Please find below a recently published article from our Construction Team members, Stephen T. Miller and Tiffany C. Raush. The article “When Force Majeure Is For Sure: The Business of Constructing in Disaster-Prone Areas” was first published in the ConsensusDocs Construction Law Newsletter Volume 4, Issue 3. 

One could have predicted in early 2017 that at least some portion of the Gulf Coast would be struck by a hurricane that year.  The reality is that constructing in Texas, Louisiana, Mississippi, Alabama, or Florida in July, August, or September carries with it the very real risk that your construction site will be struck by a hurricane or tropical storm.  The 2017 Atlantic hurricane season saw 17 named storms with more than $200 billion in damages.  Three of those named storms—Harvey, Irma, and Maria—made the 2017 Atlantic hurricane season the costliest ever on record.

Of course, thankfully, not every year will be such a record-setter.  But constructing along the Gulf Coast, or any area similarly “disaster-prone,” carries with it unique considerations.  Construction contracts almost universally include “force majeure” provisions that apply in the event of a hurricane.  But force majeure provisions typically only buy the contractor some time.  Moreover, such provisions are breeding grounds for disputes.  For example, most force majeure clauses include hurricanes as qualifying events, but recall that “Hurricane Harvey” did most of its damage as a tropical storm.  “Tropical storm” may not be included in the force majeure definition in your contract.  Second, most contracts will require timely “notice” of the qualifying event, which can be difficult to do when you are in the midst of disaster recovery.  Third, contracts and case law will often require a demonstration that the contractor acted to mitigate the effect of the force majeure event.  See also In re S. Scrap Material Co., L.L.C., 713 F. Supp. 2d 568 (E.D. La. 2010) (noting that Hurricane Katrina was an “Act of God” but “[o]ne invoking Act of God as a defense must prove not only that the weather was heavy but also that it ‘took reasonable precautions under the circumstances as known or reasonably to be anticipated.’”).  That sounds reasonable.  But mitigation efforts at the height of a disaster are often easily criticized after-the-fact when time and circumstance allow for more analysis and reflection.  Finally, the contractor must be able to show that the force majeure event caused the delay at issue.  But often the contractor is moving so quickly—as are the sub-contractors, suppliers, laborers, insurance companies, etc.—to deal with the disaster at hand, that detailed meeting minutes, confirming emails, and contemporaneous reports are simply not possible to document all the ways the force majeure event is affecting the time line of the construction project.

Contractors along the Gulf Coast cannot simply hope for the best when constructing during hurricane season.  Nor can they expect to rely on insurance and a force majeure provision should the worst happen.  Instead, contractors should be fully prepared with a disaster action and recovery plan before signing a contract.  Indeed, owners in the Gulf Coast region—particularly in populated, industrial, burgeoning cities like Houston, and particularly following Harvey—are coming to expect their contractors on major projects to have detailed and thorough disaster contingency plans in place.

What’s In Your Disaster Action Plan?

Your disaster preparedness and recovery action plan depends on the disaster and the construction project.  It should cover pre-construction disaster planning such as identifying roles and responsibilities in the event of a disaster, identifying potential off-site quarters in the event of a local evacuation order, creating an emergency call list, among other items.  This stage—i.e., before a storm is barreling down on your project—is a good time to consider potential labor and supply shortages that typically result after hurricanes.  For example, demand for construction supplies and services sky-rocketed after Hurricane Harvey., an online sourcing and supplier selection platform, analyzed searches for particular products and supplies before and after Harvey.  The below tables summarize some of the results, including 1,200% increase in searches for doors, 1,700% increase in searches for steel buildings, and 4,600% increase in searches for trucking services.  See


Identifying potential suppliers, labor sources, and transportation that may be available to you ahead of time could make a huge difference in your recovery and your bottom line.  Remember that most force majeure clauses will not allow you to recover increased costs if the cost of materials suddenly surges after the storm.  See, e.g., S&B/Bibb Hines Pb3 Joint Venture v. Progress Energy Fla., Inc., 365 Fed. Appx. 202 (11th Cir. 2010) (denying contractor’s $40 million claim after four hurricanes struck the Gulf Coast resulting in a shortage of materials and a corresponding increase in the costs of construction for the contractor).  If you are a large contractor, consider whether you have projects in other locations that could spare materials at cost until prices come down.  Alternatively, consider mitigating the risk through agreements with construction companies in other locations that may be willing to “come to your aid” should you be impacted (knowing that, as part of the risk-sharing arrangement, you would be willing to reciprocate).

