A Costly Oversight: Federal Court Emphasizes Strict Adherence to Mechanic’s Lien
A federal judge in New York served up a good reminder last week about the importance of dotting your i’s and crossing your t’s when it comes to perfecting a mechanic’s lien. The case involves a payment dispute between a subcontractor and general contractor on a police station renovation project in the Bronx.
The subcontractor liened the job and brought suit to foreclose its lien (among other claims). The New York lien law at issue for public improvement works provides that a lien “shall not continue for a longer period than one year from the time of filing the notice of such lien, unless an action is commenced to foreclose such lien within that time, and a notice of the pendency of such action is filed with the comptroller of the state or the financial officer of the public corporation with whom the notice of such lien was filed.” N.Y. Lien Law Section 18 (emphasis added). The subcontractor had filed its lien and a lawsuit to enforce it within one year but had failed to file the notice of pendency. The subcontractor’s lien had therefore automatically expired after one year. The subcontractor argued that the notice of pendency was unnecessary because the contractor had bonded off the lien. The court rejected that argument and dismissed the subcontractor’s lien claim. The case is J&A Concrete Corp. v. Dobco Inc., 2025 WL 605252 (S.D.N.Y. Feb. 24, 2025). A copy of the court’s opinion is located here.
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Captive Power Projects: A Summary of the Western Africa Regulatory Environment
Recent increases in construction and financing costs are directly affecting the development of energy projects across Africa. Captive power projects (CPPs) offer the possibility of mitigating this challenging landscape for both the developers themselves and those funding them. For those unfamiliar with the concept, CPPs are a type of power plant which provide a localised source of power to the end consumer. They are typically used in power-intensive industries for which a continual and consistent energy supply is paramount. In West Africa, CPPs are of particular interest to mining companies looking for reliable sources of energy. However, the successful development of CPPs in the region will be largely determined by the level of liberalisation in the country’s energy sector, and the right of non-state entities to develop, construct, operate and maintain these projects.
The energy sector across Western Africa has traditionally been restricted to a public monopoly closely associated with the sovereignty of a country, designed to protect the national utility company. When this type of regulatory framework prohibits or inhibits the production, transport and supply of electricity, two structures are usually considered:
where the development, construction, operation, and maintenance of a CPP serves the company’s own needs and this is permitted by the state’s regulation, the project falls under the self-production model (SPM) and the company can, as is often the case, subcontract with energy companies to ensure the supply of energy; or
where the relevant regulation permits development, construction, operation, and maintenance of a CPP for the purpose of supplying electricity to a separate private company, the project falls under the independent producer model (IPM) and can supply energy via off-grid infrastructure.
Bracewell has prepared a report summarising the applicable regulations for the two models outlined above which covers the following 11 countries: Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Democratic Republic of Congo, Guinea (Conakry), Mali, Mauritania, Sénégal and Togo.
This report provides a high-level overview of existing and proposed regulation based on available sources. It is not a substitute for bespoke legal advice from lawyers in the jurisdictions concerned. Due to the nature of the region, the relatively recent development of the CPP landscape, and the inherent uncertainty in the interpretation of these regulations, we recommend a thorough technical and legal analysis of projects which should consider specific location and bankability issues prior to committing to a CPP project.
As the report illustrates, the energy sector of several countries — such as Burkina Faso, Mali and Togo — remains largely monopolised by the national electricity company, even where the company’s monopoly has been officially terminated by new legislation. In other counties — such as the Republic of Guinea — the legislation remains under development, so while the current framework gives limited guidance, there are no prohibitions laid down either. In contrast, many regions in West Africa have renovated the structure and essence of their energy legislation, demonstrating an intentional and welcome movement away from state-governed monopolies. Countries including Mauritania, Benin, Cameroon and Côte d’Ivoire have all implemented (to varying degrees) a legal framework or, as often called, electricity or energy codes, that allow freedom of energy production. These enable the development of CPPs via either of the two models outlined above. However, it is worth noting that the transmission (rather than production) of the electricity is often still state-regulated. In some countries, such as Chad, while the transmission is under state monopoly, the distribution and construction of CPPs can be carried out by private actors.
In several regions, the relevant authorisations, concessions and/or licences for off-grid production in relation to IPMs are dependent on power purchase agreements being entered into with entities that constitute “Eligible Clients,” a term usually defined in the relevant energy code which shows a maintained, albeit reduced, level of control on the part of the state. The authorisation of SPMs is largely dependent on the installed capacity of the CPP, where sale of surplus is authorised, but the amount is capped by reference to a restricted percentage of the project’s installed capacity. The identity of the buyer is also often restricted, as above, to an entity constituting an “Eligible Client” or, in some jurisdictions, such as Togo, the grid operator. The various authorisations and concessions are granted by the relevant ministerial committees responsible for the state’s energy sector.
For the sake of comprehensiveness, references in the report are occasionally made to regimes with installed capacity thresholds that are likely too low to support the development of a CPP project.
While the report has outlined some of the trends we are seeing as regulations develop, the details for each state vary, with some requiring further investigation with the relevant administration. It is therefore important to ensure that each CPP proposal is tailored and considered in line with the relevant state’s particular legislation and restrictions.
CEQ Sounds the Death Knell for Existing NEPA Regulations
The rapid changes relating to NEPA-implementing regulations accelerated this week, as the White House Council on Environmental Quality (CEQ) published an interim final rule (IFR) removing its NEPA regulations from the Code of Federal Regulations.
