Category Archives: Federal law, policy & news

BREAKING: U.S. Supreme Court OK’s Revival of Time-Barred Defect Claims By Legislative Fiat

As set forth in the attached order, The Supreme Court of the United States will NOT review the decision of the Minnesota Supreme Court upholding legislation by the Minnesota state legislature that revives long-extinguished design defect liability arising from the 2007 collapse of a portion of the I-35W bridge in Minneapolis.Prior to the collapse, Minnesota’s “statute of repose” (a statute that limits the time during which an action can arise) for design defects was 15 years.  Despite the fact that the design work for the bridge in question was performed in the mid-1960’s, and despite the fact that the designer of record — Sverdup & Parcel and Associates, Inc. — had been bought out by Jacobs Engineering in 1999, the Supreme Court’s denial of certiorari means that Minnesota is now free to pursue $37 million in indemnity claims against Jacobs Engineering that had expired under the 15-year statute no later than the early 1980’s.

This is a scary outcome for participants in the construction industry, with potential insurance, contract drafting and document retention repercussions.  I’ll be back in the days ahead with additional analysis.  In the interim, you can read AGC’s brief in favor of review here, which sets forth quite eloquently the reasons why the Supreme Court should have reviewed and reversed the Minnesota Supreme Court’s decision.

UPDATE (5/29/12 1:38 p.m.): Coverage from Engineering News & Record can be found here.


Filed under Case law from other states, Defect Claims, Federal case law, Federal law, policy & news, State law, policy & news

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

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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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U.S. House Punts On Long-Term Highway and Transit Investment

Despite passing the U.S. Senate by a bipartisan 74-22 vote earlier this month, legislation reauthorizing how our nation’s highway and transit programs are funded stalled this week in the U.S. House.  Rather than vote on the Senate’s package, known as MAP-21 (“Moving Ahead for Progress in the 21st Century,” a good summary of which can be found here), the House temporarily extended the existing law, known as SAFETEA-LU, another 90 days yesterday, ostensibly to give itself more time to get its proverbial ducks in a row on a long-term bill.  The Senate quickly passed the temporary extension as well, and President Obama is expected to sign it into law immediately.  Assuming that occurs, it will be the ninth time SAFETEA-LU has been extended since its expiration on September 30, 2009.  ENR’s coverage of this week’s events can be found here.

The previous extension of SAFETEA-LU was due to expire at midnight tomorrow, which would have thrown prosecution of existing highway and transit work into utter disarray and cost scores of construction workers their jobs.  From that standpoint, a 90-day stopgap measure is certainly better than no action at all.

But this is no way to invest in our nation’s surface transportation needs.

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Recommended Reading: The Basics of E-Verify in North Carolina

I’m a pure sticks-and-bricks construction and surety lawyer, focusing on construction contracts, change order claims, payment claims, defect claims, delay claims, etc. etc.  While I don’t dabble in either employment or immigration law, I fully recognize that construction participants — and particularly general contractors and subcontractors — confront a host of employment- and immigration-related legal issues on a regular basis.  I therefore endeavor to pass along important information authored by my colleagues in the legal community who, unlike me, are experts in the employment and/or immigration law fields.

In that vein, Jennifer Parser of PoynerSpruill has posted an excellent primer on E-Verify that I recommend to all North Carolina construction participants.  E-Verify is an internet based tool that allows employers to instantly verify the eligibility of their employees to work in the United States.  E-Verify became the “law of the land” here in North Carolina last June, and Ms. Parser’s article discusses how the legislation will be phased in, how employers can comply and the penalties for non-compliance.  Must reading.  And for more, head to the federal government’s E-Verify site.

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Proposal To Toll I-95 Proving To Be VERY Controversial: Rep. Ellmers Introduces Federal Legislation To Stop It

Rep. Ellmers (R-NC)

In my February 6, 2012 blog post announcing the $4.4 billion widening of Interstate 95 from the South Carolina to the Virginia borders, I boldly predicted that NCDOT’s proposal to finance the project through tolling could prove controversial.

They don’t call me Master of the Obvious for nuthin’.

As of this blog post, the website has 3530 signatures.  The North Carolina Trucking Association, the Roanoke Valley Chamber of Commerce and a host of other local organizations and municipalities have all registered their strong opposition.

And now U.S. House Representative Renee Ellmers, a Republican from Dunn, has taken the fight to Congress, introducing legislation aimed at preventing North Carolina from participating in the federal pilot project that makes tolling on I-95 possible in the first place.

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Cell Phone Ban for Commercial Vehicles Takes Effect TODAY

A new year ushers in new laws, and one potentially applicable to participants in the construction industry is the new regulation from the Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and  Hazardous Materials Safety Administration (PHMSA) prohibiting interstate truck and bus drivers from using hand-held cell phones while operating their vehicles.

