Construction Legislative Week in Review
www.agc.org April 5, 2012
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On the Inside
LEGAL
AGC Leads Legal Defense of State Statutes of Repose
AGC EVENTS
Last Chance to Attend the AGC Federal Contractors Conference
ADMINISTRATION
PHMSA Proposes Rule on Federal Enforcement of State Excavation Damage Prevention Programs
GSA Administrator & Other Top Agency Officials Fired Amid Conference Spending Scandal
TRANSPORTATION
Transportation Bill Stalled Action Needed to Pass a Bill in the House
AGC Testifies on Impact of Short Term Transportation Extensions
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LEGAL
AGC Leads Legal Defense of State Statutes of Repose
 

In conjunction with the AGC of Minnesota, the American Council of Engineering Companies, the American Society of Civil Engineers and the Construction Industry Roundtable, AGC of America is encouraging the U.S. Supreme Court to take and review a potentially landmark case on state statutes of repose.

The name of the case is Jacobs Engineering Group, Inc. v State of Minnesota.  It arose out of the widely reported collapse of the I-35W Bridge in Minnesota on Aug. 1, 2007.  Following the collapse, the state carved out a retroactive exception to its longstanding statute of repose, permitting the state to seek compensation for the victims from the companies that had designed and constructed the bridge back in the 1960’s.   The legal question that the case presents is whether that state action violated the Due Process Clause of the 14th Amendment to the U.S. Constitution.

In November of 2011, the Minnesota Supreme Court held that it did not, asserting that the state merely needed to show that that its action was “rationally related” to its interest in providing compensation to the victims.  On March 2, 2012, Jacobs Engineering – the successor to the firm that designed the bridge – petitioned the Supreme Court to review that decision, and today, AGC of America filed a friend-of-the-court brief in strong support of the company’s position.

The brief makes the following points:

  • Unless reversed, the decision below will cast great doubt on the statutes of repose that 48 states and the District of Columbia have all enacted.
  • It is unfair to force design and construction companies to defend themselves long after key documents and witnesses have disappeared.
  • The standards of care that apply to design and construction professionals change over time, and it is difficult, if not impossible, for today’s courts to apply standards dating back to an earlier era.
  • Negligent maintenance is as likely to cause the failure of an aging structure as any defects in either design or construction.
  • The insurance industry has no way to price the risk of a retroactive change in a statute of repose, and the other risk management tools currently available to design and construction professionals are equally inadequate to the task of managing such a risk.
  • This situation is all too likely to recur, given the deterioration in the nation’s infrastructure.

The state’s response to the petition is due around May 2.  The Court is likely to decide whether to take the case by the end of its current term (in mid to late June).  The Court has broad discretion to grant or deny the petition, and typically, it grants only 2 percent of the petitions presented to it.  On the other hand, the Minnesota Supreme Court has set a very dangerous precedent.

For more information, or a copy of the AGC brief, contact Michael E. Kennedy at (703) 837-5335 or kennedym@agc.org. Return to Top

AGC EVENTS
Last Chance to Attend the AGC Federal Contractors Conference
 

The 2012 AGC Federal Contractors Conference will be held April 16-19, 2012, at The Mayflower Hotel in Washington, D.C. This meeting is the only national event where contractors and federal agency personnel can meet in a collaborative forum to review federal construction contracting issues and trends from around the United States. These insightful and highly productive exchanges have solidified the need for both federal construction contractors and the federal construction agencies to share information on a wide variety of issues, foster better communication, and create real solutions. 

If you are engaged in any aspect of constructing, designing, or planning a federal project and you are a general contractor, specialty contractor, service/supplier, attorney or any other important stakeholder already engaged in the federal or federally-assisted market, this conference has a place for you. If you are interested in learning more about federal contracting opportunities and how to get started, this conference is a great place to begin your learning experience.

The conference is geared for AGC members who perform a diverse range of projects including building construction for agencies such as the General Services Administration, military construction projects for our Armed Services, highway and transportation projects for our nation, and water resources projects that benefit our nation’s navigation and flood control. AGC continues to inform members from specific industry segments about emerging issues and trends that are relevant to their work.