Effective April 11, 2025, CEQ’s IFR removes all iterations of its NEPA regulations, including 40 CFR parts 1500, 1501, 1502, 1503, 1504, 1505, 1506, 1507, and 1508, which federal agencies and developers alike have relied on in permitting projects since the 1970s.
This seismic shift in the implementation of NEPA—an area of the law that remained relatively stable for nearly a half century—comes on the heels of the D.C. Circuit Court of Appeal’s denial of the requests (by both petitioners and respondents) for rehearing en banc of that court’s opinion in Marin Audubon.
As we described in our November 2024 client alert, the panel majority in Marin Audubon concluded that the CEQ lacks authority to issue binding NEPA regulations. The D.C. Circuit declined to review the panel’s opinion, but, in a concurring opinion, seven out of 12 D.C. Circuit judges described the discussion regarding CEQ’s regulatory authority as dicta.
The IFR also follows on other important judicial developments. In early February 2025, the District Court for the District of North Dakota, in Iowa v. Council on Environmental Quality, issued an opinion in which it vacated the Biden Administration’s 2024 Phase 2 NEPA rules.
The court explained that its judgment would revert the CEQ regulations to an earlier version, namely, the version promulgated by the first Trump administration in 2020 as amended by the Biden administration’s 2021 Phase 1 NEPA rules. Although the court did not finally resolve the issue, it further opined that “it is very likely that if the CEQ has no authority to promulgate the 2024 Rule, it had no authority for the 2020 Rule or the 1978 Rule and the last valid guidelines from CEQ were those set out under President Nixon.”
Citing these decisions and President Trump’s Executive Order (EO) 14154, Unleashing American Energy—which revoked President Carter’s EO 11991 that served as the basis for CEQ’s NEPA regulations—the IFR has now made it clear that CEQ’s NEPA regulations will be rescinded in full.
What does this mean for your project?
In conjunction with its IFR, CEQ released a memo to the heads of federal departments and agencies directing them to:
Revise or establish new NEPA regulations within the next year consistent with EO 14154
Not delay pending NEPA analyses while those NEPA procedures are being updated
Most importantly, “consider voluntarily relying on [the soon-to-be-rescinded] regulations in completing ongoing NEPA reviews or defending against challenges to reviews completed while those regulations were in effect.”
CEQ also encouraged agencies to use the 2020 NEPA regulations as an “initial framework” for developing revisions to their own NEPA regulations, and provided suggested guidelines for those regulations.
As the implications for project proponents and litigants unfold, we are closely monitoring not only the enforceability of CEQ’s rescinded regulations, but also the agency-specific procedures that will replace them.
Clear rules foster timely and cost-efficient environmental reviews. Project proponents should consider active participation in the rulemakings that we will see across multiple federal agencies over the next 12 months to ensure adoption of legally defensible NEPA-implementing regulations that streamline and accelerate the permitting process.
Is It Defamatory to Call Your Contractor a Crook and a Con Man?
Not according to a decision from a federal court in Ohio. The case involves a landscaping project at a hillside home in Cincinnati. The property overlooks the Ohio River, but like many projects that become cases, it ended up in the ditch. Dissatisfied with the progress of the work, the owner told her neighbors that the contractor was a “crook” and a “con man” who had photoshopped pictures of the work he had done. The case inevitably wound up in litigation with both sides suing the other for breaking their respective promises. In addition to breach of contract damages for unpaid work, the contractor also sought unspecified damages for defamation.
On summary judgment, the court reviewed the elements of a defamation claim under Ohio law and concluded that many of the owner’s insults did not constitute actionable defamation. For example, the court held that referring to the contractor as a crook and a con man was not defamatory but instead constituted the expression of an opinion. As to the statement that the contractor had photoshopped evidence, the court concluded that this was not a protected opinion but rather a statement of verifiable fact that could potentially constitute defamation. The court therefore allowed this portion of the contractor’s defamation claim to proceed to the jury.
The court’s analysis contains a helpful summary of defamation law, which construction lawyers don’t come across every day. Here is the meat of that summary:
Defamation is a false publication that injures a person’s reputation, exposes the person to public hatred, contempt, ridicule, shame, or disgrace, or affects the person adversely in his or her trade or business…. If allegedly defamatory words are susceptible to two meanings, one defamatory and one innocent, the defamatory meaning should be rejected, and the innocent meaning adopted.
The elements of defamation are (1) a false and defamatory statement, (2) unprivileged publication to a third party, (3) a requisite amount of fault on the part of the publisher, and (4) actionability or special harm caused by the statement. Truth is a complete defense to a claim for defamation.…
Whether an allegedly defamatory statement is protected opinion or actionable assertion of fact is a question of law for the district court. Consideration of the totality of circumstances to ascertain whether a statement is opinion or fact involves at least four factors. First is the specific language used, second is whether the statement is verifiable, third is the general context of the statement and fourth is the broader context in which the statement appeared….
Courts examining similar situations of name-calling are split as to whether such statements are defamatory or protected opinion. The majority position seems to be that such name-calling is not defamatory.
A copy of the court’s 42-page opinion addressing these and other claims and counterclaims can be found here.
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Joshua Tree Conservation Plan Remains Under Review
The California Fish and Game Commission (Commission) accepted public comment on the draft Western Joshua Tree Conservation Plan (Draft Conservation Plan) at its February 12, 2025 meeting, but no formal action was taken.