The new rule prohibits commercial drivers from using a hand-held mobile telephone while operating a commercial truck or bus.  Drivers who violate the  restriction will face federal civil penalties of up to $2,750 for each offense  and disqualification from operating a commercial motor vehicle for multiple  offenses.  Additionally, states will suspend a driver’s commercial driver’s license (CDL) after two or more serious traffic violations.  Commercial  truck and bus companies that allow their drivers to use hand-held cell phones while driving will face a maximum penalty of $11,000.

The rule also applies to intrastate drivers who operate commercial vehicles transporting a quantity of hazardous materials requiring placarding under 49 CFR Part 172 or any quantity of a material listed as a select agent or toxin in 42 CFR part 73.

Note that the rule applies to the popular “push-to-talk” devices frequently utilized in the construction industry.

Under the new regulation, a driver can only initiate, answer or terminate a call by touching a single button on a mobile telephone, earpiece, steering wheel or instrument panel.

Employers should consider establishing policies or practices that make it clear that its employees and agents are neither required nor allowed to use hand-held mobile telephone devices while driving a commercial vehicle.

For more on the new rule, see the attached link announcing the rule and an accompanying FAQ.


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Senate Follows House’s Lead, Votes to Terminate 3% Withholding Tax on Contractors

Ding, dong the tax is dead.

By a unanimous 95-0 vote, the U.S. Senate put an end to the 3% withholding tax on contractors due to go into effect in January 2012.  Since the legislation has already passed the U.S. House and is part of President Obama’s much-discussed jobs package, the White House is expected to sign the legislation into law soon.

Coverage from the Washington Post can be found here.  A press release from Carolinas AGC marking the occasion can be found here.  My earlier coverage of this story can be found here.

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3% Withholding Tax Could Be 100% Dead Soon

There’s potentially good news on the horizon for the contracting community.  The 3% withholding tax passed by Congress as part of the Tax Prevention Reconciliation Act of 2005 and scheduled to be fully implemented by January 1, 2013 has been repealed by the U.S. House of Representatives in a bipartisan 405-16 vote; the N&O’s coverage can be found here.  The White House has indicated its intention to sign the bill into law if the Senate follows the House’s lead and votes for repeal.

By way of background, the 3% withholding was intended to ensure tax compliance by contractors performing work on government projects.  The 2005 legislation required 3% withholding on payments for goods and services to contractors made by all branches of the federal government and its agencies and all units of state and local governments, including counties and parishes, with annual expenditures of $100 million or more.

The Associated General Contractors of America (“AGC”) has been fighting the 3% withholding with gusto, arguing primarily that it would put a squeeze on a contractor’s project cash flow, in turn raising payment bond surety risk that would lead to increased bonding costs.  You can read the September 12, 2011 testimony of AGC CEO Stephen E. Sandherr to the IRS opposing implementation of the 3% withholding tax here.

Stay tuned for updates on repeal activity in the Senate.

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Unemployment Update: Construction Sector Posts September Gains; Should ARRA Get Any Credit?

The North Carolina Employment Security Commission (“ECS”) released its September unemployment report last Friday, and according to the report, the construction sector in the State posted a net gain of 2800 jobs since the end of August.  Overall, however, the State’s unemployment rate ticked up .1% to 10.5%, led by significant government sector losses.

ECS’s report indicates that in the last twelve (12) months, construction sector employment is down modestly — 400 net jobs.  That suggests to me that the construction labor market has stabilized somewhat from the steep declines seen during the two-year period from October ’08 –  October ’10.

Is the American Reinvestment and Recovery Act (“ARRA”), better known as the federal stimulus bill, helping to bolster construction employment in North Carolina?  Anecdotally, and as the N&O reports here, federal infrastructure spending is having positive ripple effects in connection with a $14.3 million road-and-bridge project in Johnston County.   Still, and as the N&O’s story suggests, whether ARRA was actually worth the outlay is a question unlikely to be answered until the first Tuesday of November, 2012.

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High Speed Rail Through Raleigh: Light At The End Of The Tunnel?

Image courtesy Sura Nualpradid via

As reported in today’s News & Observer, a public hearing was held yesterday at the Raleigh Convention Center to unveil the latest option for siting a high-speed rail line through Raleigh.  The new route unveiled by N.C. DOT engineers, dubbed “NC5,” would feature a 700-foot bridge over Capital Boulevard between Peace and Wade Avenues.  Despite adding a reported $32 million in construction costs to the 3.4-mile segment of the line between Hargett Street and Whitaker Mill Road, the latest proposal appears to be drawing some favorable reviews from interested Raleigh residents, according to the N&O.

Additional information regarding the proposed Southeast High Speed Rail Corridor from Washington, D.C. to Charlotte can be found here.

9/30/2011 Update:  North Carolina has been awarded a $4 million grant by the U.S. Department of Transporation for environmental and design work for constructing a high-speed rail connection between Raleigh and Richmond; the Department’s press release is here.

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