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Maybe this is the ying to the yang of the American Society of Civil Engineers report that Paul Levin blogged about earlier this week. The Urban Land Institute and Ernst & Young just published Infrastructure 2012: Spotlight on Leadership, in which they detail how state and local governments have decided not to wait for funding from the federal government. It has become like Waiting for Godot (or perhaps Waiting for Guffman). In a Presidential election year the federal government is even more gridlocked than normal — if you can believe that.

But that gridlock doesn’t slow down the rate of decay of our infrastructure, so state and local governments are finding ways to get’r done. These range from old fashioned taxes and bonds to Public Private Partnerships. Of course, no one likes taxes and some object to public private partnerships as selling off our infrastructure. But remember, when a private company finances a road, they can’t roll it up and take it home.

If you don’t have time to read the 70 page report, you can see a condensed writeup about it here.

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A Bloomberg Law search reveals that more than 1,000 lawsuits have been brought in the past decade for breaches of settlement agreements. To craft a settlement that has staying power, and to avoid buyer’s remorse, both clients and their counsel should learn how to avoid the most common settlement traps. Two of our litigators, Fred Brodie and Bruce Ericson, just wrote an article about five tips that everyone should keep in mind. The article can be found here.

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The American Society of Civil Engineers (ASCE) just released a report titled “Failure to Act, the Economic Impact of Current Investment Trends in Electricity Infrastructure” and no, the results are not pretty. According to the report, the gap between the amount actually spent on infrastructure across America and the amount that needs to be spent to maintain the system will reach $107 billion by 2020 and $732 billion by 2040. The Southeast and the Western portions of the country are particularly vulnerable to infrastructure underinvestment, making up approximately half of the country’s infrastructure deficit. Furthermore, don’t forget about the 2003 blackout across large sections of the East Coast, including New York City, that showed the grid’s vulnerability. This report comes on the heels of ASCE giving the United States a grade of “D+” in the Energy category in 2009. D+ seems pretty generous.

The ASCE report predicts that disruption and inconsistent service resulting from faulty electricity infrastructure will lead to a reduction in U.S. GDP of almost $500 billion and half a million fewer jobs in America by 2020. The calculations implicit in this report are simple: if we can spend $100 billion to address this problem over the next decade, the country on the whole will be half a trillion dollars better off. It seems so simple.
However, the crunch of budget deficits at both the federal and state levels means that these profitable long-term investments lose out to short-term cost cutting. President Obama, however, has championed doubling overall infrastructure spending that would also help spur job growth and make up for years of underinvestment, but it is not enough.

Public-Private Partnerships will play an important role in bridging this funding gap by leveraging private investment over the long-term. The private sectors sees this $500 billion in potential savings and the United States needs to think creatively to spur further infrastructure development.

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California’s ambitious plan to build a high-speed rail system linking San Francisco and Los Angeles has been getting quite a lot of attention lately. Although the plan has some high-powered supporters in Secretary of Transportation Ray LaHood and California Governor Jerry Brown, the level of enthusiasm in Congress has been mixed, as reported by the San Francisco Chronicle’s Carolyn Lochhead.

Earlier this month the California High Speed Rail Authority approved a revised business plan, slashing its previous $98.5 billion estimate by nearly a third to $68.4 billion, with much of the savings coming from “blended infrastructure.” Translation: rather than construct new track for the entire route, the CHSRA’s revised plan now includes upgrades to existing track at the San Francisco and Los Angeles ends of the route.

Despite these budget reductions, the California Legislative Analyst’s office recommended that the California Legislature not approve Governor Brown’s proposals for $5.9 billion in additional funding for the project, including $2.6 billion in bond funds and $3.3 billion in matching funds from the federal government. The Legislative Analyst’s recommendation was based in part on the fact that only $11.5 billion in funding has currently been committed, and that about $39 billion of an assumed $42 billion to be funded by the federal government has yet to be secured.

Earlier this year, the CHSRA released the shortlist of design-build companies that will be allowed to bid on the first segment in the Central Valley once the RFP is released. The RFP was scheduled to be released this past March, but while the terms and conditions have been approved, the RFP remains unissued. Since the funding is still in a state of flux, this is not altogether surprising.