As detailed in our previous alert, the California Department of Fish and Wildlife (CDFW) released the Draft Conservation Plan to the Commission on December 12, 2024, as required by the Western Joshua Tree Conservation Act (Act). The Draft Conservation Plan sets forth management practices and guidelines for the avoidance and minimization of impacts to western Joshua trees.
The Commission’s February 12 meeting featured a presentation by CDFW, substantive discussion by the Commissioners, and robust public comment. Many commenters expressed concern about the cost and ultimate feasibility of the Draft Conservation Plan’s requirements. In particular, the Large Scale Solar Association voiced concerns regarding the Draft Conservation Plan’s potential to interfere with the siting and development of solar energy projects, indicating that additional costs generated by required mitigation measures would be passed on to ratepayers. Residents and politicians from desert communities — where Joshua trees are most abundant — focused on the Draft Conservation Plan’s costs and obligations as potential hindrances to affordable housing and local job opportunities. Commenters emphasized that collaboration with CDFW is essential in developing a workable and sustainable conservation effort.
CDFW acknowledged the public comments and ultimately declined to take any formal action at the meeting. Written comments are still being accepted on a rolling basis, though any substantive changes to the Draft Conservation Plan should be submitted by the beginning of March to be considered. The Act mandates that the Commission must take action to adopt the Conservation Plan by June 30, 2025.
The Commission will review the Draft Conservation Plan again at its April 16-17, 2025, meeting. In advance of that meeting, CDFW confirmed it will publish a revised set of Joshua tree relocation guidelines and a list of proposed changes to the Draft Conservation Plan. CDFW Director Bonham also suggested that, in the interim, CDFW may host workshops and/or other community outreach events to solicit further public feedback, though no further details have been provided.
The Top 10 Things Every Employer Should Know About OSHA
In the evolving landscape of workplace safety regulations, it is essential for construction employers to stay well-informed about the Occupational Safety and Health Administration’s (OSHA) protocols and guidelines. Our series, “Top 10 Things Every Employer Should Know About OSHA,” breaks down critical aspects ranging from the rights and responsibilities during OSHA inspections to intricacies of compliance standards and potential citation scenarios. This comprehensive guide aims to empower employers with the knowledge needed to navigate OSHA regulations effectively, ensuring safer work environments and minimizing legal risks.
Here’s a recap of our list of the top 10 things every employer should know about OSHA:
No. 1 – Walkaround Representatives
Employers and employees have the right to have representatives present during an OSHA site inspection.
According to 29 CFR 1903.8(c), employers and employees have the right to authorize a representative to accompany OSHA officials during workplace inspections for the purpose of aiding the inspection (also known as walkaround representatives). OSHA regulations require no specific qualifications for employer representatives or for employee representatives who are employed by the employer. We encourage all employers to have a designated walkaround representative present during OSHA inspections, which could include legal counsel.
No. 2 – Be Present in Manager Interviews
We all know that OSHA has the right to interview folks as part of an investigation. Whether a company representative and the company attorney can also attend an interview depends on the position of the person being interviewed.
If the person to be interviewed is a non-managerial employee, OSHA can conduct the interview in private, outside the presence of the employer or the employer’s representatives. Not so with managerial employees. If OSHA wants to interview a management-level employee, the employer has the right to have a company representative and/or attorney present.
No. 3 – Employees Have Rights When It Comes to OSHA Interviews
Although OSHA has the right to conduct private, one-on-one interviews with a company’s non-managerial employees, those same employees have rights too. Read the full article for details and things to consider.
No. 4 – OSHA Must Issue a Citation Within Six Months
OSHA has a time limit on issuing citations. It must issue a citation within six months of the occurrence of any violation. The only exception to this rule is where the employer has concealed the violative condition or misled OSHA. If such a situation occurs, OSHA must issue the citation within six months from the date that OSHA learns, or should have known, of the condition.
So, the moral of the story is just because it’s been a couple months since an OSHA inspection does not mean OSHA has decided not to issue a citation. You can check on the status of OSHA’s investigation by reviewing the OSHA establishment search page to see whether OSHA has closed its inspection or not.
No 5. – OSHA Can Issue Citations for Unsafe Work Conditions That Have Not Resulted in an Employee Injury
Most frequently, employers do not hear from OSHA unless there is a reported workplace injury. When a reported workplace injury occurs, OSHA performs a walkthrough inspection of the worksite and may ultimately issue a citation for hazardous conditions OSHA believes may have caused or contributed to the incident. However, OSHA is not limited to issuing citations for hazardous conditions that may have caused or contributed to a workplace injury. Rather, OSHA can cite employers for any and all hazardous conditions to which workers may have been exposed regardless of whether the cited condition was in any way related to the incident.
No 6. – But No One Was There? OSHA Can Still Cite for Unsafe Work Conditions Where Workers Were Not Exposed
We often hear, “OSHA can’t cite me because I didn’t employ the injured worker.” Unfortunately, this statement is often untrue.
Under OSHA’s Multi-Employer Doctrine, if you are an employer on a worksite where other companies are also performing work (e.g., construction sites and oil/gas well sites), you can be subject to citation for workplace hazards to which other companies’ employees are exposed. OSHA created the Multi-Employer Doctrine in recognition that there are many circumstances in which multiple employers will be working on a single worksite at the same time thereby affecting the working conditions to which all workers are exposed.
No. 7 – OSHA Can Issue Citations for Unsafe Work Conditions That Do Not Violate Any Specific OSHA Standard
Many employers have a false notion that OSHA can’t issue a citation if there is no specific standard violated.
