emergency orders are still in effect. Jury proceedings are prohibited until October 1 with certain exceptions.
• Current & Upcoming Closures

Wyoming

Wyoming State Courts

• Coronavirus COVID-19 Updates
• Wyoming Supreme Court COVID-19 Order (March 18)
• Wyoming Supreme Court COVID-19 Order (March 20)
• Wyoming Supreme Court COVID-19 Order (March 26)
• Wyoming Supreme Court Order Extending Emergency Orders to May 31 (April 1)
• Fourth Order Amending March 18, 2020 Temporary Plan
  No jury trials should be conducted prior to August 3, 2020. All in-person proceedings in all Circuit and District Courts and the Supreme Court in Wyoming should be suspended from the close of business on March 18, 2020 to August 3, 2020, with listed exceptions.
• Order Extending COVID-19 Emergency Procedural Orders to October 5, 2020

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (FFCRA). It applies to all employers with fewer than 500 employees. Employers may elect to exclude “health care providers” or “emergency responders” from its coverage.

The Department of Labor also has information on the new Act, including a “Questions and Answers” page. The law will take effect on April 1, 2020 and apply to leave taken between April 1, 2020 through December 31, 2020. Employers covered by the Act must post a notice of FFCRA’s requirements in a conspicuous place on its premises.

The two key pieces of the FFCRA include the Emergency Paid Sick Leave Act and the Emergency Family Medical Leave Expansion Act:

The Emergency Paid Sick Leave Act requires employers to provide paid sick leave to employees as described below:

• Employers must provide full-time employees with up to 80 hours of paid sick leave (and part-time employees the number of hours worked, on average, during a two-week period) who are “unable to work (or telework) due to a need for leave” and regardless of their length of employment, for any of the following reasons:
  • 1.“The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.”
  • 2. “The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.”
  • 3. “The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.”
  • 4. “The employee is caring for an individual who is subject to quarantine or self-quarantine relating to COVID-19.”
  • 5. “The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.”
  • 6. “The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”
• Employees eligible to receive paid sick leave arising out of the circumstances described in paragraphs (1)–(3), above, are entitled to paid sick leave at their regular rate of pay, but not to exceed “$511 per day and $5,110 in the aggregate.”
• Employees eligible to receive paid sick leave arising out of the circumstances described in paragraphs (4)–(6), above, are entitled to paid sick leave at two-thirds their regular rate of pay, but not to exceed “$200 per day and $2,000 in the aggregate.”
• This paid sick leave is in addition to any paid sick leave already provided by the employer but employees may choose to first use paid sick leave under this Act.
• Employees cannot extend paid sick leave permitted under this Act into subsequent years, and employers do not have to pay out such sick leave out upon termination of employment.

The Emergency Family Medical Leave Expansion Act also expands the current Family Medical Leave Act (“FMLA”) as follows:

• Employees are eligible for benefits under the Emergency Family Medical Leave Expansion Act if they have been employed by their employer for “at least 30 calendar days.”
• The FMLA’s current 12-week leave eligibility is expanded to also cover employees unable to work so they may care for a son or daughter under the age of 18 whose school has been closed due to a public health emergency.
• The Emergency Family Medical Leave Expansion Act requires employer to partially pay eligible employees for up to 12 weeks of leave. The first 10 days of leave may be unpaid, but for the remaining period, employers must provide paid leave in no less than two-thirds of an employee’s regular rate of pay. However, “In no event shall such paid leave exceed $200 per day and $10,000 in the aggregate.”
• The Act requires that employers (unless they have fewer than 25 employees) restore employees who took covered leave to the same or equivalent position when the employees return to work.

We expect numerous questions of scope and interpretation to arise, such as whether an employee is indeed subject to a federal, state, or local quarantine or isolation order related to COVID-19, since we are currently working with clients to identify which businesses are subject to these orders. Davis Graham attorneys are available to answer your questions about this new law and related questions or concerns you have regarding COVID-19.

We have been writing about the various shelter-in-place orders issued around the country and, most recently, the many cybersecurity concerns and have now established a dedicated COVID-19 page where you can find all of the most recent statewide orders issued to date. (Please note that Pennsylvania’s order now applies to only seven counties, not the entire state.) In fact, if you are reading this alert, you have already found this page! Scroll down to view the executive orders. We also have compiled every order issued to date in Colorado as well.

