Category Archives: Federal case law

4th Circuit, Flawed NEPA Review Process Cast Doubt On the Future of the Monroe Connector Bypass

Image courtesy FreeFoto.com

Remember the headline to my March 12, 2012 blog post about the Monroe Connector Bypass (or just the Monroe Bypass, for short)?

It suggested that the legal saga surrounding the proposed $725 million highway construction project was nearing “the end of the road.”

On second thought, not so much.

The road has taken an unexpectedly sharp turn, and there’s no telling how long the project may now be delayed.  Why? Because according to the Fourth Circuit Court of Appeals (“4th Circuit”) in its May 3, 2012 decision in N.C. Wildlife Federation v. N.C. Department of Transportation, the North Carolina Department of Transportation (“NCDOT”) and the Federal Highway Administration (“FHA”) (collectively, the “Agencies”) failed to conduct a clear, transparent environmental review process that permitted meaningful public comment under applicable principles of federal environmental law.

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Filed under Feature story, Federal case law, Federal law, policy & news, Local law, policy & news, Projects of Interest, State law, policy & news

BREAKING: 4th Circuit Blocks Monroe Bypass Project

I just heard this news, which I have yet to digest and absorb.  I’ll have a fuller update and analysis by early next week.  For now, please see the Charlotte Observer’s coverage here.

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Federal Appeals Court Strictly Enforces 6-Month Statute of Limitations for Violations of OSHA’s Record-Keeping Requirements

In a decision likely to be celebrated by employers in the construction industry, the U.S. Court of Appeals for the District of Columbia issued a decision on April 6, 2012 that strictly applies the six-month statute of limitations for citing an employer for record-keeping violations under the federal Occupational Safety & Health Act (the “OSH Act”).  In so holding, the D.C. Circuit Court of Appeals rejected the U.S. Department of Labor’s argument that an employer’s failure to record employee injuries and illnesses represented “continuing violations” of the OSH Act that, until corrected, prohibited the six-month statute of limitations from expiring.

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Filed under Feature story, Federal case law, OSHA

Finally Extinct: Mammoth & Harrelson Decisions Disavowed by the Same Court That Issued Them

Back in the Summer of 2009, the entire North Carolina construction industry, particularly us construction lawyers, were shocked by a series of decisions handed down by the U.S. Bankruptcy Court for the Eastern District of North Carolina that essentially prevented subcontractors and suppliers from serving claims of liens upon funds up the contractual chain once an entity higher on that chain had filed for bankruptcy protection.  Nearly three years later, and in a surprise move that should come as welcome news to a wide swath of the contracting community (and particularly to subs and suppliers), the same court reversed course last Wednesday, and is once again permitting notices of claims of liens upon funds to be served despite the automatic stay provisions of federal bankruptcy law.

I’ll have more analysis in the days ahead.  In the interim, rest assured that the In re Mammoth Grading and the In re Harrelson Utilities decisions are for all intents and purposes no more.  To read the Order of Judge Randy Doub reversing course, click here.

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Filed under Federal case law, Lien Law

Arbitration News: 4th Circuit Weighs In On “Manifest Disregard” Confusion

Consider the following hypothetical:

You are claims counsel for a large surety company who has spent the better part of last December preparing for and participating in eight days of arbitration hearings arising from the termination of your bonded principal in late 2010.  Back then, you had made the decision to contest liability under the performance bond on several grounds, not the least of which was the owner’s retention of a replacement general contractor without surety consent and otherwise in violation of the conditions precedent set forth in the AIA-A312 form of performance bond utilized on the project.  Your bonded principal is now in bankruptcy, and you were required to take a leading role in the arbitration proceeding as a result.

Your outside counsel is now on the phone, announcing that the Award of the Arbitrator has been issued.  Unfortunately, it’s not pretty.  The arbitrator has awarded the owner virtually the entire completion premium it had been seeking in the arbitration proceeding, minus a few adjustments here and there.  Adding insult to injury, the award is completely devoid of any reference to your A312 conditions precedent defense, which from day one you believed to be a winner, based on your interpretation of the prevailing legal authorities.

