Recently in Construction Generally Category

Demolition/Construction Full Steam Ahead on Sacramento Entertainment and Sports Center

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The Sacramento Business Journal in Arena builders hitting some -- but not all -- targets for local and small-business contracts reports on the progress of the Sacramento Entertainment and Sports Center (ESC), including confirming that the "oversight committee says the Sacramento Kings are exceeding commitments to hire local companies to build the downtown arena." For additional information on the "World-Class Home of the Sacramento Kings", check out the Sacramento Kings ESC website. Recent postings include an update on the ESC demolition/construction (Dec. 16, 2014), and notice of a March 6 Subcontractor Outreach Meeting. Contractors Bid Opportunity Information and renderings of the ESC are also posted. For additional information, also check out the City of Sacramento's Arena News. The ESC is expected to be completed by October 2016 in time to open for the 2016-17 NBA season.

Additional Source: Demolition For Sacramento Kings New Arena Scheduled To Commence By Month End

Chung Report Critical of Caltran's Protocols, Data Interpretation and Conclusions re San Francisco-Oakland Bay Bridge SAS Span Integrity

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A report titled Validity of Caltrans' Environmental Hydrogen Embrittlement Test on Grade BD Anchor Rods in the SAS Span dated December 2, 2014 prepared by Yun Chung, Materials Engineer (Retired), purportedly for Steve Heminger, Chair, Toll Bridge Program Oversight Committee recently surfaced. Seven other professors, consultants and engineers purportedly reviewed the report and provided comments, including Robert G. Bea, Ph.D., Russell Kane, Ph.D., Harold J. Mantle, P.E., Charles J. McMahon, Jr., Sc.D., Cory Padfield, P.E., Patrick Pizzo, Ph.D., and Pierre R. Roberge, Ph.D., P.E. The Chung Report responds, in part, to Caltrans' conclusion "that all the 2,210 HDG BD rods in the SAS are "safe" as installed from future EHE failures." The San Francisco-Oakland Bay Bridge Self-Anchored Suspension Bridge Evaluation of the ASTM A354 Grade BD Rods was issued on September 30, 2014.

In part, the Chung Report concludes that "This review revealed that Caltrans' EHE test protocols and data interpretation are both problematic and unscientific and that their conclusions as to the integrity of the [self-anchored suspension span (SAS)] could not be supported." Section 8.0 of the Chung Report sets forth 12 conclusions and recommendations, including that "Caltrans' conclusions and recommendations in their September 2014 report on the A354 BD Rod Evaluation are incorrect and will not resolve the concerns about possible hydrogen embrittlement (HE) failures of hot dip galvanized (HDG) Grade BD rods that are critical to the structural integrity of the self-anchored-suspension (SAS) span." Among other things, the Chung Report recommends that Caltrans should "adopt the strategy of using HDG BD rods that are metallurgically not susceptible to EHE failures, for example those with peak hardness of 32 - 35 HRC maximum" and "identify HDG BD rods in the SAS that are susceptible to EHE failures and replace them with new HDG BD rods or equivalent rods not susceptible to EHE failures." As for monitoring, the Chung Report recommends that Caltrans "concentrate on the tower base anchor rod performance because they are not replaceable and their failures would be critical to the SAS structural integrity.... It may take years but it is difficult to predict the timeframe of EHE failures. Caltrans should develop a risk analysis of the tower base anchor rod performance."

Additional Source: The Sacramento Bee, Independent report calls Bay Bridge Tests 'unscientific,' 'erroneous' (Dec. 2, 2014).

Texas Railroad Commission Revises Common Carrier Permit Application Rule

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In the 2012 case of Texas Rice Land Partners, Ltd., et al., v. Denbury Green Pipeline-Texas, LLC, 363 S. W. 3d 192 (Tex. 2012), the Texas Supreme Court held that the routine and ministerial issuance of a common carrier pipeline permit to Denbury Green did not conclusively establish the pipeline's status as a common carrier as a matter of law, thereby enabling the pipeline to exercise eminent domain powers over private property. Consequently property owners now have the right to challenge that status in state court. The Texas Railroad Commission took note of the criticisms lodged against its rules and procedures, and on December 2, 2014, the Commission promulgated changes to its permitting rule, which is located in Title 16, Part 1, Chapter 3 of the Texas Administrative Code, Rule § 3.70. The new rule is effective on March 1, 2015.