The reality is, however, that OSHA has a catchall/gap filler provision that allows it to cite an employer even if no specific standard was violated: the “General Duty Clause,” Section 5(a)(1) of the Occupational Safety and Health Act. OSHA can cite employers for violations of the General Duty Clause if a recognized serious hazard exists in the workplace and the employer doesn’t take reasonable steps to prevent or abate the hazard. The General Duty Clause is used only where there is no standard that applies to the particular hazard.
No. 8 – Employers Have 15 Working Days to Contest a Citation but Have the Option to Negotiate a Settlement with OSHA Before That Deadline
What happens if OSHA issues a citation and you do not agree with any or all of it? You have 15 working days from the date you receive the citation to contest in writing the citation, proposed penalty, and/or the abatement date. Read the full article to learn more about your options and how to reach a favorable settlement.
No. 9 – The Particulars on OSHA Violations: How Much Notice Is Enough?
Just what does an OSHA citation have to include? Section 9(a) of the Occupational Safety and Health Act requires that citations “describe with particularity the nature of the violation, including a reference to the provision of the Act, standard, rule, regulation, or order alleged to have been violated.”
This statutory mandate is designed to ensure that OSHA properly informs employers of alleged violations so they can correct hazards promptly and avoid unnecessary litigation. However, the Occupational Safety and Health Review Commission and the courts have consistently interpreted this requirement to mean that citations need only provide employers with “fair notice” of the violation. In other words, as long as an employer is put on notice that a particular condition may violate OSHA standards, additional specifics can be obtained through discovery. As a result, OSHA often issues citations with broad language rather than granular detail.
No. 10 – Unlocking the Secrets of OSHA Inspections Through FOIA Requests
Did you know that you can request files from OSHA? Under the Freedom of Information Act (FOIA), employers, employees, and third parties have the right to request documents from OSHA’s inspection files. These records provide valuable insight into the evidence and reasoning behind OSHA’s decisions, including citations issued during site inspections. They can also be critical in legal proceedings, including lawsuits related to workplace safety.
The Future of NEPA Implementation Without CEQ Regulations
On February 19, 2025, the Council on Environmental Quality (“CEQ”) announced an Interim Final Rule rescinding its longstanding regulations implementing the National Environmental Policy Act (“NEPA”) and issued a new Memorandum on the Implementation of NEPA (“Guidance”) to all federal departments and agencies. President Trump directed both actions in his January 20, 2025 Unleashing American Energy Executive Order (“EO 14154”).
The Interim Final Rule, to be published in the Federal Register on February 25, 2025, removes all existing CEQ regulations implementing NEPA from the Code of Federal Regulations, many of which have been in place since 1978.
The Guidance implements the President’s direction in EO 14154 to “expedite and simplify the permitting process” and strives to minimize potential delays and confusion associated with the removal of CEQ’s regulatory framework for consistent NEPA implementation across agencies. The Guidance “encourages” agencies to use the CEQ regulations issued during the first Trump Administration (the “2020 Rule”) as “an initial framework” while agencies revise or establish agency-specific NEPA implementing procedures over the next year, as directed by EO 14154. Until those changes are complete, the Guidance directs agencies to follow existing practices and procedures, with adjustments for consistency with the NEPA statute, EO 14154, and the Guidance. Further, the Guidance directs agencies to “consider voluntarily relying” on CEQ regulations for ongoing NEPA reviews and lawsuits on NEPA reviews completed while the regulations were still in effect.
The Guidance expressly states that “[a]gencies should not delay pending or ongoing NEPA analyses while undertaking these revisions.” Despite this explicit instruction, the dismantling of a regulatory structure that stood for nearly five decades may cause at least short-term NEPA review delays.
Background
NEPA applies to a broad range of actions with a federal nexus, including federal permit applications, federal land management decisions, highway construction, and other federally funded projects. Through the NEPA process, federal agencies must evaluate the environmental and related social and economic effects of their proposed actions. The NEPA statute and regulations remained largely unchanged from the 1970’s until recent revisions to the CEQ regulations made during the Trump and Biden Administrations in 2020, 2022, and 2024, and statutory amendments to NEPA made by the Fiscal Responsibility Act in 2023.
Over the decades, courts have developed a robust body of caselaw on the NEPA statute and CEQ regulations. In the last several months, however, two court cases questioned CEQ’s underlying authority to issue binding regulations. In November 2024, a D.C. Circuit panel found the CEQ regulations exceeded CEQ’s authority in Marin Audubon Society v. Federal Aviation Administration, although a majority of the court in denying rehearing indicated that portion of the court’s decision was non-binding dicta. More recently, the District of North Dakota vacated Biden’s 2024 Phase II regulations on the grounds that CEQ lacked rulemaking authority in Iowa v. CEQ.
The Interim Final Rule
The Interim Final Rule rescinds all of CEQ’s NEPA regulations and is expected to be published in the Federal Register on February 25, 2025. The Interim Final Rule does not take a position on CEQ’s prior interpretations of NEPA’s procedural requirements, and CEQ avoided a definitive statement on whether it lacks authority to maintain the NEPA regulations. The Interim Final Rule will be effective 45 days after publication.
CEQ issued this as an “interim final rule,” avoiding the typically required notice and comment rulemaking process. CEQ states that this procedural mechanism was appropriate both because the rule is “procedural” and because there was “good cause” for doing so. Although the Interim Final Rule will be effective April 11, CEQ is allowing a “voluntary” 30-day public comment period, and CEQ committed to “consider[ing] and respond[ing] to comments before finalizing” the Interim Final Rule. This is a procedural process that is vulnerable to litigation under the Administrative Procedure Act.