Your disaster action plan should also cover what to do when a storm has been predicted, when it is occurring, and after it has passed.  There is plenty of hurricane-preparedness advice out there, but one we like as a starting point is Allianz’s The Calm Before the Storm: Construction Site Hurricane Protection.  The 33-page booklet available online includes useful information, suggestions, checklists, and forms for contractors working in hurricane-prone areas.

The point is this: as the heart of hurricane season approaches in the Gulf Coast, do not be lulled into a false sense of security that (1) a storm probably won’t happen or (2) that a force majeure or similar contract provision will provide adequate protection.  In the Gulf Coast, hurricanes and tropical storms are a factor and force majeure provisions are better left as a last resort.

With hurricane season upon us, employers are justifiably concerned about the potential impact of a natural disaster on their business. A hurricane, natural disaster, or any other crisis in the workplace can bring a business to a screeching halt and devastate the lives of a business’s most valuable asset, its employees.

To minimize the impact of a natural disaster, employers should have plans in place before disaster strikes, including, for example, a crisis management plan, a communication plan, and a disaster response and recovery plan. These plans must take into account the effect a catastrophe may have on workers and include ways to help impacted employees return to work as soon as practical to ensure continued productivity at the workplace following a natural disaster. Any enacted plan should consider the application of relevant federal and state laws to ensure compliance and avoid any employment-related lawsuits or any agency enforcement action following a natural disaster. Continue Reading Planning for a Catastrophe

Houston residents who suffered damage in Harvey and have not applied for FEMA or SBA assistance must do so by Thursday.

The deadline to apply for disaster assistance from the Federal Emergency Management Agency (FEMA) and Small Business Administration (SBA) is Thursday, November 30th.  Residents who sustained damage during Harvey must apply by the deadline to be eligible for assistance.

Federal assistance includes help for temporary housing, rental assistance and repair or replacement of damaged homes for eligible individuals and families who have suffered losses as a result of the storm.

Additionally, grants may be available to help with other expenses such as medical and dental care, child care, funeral and burial costs, replacing essential household items, moving and storage, vehicle repairs and some clean-up items.

Survivors may register in many ways:

  • Online at
  • Calling the FEMA Helpline at 800-621-3362 (voice, 711/VRS-Video Relay Service) (TTY: 800-462-7585). Multilingual operators are available (press 2 for Spanish).
  • Via the FEMA app, available for Apple and Android mobile devices. To download visit:
  • Visiting a Disaster Recovery Center (DRC). Find the location of nearby DRCs online at

The following information is helpful when registering:

  • Address of the location where the damage occurred (pre-disaster address).
  • Current mailing address.
  • Current telephone number.
  • Insurance information.
  • Total household annual income.
  • Routing and account number for checking or savings account (this allows FEMA to directly transfer disaster assistance funds into a bank account).
  • A description of disaster-caused damage and losses.

For additional information on Harvey recovery from the City of Houston, visit

City of Houston Opens Pilot Neighborhood Restoration Center in Northeast Houston for Harvey Flood Survivors

The City of Houston, along with local non-profit organization partners, opened the first Neighborhood Restoration Center at the Kashmere Multi-Service Center on Wednesday, November 15, 2017 as part of a pilot program aimed at connecting Houstonians affected by Harvey with recovery services.

As part of this ongoing effort, a Neighborhood Restoration Center will be open at the Kashmere Multi-Service Center,  located at 4802 Lockwood Dr., Houston, TX 77028 every Wednesday during the hours of 9:00 a.m. – 7:00 p.m. to provide information, and connect survivors with resources, such as: legal aid, mental health and wellness, home repair and rebuilding information, employment help, and housing counselors. Case management services at the Center are being provided by BakerRipley and the Houston Area Urban League. 