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TX Supreme Court Will Hear Arguments in San Jacinto Waste Pits Insurance Controversy Jan. 15

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The Texas Supreme Court confirmed that it will hear oral arguments in McGinnes Indus. Maint. Corp. v. The Phoenix Ins. Co., et al., No. 13-20360, case on January 15, 2015. The issue was certified to the Texas Supreme Court by the Fifth Circuit Court of Appeals on June 11, 2014. The Court will decide whether, under Texas law, an EPA order to clean up a site is a "suit" triggering an insurer's duty to defend. A trial in which the companies' liability to pay civil penalties to Harris County was litigated, concluded a few weeks ago, with mixed results.

As described by the Fifth Circuit Court of Appeals in an unpublished opinion (issued June 11, 2014), McGinnes is in the waste disposal business. In the 1960s, McGinnes removed waste from a paper mill and released the waste into three ponds located in Harris County, Texas, adjacent to the San Jacinto River. During that time, McGinnes was covered by commercial general liability (GCL) insurance policies which required the insurers to defend its insured in any "suit" (an undefined term in the policies) seeking damages on account of property damage. Many years later, EPA sent a series of CERCLA notice letters to Waste Management, McGinnes parent company, including a Unilateral Administrative Order ordering McGinnes to conduct a remedial investigation and feasibility at what became known as the San Jacinto Waste Pits Superfund Site. Failing to comply with the Order would subject McGinnes to substantial civil penalties. McGinnes then notified its insurers of these demands, and requested that they provide a defense in accordance with the terms of the insurance policies. Travelers refused to defend, arguing that no "suit" had been filed. McGinnes then filed a lawsuit against the insurers in the US District Court for the Southern District of Texas, seeking over $2 million in attorney's fees as well as a declaratory judgment that Travelers was required to provide a defense to the EPA actions. However, the District Court granted the insurers motion for summary judgment, determining that the EPA CERCLA action was not a suit triggering the duty to defend. It based its decision on the fact that when the policies were issued in the 1960s and 70s when "this sort of administrative bullying did not exist." McGinnes appealed the order to the Fifth Circuit Court of Appeals.

The Fifth Circuit, realizing there was no controlling Texas precedent to guide it in deciding "an important question of Texas law, for which there is no controlling Texas precedent", certified a question of law to the Texas Supreme Court, asking whether the EPA's PRP letters and/or unilateral administrative order received by McGinnes constitute a "suit" within the meaning of the GCL policies, triggering a duty to defend. The appeal was filed on June 11, 2014.

Additional Sources: Houston * Chronicle, Science & Environment, Settlements, split verdict yield murky result in waste pit case (Nov. 13, 2014); HoustonPress, Blogs, Two Companies Settle Over San Jacinto River Waste Pits, Jury Clears Lone Holdout of Liability (Nov. 14, 2014); Texas Supreme Court's Case Information, McGinnes Indus. Maint. Corp. v. The Phoenix Ins. Co., et al., No. 14-0465

Louisiana Licensing Law for Solar Contractors ~ Compliance Required Before Feb. 1, 2015

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On June 23, 2014, Louisiana Governor Bobby Jindal signed into law Senate Bill 447. Louisiana Revised Statutes § 2156.3 governs the licensing of "entities engaging in the business of selling, leasing, installing, servicing, or monitoring solar energy equipment," and "entities engaged in the business of arranging agreements for the lease or sale of solar energy systems or acquiring customers for financing entities." Section 2156.3 prohibits licensed contractors installing solar energy equipment or solar energy systems on or after February 1, 2015 unless the licensees are in compliance with Section 2156.3 and any related rules adopted by the Louisiana State Licensing Board for Contractors (the "Board"). It provides certain exceptions, including that any contractor licensed in Louisiana as of August 1, 2014, holding the major classification of Building Construction, Electrical Work (Statewide), or Mechanical Work (Statewide), shall be deemed to have met the examination requirement.