The Guidance
The Guidance directs agencies to establish or revise their NEPA implementing procedures by February 19, 2026, providing at least 30 days but no more than 60 days for public comment on proposed regulations, to the extent public comment is required. The Guidance offers certain recommendations for agencies as they promulgate and revise their own NEPA implementing procedures, including:
developing clear procedures for reviewing project sponsor-prepared environmental assessments (“EAs”) and environmental impact statements (“EISs”);
ensuring procedures comply with statutory deadlines (two years for EISs and one year for EAs);
limiting alternatives analyzed to those that are “technically and economically feasible” and “meet the purpose and need for the proposed action”;
limiting analyzed effects to those that are “reasonably foreseeable,” regardless of whether those effects can be characterized as “cumulative”;
considering the establishment of “thresholds” for Federal funding that would not constitute a “major Federal action” triggering NEPA review; and
eliminating environmental justice analyses from NEPA reviews, except to any extent otherwise required by law.
The Guidance includes additional recommendations to help promote consistency and predictability in the absence of governmentwide CEQ regulations. The Guidance specifies additional elements that agencies should, at a minimum, include in their procedures. It also requires agencies to consult with CEQ in developing or revising their NEPA procedures. Over the next year, CEQ will host monthly meetings of the Federal Agency NEPA Contacts and NEPA Implementation Working Group required by EO 14154 to share additional guidance and provide assistance to agencies as they work to develop or revise their NEPA procedures.
In the meantime, the Guidance recommends that agencies continue to follow their existing NEPA practices and procedures and voluntarily rely on the CEQ regulations for projects currently undergoing NEPA review and legal challenges.
Implications
The intent of the Interim Final Rule and Guidance, consistent with EO 14154, is to expedite critical project approvals. However, the uncertainty caused by such wholesale changes may have the opposite effect, at least in the near term. These significant changes—in many cases to longstanding regulatory requirements—risk creating confusion at the agency level, which could lead to delays in NEPA reviews. This is especially true in the short-term, where CEQ’s NEPA regulations have been rescinded but agencies have not yet implemented new or revised NEPA regulations of their own. Additionally, inevitable litigation—on the Interim Final Rule itself, on CEQ’s rulemaking authority, or on the agency-specific regulations developed through this process—will further add to uncertainty and confusion. There is a risk that projects may benefit from a potentially faster NEPA review, only to face increased litigation risk after project approval. Moving forward, it will be critically important for project proponents and other stakeholders to engage with relevant permitting agencies and participate actively in the development of agency-specific NEPA implementing procedures.
4 Contract Negotiation Tips for Contractors and Owners
Although we are at a time when buildings can be 3D printed, most modern construction is still produced through contractors and manual labor. With prices continuing to rise on a global scale (yes, affecting products even beyond the grocery store), being able to negotiate a fair contract between contractors and owners can make a difference in outlook and favorability for both parties.
Tip #1: If You’re Looking to Cut Corners, Rethink Your Plans
Just because the materials cost a certain amount in February when you draft a contract, does not mean that they will stay that same amount in April. Consider trying to estimate an over/under price in your contract. Beware that “cutting corners” may lessen the quality of work and could affect safety.
Tip #2: Have a Letter of Intent (LOI)
A letter of intent is not required and even having one is non-binding; however, it does provide some security between the two parties. Think of the LOI as the pre-contract, where you can start to set the expectations before having the legally binding contract signed.
Tip #3: Do Not Pay in Full Up Front
While this may seem counterintuitive, it is a strategy that can help retain your contractor before they take on a new project. This does not mean to withhold large percentages of the payment. You should aim to withhold 1-10% of the total sum until the job reaches substantial completion otherwise you may be stuck with finding someone else to do final repairs, clean up, and finishes.
Tip #4: Include Attorney Fees
There may be times that an owner needs to sue its contractor for breach of contract, negligence, misrepresentation and poor quality of work, etc. Negotiating the contractor’s responsibility for attorney fees if it loses the litigation or arbitration can provide some relief.
It is still best practice to talk with your attorney before you begin any negotiations. Often, the attorney can help you research and prep your contract to make sure that you are getting the most out of the transaction without entering into an unfair deal.
Restoring Western North Carolina’s Infrastructure: NCDOT Receives $250 Million in Federal Emergency Relief Funds
The Federal Highway Administration (FHWA) has announced an immediate allocation of $352.6 million in Emergency Relief funds to support recovery efforts following the devastation caused by Hurricane Helene in September 2024.
Of this funding, the North Carolina Department of Transportation (NCDOT) will receive $250 million to repair damaged roadways and bridges, including Interstate 40. Another $32.6 million will be split between the U.S. Forest Service and the National Park Service to make repairs along the Blue Ridge Parkway and other roadways located in national forests.
The Impact of Hurricane Helene
Hurricane Helene left a trail of destruction across the Southeast, including widespread flooding, landslides, and structural damage to roadways and bridges. Western North Carolina, known for its mountainous terrain and vital transportation routes, was particularly hard-hit. The storm caused severe washouts, rockfalls, bridge collapses, and pipe failures, creating hazardous conditions and disrupting travel.
The cumulative cost of federally eligible damage is still being assessed, but early estimates suggest the total will exceed $4 billion. In response, federal, state, local, and tribal agencies have mobilized to restore accessibility and safety to the affected areas.