The design-build companies can perhaps take heart from one segment of the Legislative Analyst’s report, however. Recognizing that the Legislature might want to approve some funding to keep the project moving, the Legislative Analyst suggested that in that case the Legislature could approve funding for the first contract (estimated at $1.5 to $2 billion) and scheduled for award this December.

As someone who has spent many, many hours of my life on Interstate 5 between those two cities, and waiting in one airport when my flights to the other have been delayed, I will continue to follow this project with more than casual interest. If the final product even comes close to the statutorily mandated 2 hour and 40 minute non-stop between Los Angeles and San Francisco, that would beat my average driving time by more than half, and could be a genuine competitor for me with air travel.

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We reported last month that Maryland was on the verge of modernizing its statutory framework for P3s, legislation heavily backed by Governor O’Malley’s administration. The proposed legislation was projected to increase the State’s capital budget by as much as $315 million and create as many as 4,000 jobs.

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A federal court in Louisiana denied a subcontractor’s coverage action against Ace Insurance because the subcontractor did not enroll in the Contractor Controlled Insurance Program. The case is Williams v. Traylor-Massman-Weeks, LLC, et al., EDLA No. 10-2309 and you can look at the pdf of the opinion here: Williams v. Traylor-Massman-Weeks.pdf

The Corps of Engineers entered into a contract with Shaw, which had a Contractor Controlled Insurance Program (known as a “CCIP” which is a type of “wrap up” because its “wraps up” various types of insurance into one place. Shaw entered into a contract with Eustis and at the time, Shaw planned to sponsor a CCIP, but had not created it yet. So, Shaw’s subcontract directed Eustis to enroll — presumably when the CCIP was created.

The trouble was, Eustis didn’t enroll. And wouldn’t you know it, of all the projects where they forgot to enroll in the CCIP, that was the one where they had a lawsuit? Eustis came up with several creative theories for coverage, but couldn’t escape its fundamental problem: It simply didn’t enroll in the CCIP.

Aside from the obvious lesson here — if you are a potential enrollee on a wrap up, make sure you have actually enrolled — there are other less obvious lessons. If you sponsor a CCIP, do two things: (a) try to make sure your subs get their paper work in; and (b) structure your contracts so that if they don’t, the risk to you is minimized.

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On March 30, 2012, New Jersey’s Appellate Division issued a ruling in the case of New Jersey v Perini Corp. which explains how New Jersey’s 10 year statute of repose applies to projects using phased construction.

New Jersey’s statute of repose essentially provides that no action may be brought to recover damages for any deficiency in the “design, planning, surveying, supervision or construction” of a project “more than 10 years after the performance or furnishing of such services and construction.” Earlier cases have already established that the statute of repose runs from the date that one’s services for the project are substantially complete. So, the statute of repose will prohibit a claim against an early trade subcontractor once 10 years has elapsed after that subcontractor completed its work on the project even though the entire project may not yet be substantially complete for more than 10 years. However, the general contractor will remain on the hook until 10 years has elapsed from the date of substantial completion for the entire project.

The Perini case required the court to apply these concepts to phased construction. The state sued the general contractor, designer and pipe supplier for problems that developed with the underground hot water piping at a new state prison. The suit was filed on April 28, 2008. By contract, the prison was constructed in three separate phases – each with its own contractual substantial completion date. By April 27, 1998, 10 years before the state filed suit, the state had issued substantial completion certificates for the entirety of the first two phases of the project and for all but two buildings included in the third phase – a garage and a housing unit located outside the main perimeter. However, no certificate of substantial completion was issued specifically for the hot water system.

The court held that “multiple phases of a construction project that are clearly identified and documented can trigger separate periods of repose, even for the general contractor and other contractors that continue to work on the entire project.” However, the court rejected the notion that there can be “separate trigger dates of repose for components of a project, whether multi-phase or not, that are not clearly identified in the documentary record as distinguishable improvements.” In this case, the court found that the hot water system was not a clearly distinguishable component of the construction and was not substantially complete by April 27, 1998. As such, the state’s claim was not untimely under the statute of repose.