To learn more about the conference, download the conference brochure and register, please visit www.agc.org/fedcon. Return to Top

ADMINISTRATION
PHMSA Proposes Rule on Federal Enforcement of State Excavation Damage Prevention Programs
 

The long-awaited proposed rule from the Pipeline and Hazardous Materials Safety Administration (PHMSA) on state damage prevention programs was published on Monday, April 2. The 2006 Pipeline Inspection, Protection, Enforcement, and Safety Act (PIPES Act) requires PHMSA to enforce damage prevention laws where a state damage prevention program is deemed inadequate to do so. This proposed rule is designed to lay out the criteria PHMSA will use to judge whether a state damage prevention program is adequate and what actions the federal government will take once a state has been deemed inadequate.

The rule lays out six criteria to determine the adequacy of a state’s damage prevention program, which are:

  1. Does the state have the authority to enforce its state excavation damage prevention law through civil penalties?
  2. Has the state designated a state agency or other body as the authority responsible for enforcement of the state excavation damage prevention law?
  3. Is the state assessing civil penalties for violations at levels sufficient to ensure compliance and is the state making publicly available information that demonstrates the effectiveness of the state’s enforcement program?
  4. Does the enforcement authority (if one exists) have a reliable mechanism (e.g., mandatory reporting, complaint-driven reporting, etc.) for learning about excavation damage to underground facilities?
  5. Does the state employ excavation damage investigation practices that are adequate to determine the at-fault party when excavation damage to underground facilities occurs?
  6. At a minimum, does the state’s excavation damage prevention law require the following?
    1. Excavators may not engage in excavation activity without first using an available one-call notification system to establish the location of underground facilities in the excavation area.
    2. Excavators may not engage in excavation activity in disregard of the marked location of a pipeline facility as established by a pipeline operator.
    3. An excavator who causes damage to a pipeline facility:
      1. Must report the damage to the owner or operator of the facility at the earliest practical moment following discovery of the damage; and,
      2. If the damage results in the escape of any flammable, toxic, or corrosive gas or liquid that may endanger life or cause serious bodily harm or damage to property, must  promptly report to other appropriate authorities by calling the 911 emergency telephone number or another emergency telephone number.
  7. Does the state limit exemptions for excavators from its excavation damage prevention law? A state must provide to PHMSA a written justification for any exemptions for excavators from state damage prevention requirements. PHMSA will make the written justifications available to the public.

The rule also outlines the standards that PHMSA would consider enforceable in states determined to have inadequate damage prevention laws. These federal requirements are:

A person who engages in demolition, excavation, tunneling, or construction—

  1. may not engage in a demolition, excavation, tunneling, or construction activity in a state that has adopted a one-call notification system without first using that system to establish the location of underground facilities in the demolition, excavation, tunneling, or construction area;
  2. may not engage in such demolition, excavation, tunneling, or construction activity in disregard of location information or markings established by a pipeline facility operator; and 
  3. who causes damage to a pipeline facility that may endanger life or cause serious bodily harm or damage to property— 
    1. may not fail to promptly report the damage to the owner or operator of the facility; and 
    2. if the damage results in the escape of any flammable, toxic, or corrosive gas or liquid, may not fail to promptly report to other appropriate authorities by calling the 911 emergency telephone number.

One of the big requests from the excavation community during our comments on the Advance Notice of Proposed Rulemaking was that the term ‘excavator’ applies to all parties doing excavation, including utilities and the contractors working for them. AGC continues to examine the rule for other areas of importance to its members. Any contractor that engages in excavation activity should read the rule. We would welcome any thoughts as AGC formulates its response to this rule, which is due June 1.

You can read the proposed rule here.

For more information, please contact Scott Berry at (703) 837-5321 or berrys@agc.org. Return to Top

GSA Administrator & Other Top Agency Officials Fired Amid Conference Spending Scandal
 

General Services Administration (GSA) Administrator Martha N. Johnson and Public Building Service Commissioner Robert A. Peck and other GSA officials were forced to relinquish their positions on April 2. The agency overhaul came hours before the release of GSA Inspector General Brian D. Miller’s report on an $823,000 training conference held at a casino just outside Las Vegas, Nev.