Emergency Relief Funds: A Lifeline for Infrastructure Recovery
The FHWA’s Emergency Relief program plays a crucial role in providing financial assistance to repair and reconstruct damaged transportation infrastructure after natural disasters. The program’s “quick release” funding mechanism ensures that states receive immediate support for urgent repairs, reducing delays in reopening critical routes.
The newly allocated $250 million for NCDOT will be directed toward repairing damage along North Carolina’s roadways, including I-40, a key transportation corridor linking North Carolina to Tennessee.
Challenges and Considerations for Construction Professionals
While the federal funding is a significant step toward recovery, construction professionals working on these repair projects must navigate several key challenges:
State and Federal Procurement Requirements – Public contracts for federally funded infrastructure projects come with strict guidelines. Even though these projects are state-managed, they often require compliance with federal laws and regulations. Contractors need to ensure they are complying with all applicable laws and requirements, which may include:
The Federal Acquisition Regulation;
The Build America Buy America Act;
Davis-Bacon Act wage standards;
Minority business participation mandates; and
Bonding and insurance requirements, among others.
Licensing Concerns – If you are an out-of-state contractor interested in performing work in Western North Carolina as part of the state and federal disaster relief effort, it is critical that you understand and comply with North Carolina’s licensing laws.
Looking Ahead: A Resilient Future for North Carolina’s Infrastructure
The infusion of federal emergency relief funds into North Carolina’s transportation network is a welcome development for residents, businesses, and the construction industry. As the state embarks on the challenging task of rebuilding, collaboration among government agencies, engineers, contractors, and legal professionals will be essential to achieving a resilient and efficient transportation system.
For construction firms and industry stakeholders, the recovery efforts present both opportunities and responsibilities. With careful planning, regulatory compliance, and strategic risk management, North Carolina can emerge from this disaster with stronger, more sustainable infrastructure that serves future generations.
Mistake No. 8 of the Top 10 Horrible, No-Good Mistakes Construction Lawyers Make: Know the Benefits and Perils of a Privately Administered Arbitration
I have practiced law for 40 years with the vast majority as a “construction” lawyer. I have seen great… and bad… construction lawyering, both when representing a party and when serving over 300 times as a mediator or arbitrator in construction disputes. I have made my share of mistakes and learned from my mistakes. I was lucky enough to have great construction lawyer mentors to lean on and learn from, so I try to be a good mentor to young construction lawyers. Becoming a great and successful construction lawyer is challenging, but the rewards are many. The following is No. 8 of the top 10 mistakes I have seen construction lawyers make, and yes, I have been guilty of making this same mistake.
Most (but not all) commercial construction contracts contain binding arbitration clauses. Whether the contract is between an owner and architect/designer, an owner and prime contractor, or a subcontractor and prime contractor, the decision to arbitrate or litigate a dispute is always negotiable. You can refer back to one of my previous blog posts in this series discussing the pros and cons of binding arbitration vs. litigating in court. But when parties have decided to arbitrate a dispute, the next question is what rules will apply and how will the arbitration be administered?
Most arbitration clauses (especially those in the standard AIA form set of construction project documents) specify that the American Arbitration Association (AAA) will “administer” the arbitration and that the construction rules of the AAA will apply (the “AAA Rules”). Per the AAA Rules, a party filing an arbitration pays a filing fee to the AAA, the amount of which is based on the amount of the claim. For example, the total non-refundable fee (with few exceptions) for a claim (or counterclaim) from $500,000 to $1 million is $12,675. A claim from $1 million to $10 million is $17,450. There are other AAA fees to pay as the process continues. The other primary costs are the compensation (normally hourly) of the selected arbitrator (or panel).
There are many experienced construction lawyers who are unhappy with the administrative services provided by the AAA (I am not one of them) when taking into consideration the amounts charged by the AAA to the clients. Their arguments are as follows: “I know who the good and bad arbitrators in my area are. My clients do not need to pay the huge AAA filing fees to just get a list of potential arbitrators. And once chosen, a good arbitrator takes over the administration of the arbitration and all the AAA case manager does is set up calls (when the arbitrator does not do so), collects the estimated arbitrator fees from the parties, sends out notices and pays the arbitrator.”
Because of the arguments above, and other concerns, there is a growing trend for parties and their construction lawyers, even with an arbitration clause that calls for AAA administration, to completely “bypass” the AAA and have the arbitration administered “privately.” Over the past five years, I would estimate that 33% of the arbitrations for which I have served as an arbitrator (including on a panel of 3 arbitrator) over the past 3 years have been privately administered. What this means is that the parties agree to amend the arbitration clause; enter into a private arbitration agreement (which may call for portions of the AAA Rules to apply); and agree on an arbitrator(s). There can also be an agreement to a private arbitration without a pre-existing arbitration clause. While the arbitrator’s rates will normally be the same as the rates charged by the AAA, the obvious savings to the clients is that the AAA’s initial filing fees and other charges are avoided.
On first blush, especially for large claims and counterclaims, this may look like a win-win for the clients. However, before you go off and recommend this to your clients, you better be fully aware of the risks and issues that can arise.
Avoid issues by having an agreed private arbitration agreement.