“That can’t be right,” you complain to your outside counsel.  “That’s clear error by the arbitrator.  Doesn’t the Federal Arbitration Act give me a right to challenge his obvious failure to apply the law?”

“Well,” outside counsel begins, “likely not.  Generally speaking, the FAA only permits a judge to vacate an arbitration award upon proof of gross misconduct by the arbitrator.  I’m talking about partiality or corruption, or misconduct in refusing to hear evidence pertinent to the dispute, that kind of stuff.  And frankly, proving any of those statutory grounds would be a steep uphill battle for us.”

“Okay, let’s put the FAA to the side for a moment,” you respond.  “If I’m right, and the arbitrator completely blew it on our A312 defenses, aren’t there cases out there that allow us to challenge this award if we can prove that it demonstrates a manifest disregard of the law by the arbitrator?”

Ah, manifest disregard of the law.  For over fifty years, this common law doctrine has  represented the last best hope for parties seeking to challenge the enforceability of an arbitration award.  But ever since the U.S. Supreme Court’s decision in Hall Street Associates v. Mattel, Inc. in 2008, there’s been a decided split in the federal courts — and therefore a tremendous amount of confusion — as to whether manifest disregard still exists.

Last week, the U.S. Court of Appeals for the Fourth Circuit, which handles appeals from the North Carolina’s federal trial courts (as well as from the federal trial courts in MD, VA, WV and SC), finally took its stance in the ongoing mess.  And at least in this jurisdiction, manifest disregard lives on.

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Filed under Arbitration, Federal case law, Surety Law

Friendly Reminder

Unless you think you might enjoy a federal wire fraud conviction, don’t use construction loan proceeds for anything other than the costs of construction.

 

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Monroe Bypass Project Allowed To Proceed; Approval of Bonner Bridge Replacement Project On-Tap?

November 1, 2011 Update:  Lawyers from the Southern Environmental Law Center have appealed Judge Dever’s decision to the 4th Cirtcuit Court of Appeals.  As the Charlotte Observer notes, the appeal is not expected to postpone construction of the bypass.  Also in today’s Charlotte Observer is this story regarding the potential far-reaching impact of the project, including for area construction crews.

Original October 25, 2011 Story:  Earlier today, summary judgment entered in favor of the N.C. Department of Transportation (“NCDOT”) in a lawsuit brought by lawyers from the Southern Environmental Law Center seeking to stop the Monroe Bypass project in Union County from moving forward.  As reported by News 14 Carolina (story and video here), work can now begin on the $824 million project.  The new toll road will run approximately 20 miles from Highway 74 at I-485 to Highway 74 between Wingate and Marshville.

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Based on my cursory review of the Monroe Bypass opinion, it appears the attorneys for the Southern Environmental Law Center advanced arguments that are substantially similar to those they are making in a separate litigation concerning the planned Bonner Bridge replacement project in Dare County, on which I commented back in September.   Specifically, counsel argued that NCDOT did not carefully analyze the potential environmental impacts of the project, thereby violating the National Environmental Policy Act (“NEPA”) of 1969.  Judge James C. Dever III disagreed in a 28-page Order reciting, in a fair amount of detail, the steps taken by NCDOT to analyze the environmental impacts of the project and comply with NEPA.

Since both the Monroe Bypass and Bonner Bridge matters are pending in the U.S. District Court for the Eastern District of North Carolina, Judge Dever’s ruling is likely to cast a long shadow over the OBX litigation.   Indeed, unless NCDOT handled the environmental impact studies for the OBX project in a substantially less comprehensive manner than Judge Dever describes with respect to the Monroe Bypass project, it is difficult to envision a scenario where the Southern Environmental Law Center prevails in stopping the Bonner Bridge replacement project from moving forward.

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