Disaster-focused non-profit organizations, churches, businesses, governmental agencies, and volunteer groups are urged to join this collaborative effort. The City expects the number of participants and partners to expand each week as word of this initiative grows, with additional locations expected to roll out in the near future.

City Departments participating in the program include:

  • Department of Neighborhoods, New Americans & Immigrant Communities
  • Department of Neighborhoods, Mayor’s Citizens’ Assistance Office
  • Houston Public Works – Houston Permitting Center
  • Office of Business Opportunity
  • Housing & Community Development Department
  • Houston Health Department
  • Houston Health Department – Area Agency on Aging
  • Office of Emergency Management
  • Solid Waste Management Department

Additionally, some area non-profit agencies are providing case management, and access to recovery services, including:

  • All Hands Volunteers, Inc.
  • Care Connection – Aging and Disability Resource Center
  • Northeast Next Door Redevelopment Council

For locations, and hours of operation, visit

Houston residents in need of assistance related to Harvey recovery, who cannot come to the center are asked to call Texas 2-1-1 (877-541-7905), so a trained case manager can be made aware of their individual needs, and connect them with recovery services.

Additional information on Houston’s disaster recovery can be found at

Information provided by the Federal Emergency Management Agency (FEMA)

Hotel Stays for Harvey Survivors Extended to Jan. 16, 2018

Eligible Hurricane Harvey survivors receiving Transitional Shelter Assistance (TSA) may receive an extension to stay temporarily in hotels while they look for an alternative place to live.

Disaster survivors with a continuing need for the hotel sheltering program may be extended to
Jan. 16, 2018. However, there is a mid-term eligibility review on Dec. 12 where survivors participating in TSA will receive a phone call, email, and/or text message advising them if they have continued eligibility for assistance through a participating hotel.

Hurricane Harvey survivors who recently applied for assistance will be notified automatically of their eligibility. To be considered for eligibility, disaster survivors must be registered with FEMA for disaster assistance, and meet other eligibility criteria.

FEMA Individual Assistance deadline extended to November 30th

Texans affected by Hurricane Harvey now have until November 30, 2017, to register for federal assistance.

The deadline was November 24, however, an additional six days now gives survivors more time through the Thanksgiving holiday.

Federal assistance includes help for temporary housing, rental assistance and repair or replacement of damaged homes for eligible individuals and families who have suffered losses as a result of the storm.
Additionally, grants may be available to help with other expenses such as medical and dental care, child care, funeral and burial costs, replacing essential household items, moving and storage, vehicle repairs and some clean-up items.


Twelve years following Hurricane Katrina in New Orleans, when universities and colleges around the country embraced Tulane students displaced by the storm, Tulane has announced that it will offer a tuition-free semester for students from universities and colleges in Puerto Rico. The program, offered for the spring 2018 semester, is also open to students in other areas affected by recent storms in the USVI and St. Maarten/St. Martin. Tulane is requesting that students pay tuition at their current school to aid schools in the recovery process. For more information visit the Tulane University Admissions Blog.

The disaster wrought by Hurricanes Harvey, Irma, and Maria has also occasioned a flood of federal relief dollars into the areas impacted. Projects seeking federal funding must meet a variety of legal requirements, each of which warrant separate analysis. Here, we discuss a single federal construction contract requirement and how it has changed in light of these natural disasters: the requirement that federal contracts have written affirmative action programs.

Over the course of the last month, the U.S. Department of Labor, and specifically the Office of Federal Contract Compliance Programs (OFCCP), has worked to support relief efforts from the devastation of Hurricanes Harvey, Irma, and Maria by temporarily relaxing federal contractors’ requirements to have written affirmative action programs. The OFCCP’s National Interest Exemptions—or NIEs—protect contractors for a limited time and in limited areas: for a period of three months (subject to possible extension) following these weather events, new Federal contracts to provide hurricane relief efforts will be exempt from the written affirmative action programs contained in Executive Order 11246, the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA), and Section 503 of the Rehabilitation Act of 1973. But these exemptions are limited in breadth, as well as temporally and geographically.

What contracts are covered?