As we have pointed out in prior alerts, almost all of the shelter-in-place orders have exemptions to allow essential businesses to remain open, including those in the “critical infrastructure” category defined by the Cybersecurity and Infrastructure Security Agency (CISA). However, nothing in the shelter-in-place orders requires essential businesses to stay open. Therefore, even if a government or private business is defined as essential, it may still limit services and, in some cases, either completely or partially shut down. For example, in some orders, the Colorado legislature is identified as essential, but it has suspended its session; the courts are identified as essential but in some cases are canceling trials and hearings and only accepting electronic filings; some restaurants that could be offering takeout services have entirely shuttered.

So, the question arises: How will we ensure that critical infrastructure continues to function when, despite its social responsibility to provide services, it decides to shut down for reasons such as oil prices, lack of employees, lack of cash flow, or fear of exposing individuals to COVID-19?

The answer is that some cases may be contractual. A business may have a contract with a supplier that requires the supplier to provide goods or services. If a supplier refuses to provide goods or services, despite being contractually bound to do so, the courts may provide redress through injunctive relief, depending on the circumstances. However, in most cases, the redress available may be simply monetary compensation, which will necessarily save the company that needs its supply chain to function in order to provide its goods or services. However, what happens if the supplier declares bankruptcy and triggers the automatic stay? The time delay alone may prove fatal to its business partner.

Arizona recently issued an order titled “Prohibiting the Closure of Essential Services.” But even this order does not require essential businesses “not to close.” Instead, the Order prohibits cities, counties, and towns in Arizona from issuing conflicting shelter-in-place orders which would require an essential business to shut down, including any golf course (of course) or restaurant, as long as (in those cases) previously-issued restrictions on food and beverage service and in-restaurant dining are followed.

The answer may partially be found in the forthcoming and widely anticipated federal stimulus bill known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

This bill, which was recently passed in the Senate, provides emergency loans to distressed industries such as aviation and forgivable bridge loans to provide cash flow to allow qualifying small businesses to continue operations through incentives and grants. Check back on this site for a summary of the CARES Act once it becomes law.

In Colorado, the tools in Governor Polis’ quiver include the special powers granted to the governor pursuant to the Colorado Disaster Emergency Act, C.R.S. §§ 24-33.5-701 et seq. This Act, among other things, allows the governor to:

(a) Suspend the provisions of any regulatory statute prescribing the procedures for conduct of state business or the orders, rules,

or regulations of any state agency, if strict compliance with the provisions of any statute, order, rule, or regulation would in any

way prevent, hinder, or delay necessary action in coping with the emergency;

(d) Subject to any applicable requirements for compensation under section 24-33.5-711, commandeer or utilize any private

property if the governor finds this necessary to cope with the disaster emergency;

and

(i) Make provision for the availability and use of temporary emergency housing.

Check back on this site for more information about the CARES Act once it becomes law.

A reality of the COVID-19 pandemic[1] is that many businesses are facing unexpected difficulties complying with their contracts. Do pandemics such as the spread of COVID-19 excuse parties from their contractual obligations? The answer is maybe, via a force majeure clause in the parties’ contract.

“Force majeure”—French for “superior force”—refers to an unexpected and uncontrollable event or effect that prevents one from honoring a contract. The term can include acts of nature, such as floods and hurricanes, and acts of people, such as strikes and wars,[2]
but does not generally include mere economic hardship.[3] For example, a force majeure provision might state:

No party shall be liable or responsible to the other party, nor be deemed to have defaulted under or breached this Contract, for any failure or delay in fulfilling or performing any term of this Contract, when and to the extent such failure or delay is caused by or results from acts beyond the impacted party’s reasonable control, including, without limitation, the following force majeure events: (a) acts of God; (b) flood, fire, earthquake, or pandemic; (c) war, terrorist threats or acts, riot, or other civil unrest; (d) government order or law; (e) actions, embargoes, or blockades in effect on or after the date of this Contract; (f) action by any governmental authority; (g) national or regional emergency; (h) strikes, labor stoppages or slowdowns, or other industrial disturbances; (i) shortage of adequate power or transportation facilities; and (j) other similar events beyond the reasonable control of the impacted party.

