Gravel2Gavel Construction Law Blog

Posted October 17, 2012
By Laura Freid-Studlo

Last week, the Federal Energy Regulatory Commission ("FERC") began enforcing Order 1000, a broad and detailed set of guidelines regarding the development of the nation's power transmission system. The Order, which has been viewed as one of the most significant transformations to the electricity market in recent memory, impacts regional transmission planning and allows for new transmission projects to be competitively bid. As outlined by FERC, Order 1000 consists of three categories of reforms - planning reforms, cost allocation reforms, and nonincumbent developer reforms.

The most controversial aspect of the Order appears to be this third category of reforms, which takes away incumbent utilities' right of first refusal from any FERC jurisdictional contracts. But not all energy executives are opposed to this reform. Transmission & Distribution World shared the views of several top utility executives, including one who supports the elimination of the right of first refusal because it opens up opportunities for more providers to participate in building transmission lines and allows existing utilities to compete in other parts of the country. Other executives, however, fear that opening up development by letting inexperienced companies bid on transmission may jeopardize reliability.

It is undisputed that the nation's current power grid is out of date. The American Society of Civil Engineers reports that 70 percent of power lines and transformers are over 25 years old, and 60 percent of circuit breakers are over 30 years old. Clearly, the need for investment and opportunities for development, construction, and business are massive. Bloomberg reports that approximately $673 billion will need to be invested by 2020 to avoid major breakdowns of the power grid. $104 billion worth of new transmission capability will be constructed by 2022, resulting in an estimated $6 billion in profits for developers of power lines.

It is anticipated that the costs of modernizing the power grid will be borne in part by consumers, who will likely face increased rates. But a more efficient power grid should ultimately lead to lower rates. In addition, modernization will help facilitate the use of renewable energy. SmartGridNews.com notes that new transmission lines are essential for energy sources like solar and wind to be incorporated into the power grid.

The true impacts of Order 1000 may not be known for some time, but the need for improving the grid combined with the opportunity for increased competition may provide a much needed economic boost.

Posted September 21, 2012
By Laura P. Bourgeois

• As if gas prices aren't enough. San Francisco pushes for a tax based on the miles you drive.

• A new form of procrastination for students. This amazing video shows students working together to make a building dance by opening and closing its windows.

• Taking "green building" to a whole new level - with a live micro-algea bio-facade.

Posted September 11, 2012
By Andrew M. Argyris

On the eleventh anniversary of the September 11 terrorist attacks, One World Trade Center steadily progresses toward a late 2013 completion date. The spire on top of the 104-story skyscraper will reach 1,776 feet, a symbolic reference to America's independence. David Childs of Skidmore, Owings and Merrill, Architect, is the architect for One World Trade Center, and Tishman Construction is the primary contractor. Although reports vary, the final construction cost of the tower will be close to $4 billion. The current images of One World Trade Center are inspiring and an uplifting image on this day of remembrance.

On June 14th, President Obama joined Governor Cuomo, Governor Christie and Mayor Bloomberg to see first-hand the tower's progress. The President added a personal touch to one of the final steel beams to be installed at the top of the skyscraper by including the following signed message: "We remember We rebuild We come back stronger! Barack Obama." One World Trade Center will be surrounded by three additional high-rise office buildings and the National September 11 Memorial & Museum.

While the tenth anniversary of 9/11 put the memorial on full display, the 100,000-square-foot museum is currently behind schedule. Delayed by funding, oversight, and financing, construction of the museum came to a halt after the tenth anniversary. On Monday night, however, the 9/11 Memorial and Museum Foundation (chaired by Mayor Bloomberg) and the Port Authority of New York and New Jersey (controlled by Mayors Cuomo and Christie) signed a memorandum of understanding, resolving the outstanding issues. The parties negotiated additional payments from the September 11 foundation, in an attempt to ensure that no additional public funds are needed to complete the National September 11 Memorial & Museum. Originally planned to open today on the eleventh anniversary, the museum is now likely to open at the end of 2013.

Posted August 28, 2012
By Noa L. Clark, Robert A. James and Amy L. Pierce

When trouble, in the form of adverse changes in financial conditions or the property marketing environment, strikes during the period between construction contract signing and completion of procurement and construction activities, the developer often will have to consider taking the course of action that will maximize value for all stakeholders. Ultimately, it may reluctantly determine that the construction contracts and work should be suspended for some period of time or terminated altogether. Our white paper Shutting Down the Construction Project, updated to include California's mechanic's lien laws effective July 1, 2012, outlines significant issues that an owner should consider when suspending or terminating a California commercial construction project.