The NIEs apply to new supply & service and construction contracts which are entered into within the three-month period (discussed below) and which are solely for the specific purposes of providing hurricane relief. Let’s break that down. According to OFCCP, the contract must be:

  1. New. That means that if it is a contract entered into before the NIE applied, even if for hurricane relief, it is not covered by the NIE.
  2. For the specific purpose of providing hurricane relief. The OFCCP takes a Justice Stewart “I know it when I see it” approach to defining this requirement. While the OFCCP says it has notified all federal contracting agencies of the NIE and provided them with “language to include in new supply & service and construction contracts,” it goes on to state that “Federal contracting officers know the terms and conditions of the contracts they execute. Therefore, they are in the best position to determine what constitutes a supply & service or construction contract specifically to provide Hurricane Harvey relief and whether it is appropriate to include the NIE language in the contract.”
  3. Solely for the specific purpose of providing hurricane relief. So if the contract is for hurricane relief and something else, it is not covered by the NIE.

Further, the NIEs also apply to subcontractors as long as the subcontractor is providing goods or services as part of a prime contract specifically for hurricane relief.

For what time period does the NIE apply?

  • For Hurricane Harvey: applies to new supply & service and construction contracts entered into between September 1, 2017, and December 1, 2017 (with possible extension).
  • For Hurricane Irma: applies to new supply & service and construction contracts entered into between September 8, 2017, and December 8, 2017 (with possible extension).
  • For Hurricane Maria: applies new supply & service and construction contracts entered into between September 21, 2017, and December 21, 2017 (with possible extension).

What geographic areas are covered?

For all three hurricanes, this is defined as any area that has been designated a Designated Area by FEMA to receive both individual and public assistance (FEMA categories A and B). For Harvey, the OFCCP lists some specific counties in Texas: Aransas, Bee, Brazoria, Calhoun, Chambers, Colorado, Fayette, Fort Bend, Galveston, Goliad, Hardin, Harris, Jackson, Jasper, Jefferson, Kleberg, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Refugio, Sabine, San Jacinto, San Patricio, Victoria, Waller, Wharton. The ultimate list is available on FEMA’s website:

What the NIE does not exempt?

New supply & service and construction contracts falling under NIE continue to be subject to the nondiscrimination requirements of EO 11246, VEVRAA, and Section 503, and must still meet the following FAR requirements:

  • Posting of the “Equal Opportunity is the Law” notice under all three laws;
  • Record keeping and record retention requirements under all three laws; and
  • Employment listing with the appropriate employment service delivery system as required under VEVRAA.

Louisiana’s legal community has grown accustom to offering pro bono legal assistance to Louisiana storm victims. After addressing foremost concerns like shelter, food, water, and clothing, disaster victims are left to grapple with more intricate setbacks like insurance claims and FEMA appeals, landlord-tenant disputes, contractor fraud and contract disputes, custody and domestic disagreements, consumer issues, and lost legal documents, to name a few.

The 2017 hurricane season has largely spared Louisiana relative to other U.S. states like Texas and Florida, and U.S. territories like the USVIs and Puerto Rico, where millions were left without power and basic necessities weeks after Hurricane Maria. Louisiana lawyers are paying it forward and expanding a “disaster legal hotline”—normally reserved for low-income Louisiana residents—to help those devastated by the hurricanes in Puerto Rico and the USVIs.

Louisiana’s efforts are a leading example of a national program established in 1978 by the Federal Emergency Management Agency (FEMA) in partnership with the American Bar Association Young Lawyers Division (ABA YLD) to provide pro bono disaster legal services to low-income survivors of a federally-declared disaster. When the Federal Government issues a disaster declaration in a particular state, FEMA and the ABA YLD, through the state’s young lawyer representative, coordinate with bar associations, legal aid groups, and law firms to implement the program, known as Disaster Legal Services (DLS). In Louisiana, the Disaster Legal Services program is administered with the Louisiana State Bar Association through the Louisiana Civil Justice Center (LCJC), which was formed after Hurricane Katrina and works to expand access to justice to low-income populations around Louisiana. The LCJC operates a year-round civil legal aid hotline, which is adapted to intake disaster-related calls for the Disaster Legal Services program.

the largest intake in the history of the Federal Disaster Legal Services program.

Louisiana displayed its pro bono capacity following the historic Baton Rouge flooding in August 2016, when more than 4,300 individuals called into the disaster legal hotline—the largest intake in the history of the Federal Disaster Legal Services program.