Ultimately, the types of events that constitute force majeure depend on the contract’s specific language.[4]
For example, in Gillespie v. Simpson, the Colorado Court of Appeals accepted a geothermal lessee’s argument that the government’s refusal to issue permits for the development of geothermal wells until certain regulatory actions occurred constituted a force majeure event, excusing the lessee from paying rent to the lessor. This was the case even though the lessee was actually able to pay rent—and did so—during the duration of the force majeure event. The contract defined force majeure as any action by the state that interferes with the lessee’s rights. The court reasoned that the interference was “obvious in that the lessee [wa]s deprived of an opportunity to generate income by development of the [wells] for payment of the rentals. Accordingly, it held that the lessee was entitled to a rent credit equal to the amount of rent paid during the force majeure event.[5]

All this is to say that parties should examine their existing contracts and consult with in-house or outside counsel to see if those contracts include a force majeure clause that may cover coronavirus—especially if the pandemic is impacting the parties’ contractual obligations. Parties should pay attention to any requirements that the party provide evidence of impacts or information, along with a notice that the party is invoking the force majeure clause, or that the party mitigate damages incurred as a result of the force majeure event. Going forward, parties should consider insisting that their contracts include epidemic or pandemic as a force majeure event in case performance becomes impossible due to COVID-19. Parties struggling to honor their contractual obligations might also consider a mutual solution, such as negotiating a contractual amendment to move performance to a time after the health crisis has passed.

Davis Graham & Stubbs LLP’s attorneys have experience litigating commercial contracts containing force majeure clauses. Please contact Shannon Stevenson or Gabrielle Robbie if you have further questions on this topic.

[1] World Health Organization, Coronavirus disease 2019 (COVID-19): Situation Report – 52 (March 12, 2020), https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200312-sitrep-52-covid-19.pdf?sfvrsn=e2bfc9c0_4.

[2] Black’s Law Dictionary, “FORCE MAJEURE” (11th ed. 2019).

[3] 30 Williston on Contracts § 77:31 (4th ed.).

[4] Id.

[5] 588 P.2d 890, 892 (Colo. 1978).

Now more than ever, it is important for organizations of all sizes to practice sound cybersecurity hygiene. And although cybersecurity is just one of many issues challenging company operations in response to the spread of COVID-19, it is an issue for which an ounce of prevention is worth a pound of cure.

The U.S. Federal Trade Commission (FTC) and the National Institute of Standards and Technology (NIST) recently issued guidance for information security when employees work remotely. The FTC guidance focuses on what employees can do, while the NIST guidance provides recommendations to organizations. Both are summarized below. But here are some steps to take now, to reiterate to employees the importance of staying safe online:

• Communicate with employees about the increased risk of cyberthreats when working from home.
• Offer practical tips like: Don’t open emails from senders you don’t know ; flag suspicious emails to your IT department; if you are asked to provide sensitive information, be sure the request is legitimate (for example by calling the sender to confirm).
• Consider conducting refresher training to remind employees about the company’s policies around information security.

The FTC guidance, in the form of a blog that can be accessed here, stresses good cybersecurity hygiene. Best practices mentioned in the guidance include:

• keeping software up to date (i.e., installing patches when made available);
• using strong, unique passwords;
• securing portable devices like laptops and mobile phones (including password-protection, locking after time out, and keeping the device physically secure);
• when working remotely with hardcopy versions of sensitive information, ensure that such materials are physically secured and disposed of appropriately (i.e., shredding).

The NIST guidance, accessible here, makes several recommendations from an organizational perspective, starting with the premise that all information security policies around teleworking should be based on the assumption that external environments contain hostile threats. By thinking in this way, organizations can implement measures to mitigate such threats instead of reacting in the event of an incident. The NIST guidance also recommends that companies:

• Develop telework security policies defining the permitted forms of remote access, the types of devices that can use each form of remote access, and the level of access each device will be granted.
• Ensure that remote access servers are secured effectively and configured to enforce telework security policies.
• Secure organization-controlled telework devices against common threats and maintain security regularly.

As employees become more isolated while working from home and for longer periods, the importance of communication grows. The key message for individuals is to be as vigilant, if not more, of tricksters operating on the internet, and for organizations, it is to tighten cybersecurity controls.