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After three years of development, on March 28, 2012, the International Code Council (“ICC”) announced the release of its 2012 International Green Construction Code (“IgCC”). The IgCC, a milestone for bringing sustainability into the mainstream, will enable state and local governments to codify green building practice. The IgCC was developed by the ICC in cooperation with key industry partners – the AIA, ASTM International, ASHRAE, the U.S. Green Building Council (“USGBC”), and the Illuminating Engineering Society (“IES”).

The ICC touts the IgCC as the first model code to address sustainability issues throughout the entire life of a construction project – from design to certificate of occupancy. Richard P. Weiland, CEO of the ICC, described the IgCC to GlobeSt.com as “a baseline document or regulatory framework that different jurisdictions can use for sustainable construction practices.” Wieland further explained that the ICC incorporates the 2011 version of the ANSI/ASHRAE/IES/USGBC Standard 189.1 but allows state and local governments to be flexible in implementation.

More, after the jump.

A press release from the USGBC, maker of the LEED green building certification system, lauded the model code as an important policy option for localities. According to the USGBC, the IgCC is a complement to LEED that allows state and local governments “to share many of the benefits of green buildings with the millions of buildings that are designed, constructed and renovated to meet minimum code, whether or not they are engaged in the LEED program.”

As jurisdictions begin to consider adopting the IgCC, training and resources will be available from the ICC and its partners. The AIA’s announcement states that it has analyzed the IgCC’s impact on the architectural profession and will be releasing a guide in May 2012. The ICC’s Green Building guide, which it claims is the construction industry’s first support publication referencing the 2012 IgCC, is currently available here.

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Could LEED certification of new buildings cause increased injury rates for construction workers? Matthew Hallowell, an assistant professor in the Civil, Environmental and Architectural Engineering Department at the University of Colorado at Boulder, thinks so. A recent set of articles authored by Hallowell and several co-authors published or in review by the Journal of Construction Engineering and Management analyzed LEED credits and conducted field research on the hazards related to constructing buildings that will be registered under the LEED system. The articles found that twelve LEED credits contribute to increased hazards for construction workers. According to the author’s research, these hazards for construction workers include:

– A 24% increase in injuries resulting from slips and falls while installing heavy solar panels on roofs painted white in order to reflect sunlight;

– A 36% increase in cuts and abrasions when entering recycling dumpsters to retrieve improperly discarded materials;

– An increase in falls when green roofs are installed by landscaping contractors not accustomed to working at height; and

– An increase in falls when workers spend increased time at height installing sky lights to provide day lighting or performing time-intensive wiring for lighting sensors.

The articles do note that worker safety under LEED is improved by the use of lower VOC adhesives and sealants. In all, Hallowell claims that a building cannot be considered sustainable without accounting for the health of construction workers.

But should we blame LEED for these hazards? Several of these risks and related mitigation strategies predate LEED and apply equally to any large construction project, including increased emphasis on fall protection procedures, reducing the time workers spend in hazardous situations, and increased protections against hazardous chemicals.

Further, several of the potential hazards Hallowell references could be addressed by additional safety features for construction practices that could be introduced by regulators or contractors. For example, the articles cite potential injuries caused by installing white solar roofing panels, which can be heavier and more slippery than traditional black roofing materials and can reflect light into workers’ eyes. The authors recommend rubber walk pads and safety eyewear to combat these problems, safety measures that are not noted by LEED.

The U.S. Green Building Council, which oversees LEED, has taken notice of potential safety hazards. Brendan Owens, a USGBC representative, said he was surprised by Hallowell’s findings and noted that USGBC is working with the National Institute for Occupational Safety and Health to evaluate these safety issues. While it may be too late for the USGBC to include safety-related changes for the forthcoming update to the LEED rating system, called LEED 2012, safety concerns will likely play a larger role in future updates to the rating system.

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Colorado’s Regional Transportation District (RTD), the public transit provider for the Denver Metro area, is hopeful that public-private partnerships, including unsolicited P3 bids, will accelerate the completion of the FasTracks program. FasTracks, a voter-approved transit expansion program aimed at better connecting the Denver Metro area, includes 122 miles of commuter and light rail, 18 miles of bus rapid transit service, 21,000 new parking spaces, redevelopment of Denver’s Union Station and redirected bus services.

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