The report cited numerous expenses in violation of federal limits on conference spending. For more information on the details of those expenses as reported by the Washington Post, click HERE.

The Obama administration has tapped former Washington, D.C. Administrator Dan Tangherlini—currently an official at the Treasury Department—to replace Johnson.

For more information, please contact Jimmy Christianson at (703) 837-5376 or christiansonj@agc.org. Return to Top

TRANSPORTATION
Transportation Bill Stalled Action Needed to Pass a Bill in the House
 

Last week President Obama signed into a law a 90 day extension of the federal surface transportation programs.  As reported last week, Congress passed the 9th extension of SAFETEA-LU before leaving Washington for a two week recess. When the House and Senate return to session on April 16, there will be continued focus on passing a bill. 

Since the Senate has already passed their 2-year $109 billion bill, MAP-21, the responsibility lies with the House to pass a bill that will allow them to go to conference with the Senate and negotiate a final package.  Thus far the House Republicans have been unable to secure the necessary votes in their conference to pass H.R. 7, the American Energy and Infrastructure Jobs Act.  Following passage of the latest extension, the House will have to decide how quickly to move on a longer term bill.  Speaker John Boehner has indicated he would like act on a bill in the week or two following their return from recess on April 16.  This approach would give the House and Senate a good chance of completing a conference by June 30.  If they House decides to not act quickly upon their return, there is little chance of completing a conference by the expiration of the current extension. In this case, another extension would almost certainly be necessary.

Making things even more complicated is that House leaders have yet to decide what bill they will pass to arrive at a conference with the Senate.  This fact makes advocating for the House to take action very difficult.  However, it is still imperative that while House members are back in their districts that they hear from their constituents of the importance of passing a bill that gets them to a conference with the Senate.  It is vital that AGC members stay involved and continue to engage your Representatives and let them now that the time to act is NOW.  For more information on how to send a letter or schedule a meeting with your Representative, please visit www.agc.org/roads.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org. Return to Top

AGC Testifies on Impact of Short Term Transportation Extensions
 

AGC Senior Vice President Paul Diederich presented AGC testimony today at a hearing held by the Senate Budget Committee concerning the impact short-term extensions of the transportation authorization have on the highway construction industry and infrastructure investment. Diederich listed a long litany of negative impacts on state Departments of Transportation as well as the construction industry that result from the inability of Congress to finalize a multi-year transportation bill including: no long term planning by DOTs, reduced bid lettings, extreme competition at bidding table resulting in unrealistically low prices, work force reductions, reduced worker training, workers leaving the industry and deferred investments in new equipment. The testimony also focused on the unemployment rate in the construction industry, currently hovering at 17 percent, and the huge transportation needs facing each state, pointing out that infrastructure investment would address both of these problems while aiding in economic growth.

Diederich also said that, “While AGC supported the latest extension (number 9) to prevent a shutdown of essential infrastructure improvements across the nation, that support should not be confused as acceptance of inaction on a multi-year reauthorization bill.  Our members are growing increasingly frustrated that Congress seems incapable of passing critical legislation that improves the flow of commerce and promotes economic growth.” AGC’s testimony also pointed out that the Senate passed a two-year reauthorization bill that maintains current funding levels, makes reforms in the how the highway and transit programs operate and improves the environmental review and planning process and is an important first step in addressing the Nation’s long term transportation issues. However, it was also noted that the legislation does not address the Highway Trust Fund’s long term revenue problems. “In fact, after FY 2013, the Highway Trust Fund falls off the cliff.  Deep cuts in highway and transit funding will be required if additional revenue is not provided,” said Diederich.  AGC urged the Senate to continue to work on a long term solution to filling our transportation infrastructure deficit by identifying revenue and financing options that will allow the Nation to maintain and improve the National Highway System.

Photo Caption: AGC’s Senior Vice President Paul Diederich discusses impact of short term transportation extensions with Senate Budget Committee Chairman Kent Conrad (D-ND) and North Dakota’s Department of Transportation Director Francis Ziegler.

For more information, please contact Brian Deery at (703) 837-5319 or deeryb@agc.org. Return to Top

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