If you need assistance on these or other privacy issues, please don’t hesitate to contact Camila Tobon.

As of our client alert issued just last Thursday afternoon, only a few counties in Northern California and San Miguel County in Colorado had issued shelter-in-place orders.

What a difference a few days makes. As the COVID-19 pandemic and the number of deaths in the U.S. continue to skyrocket upward, by the end of today multiple states (including California, New York, New Jersey, Oregon, Pennsylvania, Michigan, Ohio, Louisiana, and Illinois) will have issued statewide shelter-in-place orders. Inevitably, as the dominoes fall, more states and local jurisdictions will follow throughout this week with similar orders.

Here in Colorado, Governor Polis issued a 50% statewide reduction in force order over the weekend on March 22, 2020, and the same day, CDPHE issued an order implementing the governor’s order. This afternoon, Denver issued a shelter-in-place order for Denver County.

As we noted in our alert last week, employees associated with the 16 categories of critical infrastructure and assets identified in Presidential Policy Directive 21 are typically excluded from these orders, but the orders vary considerably in their terms and require close scrutiny, particularly for businesses that operate across multiple jurisdictions with varying (and potentially no) orders in place. Late last week, CISA issued guidance on what constitutes critical infrastructure to assist states and local governments in developing national consistency.

At Davis Graham, we are busy at work analyzing the impacts of these orders on our clients’ businesses and helping our clients deal with multiple issues arising from these orders and the pandemic generally, including:

• How do we operate efficiently when the shelter-in-place orders are inconsistent across jurisdictions in which a client operates?

• What documentation do our clients’ employees need to identify their workforce as critical infrastructure employees?

• When is a declaration of force majeure justified under the circumstances of a pandemic declaration, disaster declaration, and shelter-in-place order?

• When does a positive COVID-19 test result constitute an OSHA-recordable injury?

If you need assistance on these or other issues, or simply want a copy of the most recent shelter-in-place orders impacting your operations, please don’t hesitate to contact a Davis Graham partner.

As we all collectively work on our planning and preparation to respond to the pandemic to keep our businesses, employees, friends, and families safe, we must all be aware of the potential for a shelter-in-place order, similar to the one currently in place in Northern California. Recently, San Miguel County in Southern Colorado issued its own shelter-in-place directive, the first county-wide shelter-in-place directive in Colorado.

Please note that the existing shelter-in-place orders exempt essential employees. The Northern California order states “individuals may leave their residence to provide any services or perform any work necessary to the operations and maintenance of ‘Essential Infrastructure,’ including, but not limited to, public works construction, construction of housing (in particular affordable housing or housing for individuals experiencing homelessness), airport operations, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, internet, and telecommunications systems (including the provision of essential global, national, and local infrastructure for computing services, business infrastructure, communications, and web-based services), provided that they carry out those services or that work in compliance with Social Distancing Requirements as defined in this Section, to the extent possible.”

Similarly, the San Miguel Order exempts a large category of activities associated with “Essential Businesses” (See Order at page 7). Given the increasing likelihood that a shelter-in-place order will be issued by the federal government, please be aware that the following industries and key resources have assets and infrastructure that are considered “critical infrastructure” pursuant to Presidential Policy Directive 21 and will have some level of exemption.

These industries are:

1. Chemical
2. Commercial facilities
3. Communications
4. Critical manufacturing
5. Dams
6. Defense industrial base
7. Emergency services
8. Energy
9. Financial services
10. Food and agriculture
11. Government facilities
12. Healthcare and public health
13. Information technology
14. Nuclear reactors, materials, and waste
15. Transportation systems
16. Water and wastewater systems

Each of these industries (and other business sectors that support them) has a vital role to play in keeping the nation’s infrastructure functioning during a pandemic.

Despite the lack of coverage in the media, planning for a pandemic has been in the works for years, and industry sector planning guides are available. For example, the see Oil and Natural Gas Sub-Sector Pandemic Guideline here.

OSHA has been hard at work and has developed a guide for Preparing the Workplace for COVID-19, and that guide can be found here.

We at Davis Graham are here to help your business succeed and to keep our community and employees safe during these challenging times. Please feel free to reach out to us if we can assist in any way, from a safe distance of at least six feet away.

Please contact a Davis Graham partner if you have any questions or if we can assist you with any legal needs.