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DC Court of Appeals: District Court's Ruling On Attorney-Client Privilege Irreconcilable With Long Standing Law

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Internal corporate investigations often raise questions regarding legal privileges. In an important attorney-client and work product controversy in the corporate area, last June the DC Circuit Court of Appeals granted a petition for a writ of mandamus in connection with documents the trial court had ordered to be made available to the plaintiff in a False Claims Act case. The case is reported as In re: Kellogg Brown & Root, Inc., 756 F.3d 754 (May 7, 2014). The Court of Appeals, vacating the District Court's document production order, found that the District Court, in United States ex rel. Barko v. Halliburton Co., No. 05-cv-1276, 2014 WL 1016784, at *2 (D.D.C. Mar. 6, 2014), should have carefully reviewed the protections afforded internal legal deliberation protections recognized by the Supreme Court in Upjohn Co. v. U.S., 449 U.S. 383 (1981). In doing so, the Court of Appeals recognized that the attorney-client privilege means that potentially critical evidence may be withheld from the factfinder; however, "our legal system tolerates those costs because the privilege 'is intended to encourage 'full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice.'" It further ordered that "[t]o the extent that Barko has timely asserted other arguments for why these documents are not covered by either the attorney-client privilege or the work-product protection, the District Court may consider such arguments."

During discovery, Barko sought documents related to a prior internal investigation. The internal investigation was pursuant to its Code of Business Conduct, which is overseen by the company's Law Department. The internal investigation had allegedly been conducted for the purpose of obtaining legal advice and that the internal investigation documents therefore were protected by the attorney-client privilege. Barko responded that the internal investigation documents were unprivileged "business records." After reviewing the disputed documents in camera, the District Court determined that the attorney-client privilege protection did not apply because, among other reasons, it has not been shown that "the communication would not have been made 'but for' the fact that legal advice was sought." United States ex rel. Barko., 2014 WL 1016784, at *2 (quoting United States v. ISS Marine Services, Inc., 905 F. Supp. 2d 121, 128 (D.D.C. 2012)). The District Court concluded that the internal investigation was "undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice." Id. at *3.

The Court of Appeals found that "[t]he District Court erred because it employed the wrong legal test." "[I]n a key move", the District Court ruled that "the primary purpose of a communication is to obtain or provide legal advice only if the communication would not have been made 'but for' the fact that legal advice was sought," implying that "if there was any other purpose behind the communication, the attorney-client privilege apparently does not apply." The District Court, because it found that the internal investigation was "undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice," further concluded that "'the primary purpose of' the internal investigation 'was to comply with federal defense contractor regulations, not to secure legal advice.'"

The Court of Appeals confirmed that "[t]he but-for test articulated by the District Court is not appropriate for attorney-client privilege analysis." It underscored the "that the primary purpose test, sensibly and properly applied, cannot and does not draw a rigid distinction between a legal purpose on the one hand and a business purpose on the other. After all, trying to find the one primary purpose for a communication motivated by two sometimes overlapping purposes (one legal and one business, for example) can be an inherently impossible task." The District Court's "novel approach to the attorney-client privilege... would eradicate the attorney-client privilege for internal investigations conducted by businesses that are required by law to maintain compliance programs, which is now the case in a significant swath of American industry." Finding that the District Court's decision "generated substantial uncertainty about the scope of the attorney-client privilege in the business setting," it concluded that "the District Court's decision is irreconcilable with Upjohn." It then held that "[s]o long as obtaining or providing legal advice was one of the significant purposes of the internal investigation, the attorney-client privilege applies, even if there were also other purposes for the investigation and even if the investigation was mandated by regulation rather than simply an exercise of company discretion."