Louisiana’s legal community, all too familiar with disasters, is now graciously leveraging its experience to help our fellow Americans as their needs transition from “boots on the ground” to “suits on the ground.” Storm victims who qualify for Disaster Legal Services can contact the Louisiana Civil Justice Center at 1-800-310-7029.

On September 29, President Trump signed into law the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (the “Act”). The Act provides temporary tax relief to the victims Hurricanes Harvey, Irma, and Maria (the “Hurricanes”). The Act also provides victims of the Hurricanes with additional access to their retirement accounts and lessens the tax burdens related to these distributions. Below is a summary of the relief provided by the Act.

This relief is in addition to the relief previously provided by the IRS, DOL and PBGC, as discussed in our recent client alert titled “Federal Agencies Provide Benefit Plan Relief to Victims of Hurricanes Harvey and Irma,” released earlier this month.

Relief to Participants of Eligible Retirement Plans

Qualified Hurricane Distributions

In addition to the relaxed withdrawal rules under prior IRS guidance, the Act permits individuals directly affected by the Hurricanes to take a “qualified hurricane distribution” from their retirement plan accounts. A “qualified hurricane distribution” is any distribution from an eligible retirement plan to an individual affected by the Hurricanes, as follows:

  • For an individual whose principal residence on August 23, 2017, is located in the Hurricane Harvey disaster area and who has sustained an economic loss by reason of Hurricane Harvey, a distribution made on or after August 23, 2017, and before January 1, 2019 (see for the applicable Harvey disaster area);
  • For an individual whose principal residence on September 4, 2017, is located in the Hurricane Irma disaster area and who has sustained an economic loss by reason of Hurricane Irma, a distribution made on or after September 4, 2017, and before January 1, 2019 (for the applicable Irma disaster areas, see for Florida, for Georgia, for Puerto Rico, and for the U.S. Virgin Islands); and
  • For an individual whose principal residence on September 16, 2017, is located in the Hurricane Maria disaster areas and who has sustained an economic loss by reason of Hurricane Maria, a distribution made on or after September 16, 2017, and before January 1, 2019 (see for the applicable Maria disaster area).

The total amount of qualified hurricane distributions to an individual from all eligible plans cannot exceed $100,000. When applying this limit, plan sponsors are only responsible for monitoring total distributions from plans that they (or other controlled group members) sponsor.

The following special rules apply to qualified hurricane distributions:

  • Exempt from the 10% excise tax that normally applies when an active participant takes money out of a plan before age 59-1/2.
  • Exempt from the usual 20% mandatory withholding.
  • The distribution can be included in taxable income ratably over the 3-taxable year period that begins with the year in which the distribution is received.
  • Individuals can avoid paying tax on all or a portion of a qualified hurricane distribution if they repay the same amount to the same or other eligible retirement plans (i.e., an IRA, 403(b), 457 plan, etc.) in which they participate at any time within 3 years from the date of the distributions.

Qualified Plan Loan Relief

The Act increases the maximum loan amount for “qualified hurricane distributions” (defined below) from $50,000 to $100,000, and removes the limit that would normally cap a loan at 50% of the vested account balance. This allows a participant to borrow up to the lesser of $100,000 or his or her entire vested account balance.

In addition, “qualified individuals” (defined below) with an outstanding plan loan on or after August 23, 2017 (for Harvey victims), September 4, 2017 (for Irma victims) and September 16, 2017 (for Maria victims), may delay for one year any loan repayments due after the applicable date, and before January 1, 2019. Participants taking advantage of the delay must have their loans reamortized to reflect the one-year postponement, and the one-year postponement period does not impact the term of the loan.

Re-contribution of Prior Withdrawals for Home Purchases

The Act includes a special provision that allows participants who to took a hardship distribution for the purchase or construction a home in any of the designated disaster areas to re-contribute the distribution if the Hurricanes prevented the home from being purchased or constructed. To be eligible for this relief, the withdrawal must have been received after February 28, 2017 and before September 21, 2017, and the re-contribution must be made during the period from August 23, 2017 through February 28, 2018. Re-contributed amounts are treated similar to repayments of qualified hurricane distributions discussed above.