If the arbitration clause calls for AAA Rules, and the parties agree to private arbitration, there should always be a carefully well-drafted private arbitration agreement signed by the clients. It should, among other items, set forth what rules will be applicable; what pre-hearing discovery will be allowed; identify the agreed arbitrator (and at what hourly rate); outline the requirement to split the arbitrator compensation; and determine a process if, for whatever reason, the existing arbitrator must withdraw prior to the hearings. I do not agree to serve as a private arbitrator without such an agreement in place (which is where I obtain my authority to issue a binding award). Also, do not forget that such an agreement is a “contract,” and there can be clauses included that were not in the original contract, such as a prevailing party attorneys’ fees/arbitration expenses clause or even an agreement for the most convenient hearing location (not the location of the project). Last year I served as a private arbitrator on a project located in Alabama with counsel in Atlanta, Tennessee and Colorado, and the hearings were in my firm’s offices in Nashville.
Involve your client in the arbitrator selection.
In the AAA process for selecting an arbitrator, the AAA sends a list of potential arbitrators to both counsel, who then send in a confidential list to the case manager with names crossed off and an order of preference (much like jury selection). The case manager then reviews the list and appoints the arbitrator (subject to conflicts). In a private arbitration, both sides must agree on an arbitrator. In most instances, the client will not have any idea of any potential arbitrator, so the client will be heavily relying on your advice, albeit tempered by the admonition that there cannot be any guaranties on how an arbitrator might rule. Another previous blog post in this series discussed the issues of not vetting potential arbitrators. The point here is to involve your client and explain who has been suggested as the private arbitrator. Because if the agreed upon arbitrator rules against your client, despite your fantastic efforts, a losing, disgruntled client may ask (when presented with your final post-hearing invoice), “I don’t recall agreeing to this arbitrator: why did you recommend we use that guy? You told me he would call balls and strikes, and he did not.”
Managing post-arbitrator selection conflicts can be tricky.
While any potential private arbitrator will disclose any conflicts (same process as the AAA), arbitrator conflicts can come up after selection. An example would be the later disclosure of expert witnesses or fact witnesses. If that arbitrator uses or has used one side’s designated expert, there should be a disclosure. The difference is that when the AAA administers the case, if a disclosure is necessary, the arbitrator discloses to the case manager who then deals only with counsel. Under the AAA Rules, the AAA has the sole discretion to rule on whether the arbitrator can continue to serve. In a private arbitration, the arbitrator must manage the conflict directly with counsel. One solution is to designate, in the private arbitration agreement, another qualified arbitrator who is authorized by the parties to rule on any conflict.
Handle party nonpayment issues.
When the AAA administers a case, the arbitrator provides an estimate of his total compensation/expenses, and the AAA bills each side one-half of the estimate. The payments go into the AAA “bank.” The arbitrator sends invoices to the AAA, and the AAA pays the arbitrator from the deposits. The difference is if one side does not pay its share. If a AAA administered arbitration, the case manager manages it internally and does not inform the arbitrator which side has not paid. If the payment is not timely made, the arbitrator is then given the option of proceeding with the hearings or putting the arbitration on hold. The AAA does give the paying party the option to pay the other side’s portion (but most of the time this does not happen). In a private arbitration, the arbitrator is the “bank.” The pre-payments are made to her, and obviously she knows which side has or has not paid.
The bottom line is not making the mistake of allowing the “benefit” of a client not having to pay the AAA fees with the real and material issues that can occur with a private arbitration. Having good, experienced counsel on both sides helps, as well as knowing that many of the identified issues can be anticipated in a well-drafted private arbitration agreement.
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UK Appeal Court Provides Authoritative Guidance on Construction All Risks Insurance Policies
In the UK Court of Appeal decision in Sky UK Limited and Mace Limited v Riverstone, authoritative guidance has been provided on the key principles that apply to Construction All Risks (CAR) insurance policies.
The decision is of great importance to all those involved with the insurance of construction projects because it provides clarification on: (i) the meaning of “damage” under these policies, (ii) recovery of foreseeable damage occurring outside of the policy period, (iii) the recoverability of investigation costs, and (iv) the mechanics of aggregation and deductibles.
Background
From 2014 to 2016, Sky’s global headquarters (Sky Central) was constructed by Mace Limited (Mace) as the main contractor under a Design and Build Contract. For the purpose of the construction, Mace alongside Sky UK Limited (Sky) were insureds under a Construction All Risks (CAR) insurance policy, which ran from 1 February 2014 (commencement of the project) to 15 July 2017 (one-year post-completion).
Sky Central’s roof covers an area of about 16,000 square meters and is said to be the largest timber flat roof in Europe. The roof is made up of 472 individual wooden cassettes, which were installed between December 2014 and May 2015. Following installation, the cassettes were left waiting for permanent waterproofing and it later became apparent that rainwater had entered the cassettes from an early stage. By March 2015, standing water was found inside the gutter compartments of 27 cassettes which had entered these cassettes and remained there, leading to a wetting of internal timbers. The ingress of water mostly occurred during the construction and therefore within the policy period. The appeal concerned crucial issues under the CAR policy arising from of this extensive water damage.
Court of Appeal decision
The Meaning of “Damage” Within the Insuring Clause
The insuring clause in the CAR policy provided that insurers would “indemnify the Insured against physical loss or damage to Property Insured, occurring during the Period of Insurance, from any cause whatsoever…”1 The parties disagreed on whether the wetting of the internal timbers was itself “damage”. The insurers argued that, to constitute “damage”, the timbers needed to have reached a condition where they required immediate replacement or repair. They argued that wetting that could be cured by drying out was not “damage”.
The Court disagreed and determined that, in line with criminal law authorities, “damage” amounted to “any change to the physical nature of tangible property which impair[s] its value or usefulness to its owner or operator.”2 There was no reason to take a different approach—this was the natural and ordinary meaning of “damage”.