The latest decision of the District Court in United States ex rel. Barko was issued, and most of the 150 or so documents generated by communications between Halliburton's in-house counsel and outside counsel qualify for the attorney-client or attorney work product protections. An appendix to the ruling lists these documents, and indicates the basis on which the court determined whether they are privileged.

First Amendment v. Conflict Mineral Rules

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A panel of the U.S. Court of Appeals for the DC Circuit has agreed to rehear the case of National Association of Manufacturers v. SEC, 748 F.3d 359 (2014), responding to petitions for rehearing submitted by the Securities Exchange Commission and Amnesty International. The Court will consider the First Amendment implications of compelled commercial speech in view of a recent en banc decision by the court in American Meat Institute v. Department of Agriculture, 760 F.3d 18 (2014).

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NJ Announces Complex Business Litigation Program ~ Will Include Certain Construction Disputes

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Chief Justice Stuart Rabner recently announced that, following the New Jersey Supreme Court's November 13, 2014 order authorizing the Program, the New Jersey Judiciary will begin on January 1, 2015 accepting cases into the Complex Business Litigation Program. The Program will be a forum for the resolution of complex business, commercial and construction cases that meet the $200,000 threshold amount for damages. Parties in cases that do not meet the $200,000 threshold can file a motion to have their dispute included in the Program if there are compelling reasons to do so (e.g., the case will involve complex factual or legal issues, a large number of parties, complex discovery issues such as multiple witnesses or large numbers of documents, potential to impact the business beyond the particular dispute, or a significant interpretation of a business or commercial statute). In turn, parties that believe that their matter does not meet the $200,000 threshold may file a motion to have the case removed from the Program.

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Earthquake Brace + Bolt Program Available January 2015 in 26 CA ZIP Codes

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The California Contractors License Board (CSLB) recently encouraged contractors to take note of the Earthquake Brace + Bolt (EBB) program being offered by the California Residential Mitigation Program, a joint powers agency of the California Earthquake Authority and the Governor's Office of Emergency Services. The EBB program is a residential seismic retrofit program that financially incentivizes homeowners to retrofit homes built before 1940 -- the homeowner will receive up to $3,000 to cover costs associated with retrofitting an eligible home. The retrofit will reduce the potential for the homes to slide or topple off of their foundations during an earthquake by adding anchor bolts and bracing in the crawl space ("cripple wall") to improve the connection between the wooden framing and concrete foundation. Homeowner registration takes place from January 15 to February 15, 2015.

The EBB program will be available in January 2015 in 26 California ZIP Codes:

  • Oakland: 94602, 94607, 94609, 94610, 94618

  • San Francisco: 94112, 94121, 94127, 94132

  • San Leandro: 94577, 94578, 94579

  • Los Angeles: 90026, 90031, 90039, 90041, 90042, 90065

  • Pasadena: 90026, 91101, 91103, 91104, 91105, 91106, 91107

  • Santa Monica: 90401, 90404
The CSLB encourages contractors experienced in seismic retrofitting, specifically with California Existing Building Code (CEBC) Chapter A3, 2010 Edition, to recognize that opportunities will be available for this work. Contractors can participate in the program at no charge and be added to a searchable contractor list by completing the online FEMA education training. Contractors who want to participate are encouraged to register and take the FEMA training as soon as possible so they are on the program's list of contractors when homeowner registration opens.

Owner/General Contractor With Right to Control Work and Worksite May Be Exposed to Claims by Subcontractors' Workers for Safety-related Issues

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Recently, the Nebraska Supreme Court, in Gaytan v. Wal-Mart, et al., 289 Neb. 49 (2014), concluded that there were genuine issues of material fact with respect to the general contractor's liability for claims brought by a special administrator for a deceased worker's estate. The claims against the general contractor, Graham Construction, Inc. (the "GC"), were premised on the theory that it retained control over the roofing subcontractor's, D & BR Building Systems, Inc. (D&BR), safety practices on the jobsite, and specifically its workers use (or non-use) of personal protection equipment (PPE), and the manner in which the decking was secured to the roof.