Relaxed Qualifications for Casualty Loss Deductions

The Act has relaxed casualty loss deduction requirements. Under current law, a taxpayer may claim an itemized deduction for any loss sustained during the tax year that is not compensated by insurance, but only to the extent that is at least $100 and exceeds 10% of adjusted gross income (“AGI”). Under the Act, the requirement that personal casualty losses must exceed 10% of AGI is eliminated for individuals affected by the Hurricanes. However, the Act increases the casualty minimum deduction from $100 to $500.

Further, the Act removes the itemized requirement of the casualty loss deduction. Currently, in order to be eligible for a casualty loss deduction one must claim it as an itemized deduction on their federal income tax return. Thus, the casualty loss was unavailable to a taxpayer who did not itemize but rather opted to use the standard deduction. Under the Act, the amount of the casualty loss deduction will be allowed to be added to the standard deduction. Thus, the Act allows taxpayers to deduct casualty losses whether they itemize or take the standard deduction.

Charitable Deduction Limitations Suspended for Qualifying Hurricane Relief Contributions

Under the Act, “qualified contributions” towards hurricane relief are exempt from the limitations under Code Section 170. Currently, Section 170 limits the deduction of charitable contributions based on a percentage of the taxpayer’s AGI, depending on both the type of property contributed and the type of taxpayer. Further, any excess contribution amounts may be carried forward five years. “Qualified contributions” are cash contributions made during the period beginning on August 23, 2017, and ending on December 31, 2017, to specific, listed organizations providing relief to victims of the Hurricanes. For the contribution to be qualified contribution, the taxpayer must also make an election and provide evidence substantiating that the contribution was used for covered relief efforts.

Employment Tax Credits

The Act creates an employee retention credit for eligible employers equal to 40% of up to $6,000 of qualified wages with respect to each eligible employee for the tax year. For purposes of the Act, “eligible employers” are those that conducted an active trade or business in a declared disaster zone on the date of the disaster and, for some period of time following the disaster, were rendered inoperable.

Special Rule on “Earned Income”

The Act allows an individual whose place of abode on August 23, 2017 was located in a federally declared disaster area to substitute their previous year’s earned income for purposes of calculating the earned income tax credit and child tax credit. To be eligible for the election, the earned income of the taxpayer for the tax year in which the disaster occurred must be less than the earned income of the preceding year.

U.S. Territory Tax Relief

Individuals subject to Puerto Rico income taxation may qualify for deadline extensions and other relief from the Puerto Rico Department of Treasury, which is operating from a temporary remote location. In addition, in Notice 2017-56, the IRS relaxed the requirements to be considered a bona fide resident of Puerto Rico or the U.S. Virgin Islands (and therefore exempt from U.S. income tax), for those who temporarily left the territories due to Hurricanes Irma or Maria. Individuals who are residents of Puerto Rico or the U.S. Virgin Islands should consult U.S. territory tax advisors for guidance.

Action Items

Plan sponsors interested in adopting the special distribution rules under the Act have until the end of the first plan year beginning on or after January 1, 2019 (December 31, 2019, for calendar year plans) to amend their plan documents. Plan sponsors who amend (or intend to amend) their plans to provide qualified hurricane distributions should also consider taking the following steps to insure that participants are aware of the opportunities offered by Act:

  • Consider notifying all participants, both active and inactive, about the availability of qualified hurricane distributions.
  • Supplement the plan’s Special Tax Notice to include information regarding the special tax treatment of qualified hurricane distributions.
  • Send participants a Summary of Material Modifications to the plan’s Summary Plan Description (“SPD”), or restate the SPD.

The IRS is likely to issue additional guidance on these topics in the coming weeks. In the meantime, if you have any questions regarding qualified hurricane distributions or any of the additional tax relief provided under the Act, or would like assistance amending your plan, please contact your Jones Walker relationship attorney or one of the attorneys listed below.

Ricardo Carlo, Katelyn Gunn and Joseph Landry are associates in Jones Walker’s Tax and Estates practice group. Ricardo can be reached at or (504) 582-8409, Katelyn can be reached at or (504) 582-8205, and Joe can be reached at or (504) 582-8428.