Things to consider include providing notice of the suspension/termination, if the contract is suspended, keeping the contract and subcontracts in effect, and closing out the claims exposure. Similar principles apply to projects in other states and projects of a residential, industrial or public nature. As becomes quickly apparent, the laws governing these issues are highly technical and often impose short deadlines for compliance, and also pose signfiicant risk to owners and contractors for non-compliance. To learn more about this, click here to our white paper.

Posted August 24, 2012
By Laura P. Bourgeois

• Whose turn is it to take out the trash? With no "rules" about floating debris, the Headquarters for Ocean Policy is faced with a dilemma - who should bear the cost of cleaning up the millions of tons of debris that originated in Japan after the tsunami and is expected to land on the U.S. west coast in the fall? The floating debris pile approaching the U.S. includes, among other things, houses and cars.
• And in other floating-related news...the government of the Maldives has decided to replace the sinking islands with man-made floating islands. Designers plan "to construct the floating islands in India or the Middle East and tow them to the Maldives to reduce costs."
• Meanwhile, on solid ground... engineers report the Washington Monument did not sink during the earthquake that hit DC last year. We previously reported on this issue here.

Posted August 22, 2012
By William S. Hale

Developers got a significant win in California last week when the California Supreme Court held that an arbitration provision contained in a recorded instrument bound a homeowners association, despite the fact that the homeowners association did not exist when the instrument was recorded and thus had no opportunity to negotiate the provision. The opinion can be found here.

In Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC (August 16, 2012) 2012 Cal. LEXIS 7665, a homeowners' association ("HOA") sued the developer of a mixed-use residential and commercial common interest community, alleging construction defects. Prior to selling any units, the developer had recorded a declaration of covenants, conditions, and restrictions ("CC&R's"), which provided that the developer, each individual homeowner, and the HOA, all consented to arbitration under the FAA of any construction-related disputes. Each individual homeowner's purchase agreement specifically noted the homeowner's acceptance of the CC&R's, and the arbitration provision in particular. However, pursuant to California law, the HOA was not actually created until the sale of the first unit.

Posted August 16, 2012
By Laura P. Bourgeois

• Welcome to Washington DC. Federal officials claim the board overseeing the Metrorail line to Dulles is "dysfunctional, out of control and secretive."




• When art meets building. Local artists brought in to beautify a Minneapolis construction site during renovation .
• Wonder how much replacement ink cartridges cost. A professor from USC has developed a system to "build" a home using a giant 3D printer.

Posted August 16, 2012
By Michael S. McNamara and Andrew M. Argyris

One of John F. Kennedy's best quotes was noting that "Washington is a city of Southern efficiency and Northern charm." When it comes to Public Private Partnerships, things have turned around in the last 50 years. The South leads the way in P3's with Virginia, Florida and Texas being notable standouts. The conventional wisdom has been that strong unions in northern states would continue to fight against more private involvement in state infrastructure. But the pressures of constrained state budgets are proving too strong.

So, earlier this year we saw Maryland almost pass a new P3 statute (alright, Maryland is South of the Mason-Dixon Line, but it's still a blue state with heavy union activity). Then Pennsylvania actually passed a law, and now New Jersey has entered the fray with a new law targeting colleges.

We'll take a look at the new Pennsylvania and New Jersey laws, after the jump.

Posted August 10, 2012
By Paul C. Levin

The Olympics are in full swing, with the world's attention on the playing fields and pools dotting the United Kingdom. But how about the venues themselves, how green are they? The London Organizing Committee planned the Games with a green tint, focusing on sustainable principles for everything from stadium construction, food service, and the use of public transportation. Plus, the large number of preexisting venues around the city (tennis at Wimbledon, for example) made some additional construction unnecessary.

Planning for Green - The Organizing Committee took the forward-thinking step of setting up the London Legacy Development Corporation three years ahead of the Games, which has focused on long-term uses of the Olympic venues after the torch is passed to Russia's winter Olympics. The Development Corporation's plans for housing and parks were developed with an eye to rebuilding parts of London, particularly East London. The Organizing Committee even took the extra step of working with the Independent Standards Organization to develop a global standard for sustainable event management, now known as ISO 20121:2012.

Green Building - Venues constructed for the games include a number of innovative green features. The roof of Olympic Stadium, for example, was constructed from unwanted gas pipes from the North Sea and over 40% of the concrete used for construction is made of recycled materials. While the question remains as to whether this much new construction can ever be considered truly sustainable when developed for a single mega-event, the Organizing Committee took great steps to reduce waste. Many Olympic venues that do not have long-term uses were built only to be used for the Games and will then be taken apart and their materials will be reused.