It followed that the insurers’ position—that “damage” required the cassettes to have reached a stage which impaired their structural performance and integrity—was rejected. The entry of moisture into the cassettes was a tangible physical change to the cassettes as long as the presence of water, if left unattended, would affect the structural stability, strength, functionality, or useable life of the cassettes (or would do so if left unremedied).
Recovery of Foreseeable Development and Deterioration Damage Occurring Outside the Policy Period
The Court noted that, by a well-established line of authority, a property insurance claim is a claim for unliquidated damages, which means the measure of recovery is based on the common law principles governing damages for breach of contract. The general objective of damages for breach of contract is to put the innocent party back in the position they would have been in had the breach not occurred. While it is open to the parties to the insurance contract to modify the measure of damages that the general law provides for, the exclusion of the usual remedies must be expressed in clear words. As a result, the cost of remedying the foreseeable deterioration and development damage—which occurred after the policy period but resulted from insured damage occurring during the policy period—was within the measure of recovery under the policy.
The Court also noted that this conclusion accords with business common sense. A businessperson in the shoes of the insured would “reasonably expect to be compensated for the consequences of the insured damage deteriorating or developing, absent a contract term excluding such recovery.”3 If this was not the case, there would be “serious and unacceptable adverse consequences” because it would make deterioration and development damage occurring after the policy period uninsurable under any subsequent insurance cover.4
Investigation Costs
Concerning the recoverability of investigation costs, the Court determined that, as a matter of principle, where insured damage has occurred for which damages are recoverable under the policy of insurance, the costs of investigating the extent and nature of the damage (including any development and deterioration damage) are recoverable if they are “reasonably incurred in order to determine how to remediate it”.4 Thus, the reasonable costs of investigation of what is reasonably necessary to remedy insured damage was “self-evidently” part of the “full cost of repairing or reinstating” insured damage.6
Aggregation / Deductibles
Lastly, the Court considered whether a deductible of £150,000 “any one event” (the Retained Liability Provision) applied once to the whole of the claim or applied separately in respect of damage to each individual cassette. At first instance, the judge had decided that one deductible of £150,000 applied to Sky’s claim because the proximate cause of the water ingress was the deficient design of the works that failed to provide for a temporary roof over the cassettes during construction. The decision not to provide this roof was therefore the “any one event” for the application of the deductible.
The insurers appealed on the basis that the judge had erred in his construction and application of the Retained Liability Provision by: (a) treating the relevant single “event” as the design decision not to use a temporary roof; and (b) in failing to identify each individual cassette as the “part” or “parts” of the property insured to which the Retained Liability Provision applied. The insurers argued that the term “event” applies to the damage suffered not the cause of the damage—meaning there were numerous “events” for the purposes of this deductible.
The Court dismissed the insurers’ appeal, noting that “any one event” is an expression used in aggregation clauses both for the purposes of deductibles and policy limits and, in this context, has a well-established meaning, which both parties were taken to have been aware of. “Event” refers to the cause of the damage, not the damage itself, and a decision (in this case not to provide a temporary roof) could amount to an “event” for these purposes. “Any one event” is a classic term for aggregation of losses by reference to the cause of the losses.
Conclusion
The key points for policyholders are:
Damage can involve any change to the physical nature of tangible property that impairs its value or usefulness. Property can be damaged even if such damage is capable of remedy.
Recovery is not necessarily confined to damage physically present at the time the policy expires. Unless the policy provides otherwise, the costs of remedying the foreseeable deterioration and development damage are recoverable under the contractual principles that govern common law damages, even if such damage extends beyond the policy period.
Once it is established that there is insured damage, reasonable investigation costs incurred in investigating the cause and extent of the damage should be recoverable.
Lastly, reference to “any one event” in the context of an aggregation clause determining the number of policy deductibles meant the event causing the damage—not the damage itself.
Footnotes
1 [2024] EWCA Civ 1567, [2].
2 [2024] EWCA Civ 1567, [107].
3 [2024] EWCA Civ 1567, [80].
4 [2024] EWCA Civ 1567, [81].
5 [2024] EWCA Civ 1567, [89].
6 [2024] EWCA Civ 1567, [90].
Executive Order Update on Construction Materials
Executive Order Adjusting Imports of Aluminum into The United States
On February 11, 2025, in an executive order titled Adjusting Imports of Aluminum into the United States, President Trump increased, from 10% to 25%, the ad valorem tariff rate on imports of aluminum and aluminum-derivative articles from most countries. The tariff rate on imports of aluminum from Russia will be 200%. President Trump cited national security grounds as the reason for the tariff increases.
The executive order also ended previous exemptions on these imports for allies such as Argentina, Australia, Mexico, Canada, the EU, and the UK.
The tariffs begin on March 12, 2025.
The President stated that these actions aim “to protect America’s steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity.”
Executive Order Adjusting Imports of Steel into The United States
On February 10, 2025, in an executive order titled Adjusting Imports of Steel into the United States, President Trump increased, from 10% to 25%, the ad valorem tariff rate on imports of steel and steel-derivative articles from most countries. President Trump cited national security grounds as the reason for the tariff increases.
The executive order also ended previous exemptions on these imports from Argentina, Australia, Brazil, Canada, the EU, Japan, Mexico, South Korea, and Ukraine.
The tariffs begin on March 12, 2025.
The President stated that these actions aim “to protect America’s steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity.”