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"Roadless Rule" Litigation Revived By DC Circuit Court of Appeals

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It's not over until it's over. The State of Alaska was recently given another opportunity to challenge the U.S. Forest Service's 2001 "Roadless Rule," a rule that prohibits the construction and repairs of roads and timber harvesting on millions of acres in the national forests. The case is State of Alaska v. U.S. Department of Agriculture, et al. On November 7, 2014, the D.C. Circuit Court of Appeals reversed the District Court's dismissal of the State of Alaska's challenge to the Forest Service's January 2001 "Roadless Rule," a rule repealed by the Forest Service in 2005 and reinstated by the District Court for the Northern District of California in a decision issued in 2006, California ex rel. Lockyer v. U.S. Department of Agriculture, 459 F. Supp. 2d 874, 916 (N.D. Cal. 2006) (court reasoned that the elimination of a major nationwide land management program would be sufficient to trigger environmental analysis, rejecting the Department of Agriculture's argument that replacing the Roadless Rule was a paper exercise).

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Supreme Court Heard Oral Argument in Yates v. US

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Day before yesterday, the Supreme Court heard oral argument on November 5, 2014 in the case of Yates v. United States. The Supreme Court is being asked to answer the question: "Whether petitioner's efforts to thwart a government investigation by dumping undersized fish at sea violated the criminal prohibition on "knowingly ... destroy[ing] ... [or] conceal[ing] ... any ... tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States," 18 U.S.C. 1519. Although the Sarbanes-Oxley Act, when enacted, was concerned with corporate fraud, the Yates case reflects that it may be used to sweep in all kinds of trivial forms of noncompliance--and subject an individual to felony prosecution. For example, Justice Breyer has observed that the Sarbanes-Oxley Act could apply to throwing away an EPA questionnaire about a company's waste recycling activities. The Supreme Court's ruling in Yates likely will have some impact on company's routine records management practices.

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Proposed Redefinition of "Waters of the United States" Likely to Have Significant Implications

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By Pillsbury Winthrop Shaw Pittman

Many construction projects are subject to the federal Clean Water Act and its regulation of the discharge of pollutants into the navigable waters of the United States, which the law defines simply as the "waters of the United States". This definition drives the scope of federal jurisdiction in numerous areas. The EPA and the U.S. Army Corps of Engineers have significant regulatory responsibilities under the Clean Water Act, and these agencies are now proposing to revise the current definition of this very important term.

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Anti-Bullying Training Required in California

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On September 9, 2014, Governor Edmund G. Brown Jr. signed into law Assembly Bill 2053 amending California Government Code § 12950.1. Subdivision (b) requires an employer, as defined, to include prevention of abusive conduct , as defined, as a component of the training and education required in Subdivision (a) of Government Code § 12950.1.

For purposes of Section 12950.1, "employer" means "any person regularly employing 50 or more persons or regularly receiving the services of 50 or more persons providing services pursuant to a contract, or any person acting as an agent of an employer, directly or indirectly, the state, or any political or civil subdivision of the state, and cities" (Cal. Gov. Code § 12950.1(g)(1)) and "abusive conduct" means "conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer's legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person's work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious" (Cal. Gov. Code § 12950.1(g)(2)).

Additional Source: California Legislative Information, A.B. 2053 (2014)

New Cal/OSHA "Serious Injury or Illness or Death" Reporting Requirement January 1, 2015

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On July 8, 2014, Governor Edmund G. Brown Jr. signed into law Assembly Bill 326 amending California Labor Code § 6409.1. Subdivision (b) requires every employer, in addition to the report required by Subdivision (a), to make an immediate report to the Division of Occupational Safety and Health by telephone or email of every case involving an employee's serious injury or illness or death. Failure to do so, will expose the employer to a civil penalty of not less than $5,000.

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