Looks like a tough act to follow for Sochi and Rio.

Posted July 31, 2012
By William S. Hale

Illinois and California appellate courts recently issued two policy-holder favorable decisions. In both cases, the trial court had granted summary judgment in favor of the insurance company and denying coverage, and in both cases the trial court decisions were reversed.

Posted July 27, 2012
By Laura P. Bourgeois

• Form over function gone too far? Ticket-holders in some seats in The London 2012 Aquatic Center will get a refund because "the angle and curve of the aquatic centre roof" obscures the views of divers. The building was designed by Zaha Hadid, who denies that the design is the reason for the ticketing "blunder."

• No intro necessary here. Construction workers save elderly woman from fire.

• What ever happened to tough love? Report shows that members of DOJ staff manipulated hiring process to get their kids jobs.

• Sustainable cities beneath the sea? The "highly imaginary concept" of seascrapers is segmented into garbage collection units at the bottom, recycling plants in the middle, and housing and recreational zones at the top.

Posted July 26, 2012
By Laura Freid-Studlo

Throughout the world, the popularity of "green roofs" is on the rise. ENR.com reports that green roofs are being used to mitigate various environmental problems facing urban areas, most notably, storm water management. According to the EPA, green roofs also help combat a problem known as "Heat Island Effect" by removing heat from the air through evapotranspiration. This process reduces temperatures of both the roof surface and the surrounding air, allowing the surface temperature of a green roof to be lower than the surrounding air temperature on a hot day. Other benefits of green roofs include corrosion protection, noise reduction, energy efficiency, and improved air quality. And the uses for green roofs vary widely from practical to pure entertainment. The ENR.com article notes that the largest green roof project currently underway in the United States - the Croton Water Filtration Plant in Bronx County, New York City - will include a 36,512-sq-m golf driving range.

Posted July 20, 2012
By Laura P. Bourgeois

• Time to revise the game plan. New Jersey officials re-evaluate planned infrastructure projects in light of Super Bowl 2014. Bottom line: be prepared for some gridlock. Oh, and bundle up since this will be the first ever outdoor Super Bowl in a cold-weather city.

• There's an app for that! Bluebeam Software launches its latest iPad app designed to assist the construction industry in the field.

• A FAR re-write, you say? A contracting officer's take on the need to tone down the bureaucracy.

• DC Silver Line milestone! The aerial portion of the Metro project - spanning over three miles - is complete.

Posted July 12, 2012
By Laura Freid-Studlo

It is the rule in many jurisdictions that an insurer which assumes defense of its insured without issuing a reservation of rights can be estopped from later denying coverage based on rights or defenses in the insurance contract. This general rule was rejected by the Supreme Court of Wisconsin in Maxwell v. Hartford Union High School District, 814 N.W.2d 484 (Wis. 2012). The court in Maxwell held that an insurer which defends without reserving the right to deny coverage has not waived its ability to rely on coverage clauses in the policy allowing for such a denial.

In Maxwell, the policyholder - a school district facing a wrongful termination suit from an ex-employee - tendered a claim to its liability insurer which defended the school district in the ensuing litigation without issuing a reservation of rights letter. It was not until a judgment in excess of $100,000 was awarded against the school district that the insurer denied coverage based on language in the policy excluding liability for damages due under the employment agreement and for lost benefits or lost wages. That the policy indeed excluded coverage for the damages at issue was not in dispute. The issue presented to the court was whether, because the insurer failed to issue a reservation of rights, it had waived or could be estopped from asserting its defense of no coverage. In rendering its decision, the court held that waiver or estopped could not supply coverage to an insured that was not provided in the policy itself. Ruling otherwise, the court stated, would force an insured to pay for a loss for which it had not received a premium.

Posted July 9, 2012
By Robert A. James

On July 6, the California State Senate narrowly approved the use of $4.5 billion in proceeds from state Proposition 1A bonds for transportation projects. Governor Jerry Brown is expected to sign the bill into law. Full text of the bill can be found here. Senate Bill 1029 is intended to preserve California's rights to about $3.3 billion of federal American Recovery and Reinvestment Act (ARRA) funds for the long-awaited California High Speed Rail.

About $2.6 billion of the state bond proceeds is now dedicated to High Speed Rail, intended to match the $3.3 billion of ARRA funds for a total of about $5.9 billion in funding for the early rail projects. (The remaining $1.9 billion is earmarked for local transit improvements, such as $140 million for new BART cars, $705 million for Caltrain electrification, $61 million for the SF Muni Central Subway, and $500 million for Metrolink and related systems.)