Gov. Wolf’s businesses closure orders and the business waiver process recently came under fire from the Western District of Pennsylvania Federal Court and the Pennsylvania Auditor General Eugene DePasquale. Gov. Wolf’s prior orders forced nearly all activities of the construction industry to cease in-person operations.

Pennsylvania Federal District Court Finds Gov. Wolf’s Orders Unconstitutional

On September 14, Western District of Pennsylvania Judge William Stickman IV held that Gov. Wolf’s orders violated the U.S. Constitution on three separate grounds:

(1) the congregate gathering limits imposed by Gov. Wolf’s mitigation orders violated the First Amendment right of assembly since they were more restrictive than the occupancy restrictions on certain businesses, and because the gathering limits applied equally across all counties;

(2) the business closure components of Gov. Wolf’s orders designating every business as either life-sustaining or non-life-sustaining violated the due process clause of the Fourteenth Amendment; and

(3) the business closure components of Gov. Wolf’s orders violated the Fourteenth Amendment’s equal protection clause.

The court expressed significant concern with how the process identified businesses as life-sustaining or non-life-sustaining, and found that Gov. Wolf’s advisory team had neither fully defined “life-sustaining” nor had a written policy or procedure for classifying businesses. This lack of a written policy or set definition affected the waiver process and led to an arbitrary application. It seemed that whether a business received a waiver came down to the advisory team member who reviewed the application, and not whether a particular business classified as life-sustaining under a sound definition or policy. The court expressed further consternation since the waiver process closed on April 3 “because the backlog of requests slowed the process down.” Finally, the court provided specific examples of the arbitrary and unequal application of the business closure orders and waiver process, pointing out that stores like The Home Depot and Walmart remained open, while small businesses that sold the same products were forced to close.

After Gov. Wolf appealed the District Court’s decision, the Third Circuit Court of Appeals granted a stay of the District Court’s decision pending appeal on October 1.

Pennsylvania Auditor General Investigation

While conducting an audit of the Department of Community and Economic Development’s business waiver process, on October 6, Pennsylvania Auditor General Eugene DePasquale released a status update in which he noted inconsistencies and “puzzling decisions” with the waiver process. The update hit on some of the same points that Judge Stickman expressed in his decision. DePasquale criticized the waiver process for inconsistent application, constantly changing guidance, and sowing confusion among businesses. For example, the update specifically pointed out that there seemed to be no real rhyme or reason to how waivers were granted, and that decisions for particular businesses sometimes changed from a “yes” to a “no,” or vice versa without explanation. The audit remains ongoing.

Takeaway for the Construction Industry

The impact of Judge Stickman’s decision, including review by the Third Circuit, remains to be seen. As such, both the Third Circuit’s decision and the results of Auditor DePasquale’s audit bear watching. In the short term, however, it is important to remember that the District Court’s decision did not impact the portions of Gov. Wolf’s orders providing for other mitigation efforts like mandatory mask-wearing or cleaning and safety protocols for job sites. These types of restrictions should continue to be followed on your job sites. Moreover, because these mitigation efforts are still in effect and must be followed, you should continue to track any additional incurred costs to abide by the mitigation protocols. Complete records may help you recover these costs to the extent allowed by your contract through a later change order or potential claim. You can read more about the required health and safety protocols for businesses here.

The information above is for informational purposes only and is not intended to serve as providing legal advice. If you have further questions or seek advice based on your specific fact situation and contractual provisions, please reach out to any members of the Troutman Pepper Construction Practice Group.