Cal/OSHA’s Latest on Lead Exposure: Clarification for the Construction Industry
On May 5, 2025, the California Department of Industrial Relations made an important announcement that affects employers in the construction industry. Cal/OSHA has clarified lead exposure prevention guidance specific to protecting workers conducting dry abrasive blasting while performing construction work.
California’s recently amended lead standards for the construction industry went into effect on January 1, 2025 (California Code of Regulations, title 8, section 1532.1) as part of a broader effort to provide greater protection for workers from the health effects tied to lead exposure. These requirements, which are generally more protective than existing federal regulations, emphasize an increase in the use of protective measures, including substitution, engineering controls, and administrative controls.
According to Cal/OSHA’s guidance, employers must assess their workers’ exposure to lead when conducting abrasive blasting. Until the employer completes the assessment, dry abrasive blasting is currently limited to five hours a day, dropping to two hours per day in 2030. After completing the assessment, there is no time limit, but exposure must stay below the permissible regulatory limit of 25 micrograms per cubic meter of air. Beginning January 1, 2030, this limit drops to 10 micrograms.
Cal/OSHA directs employers to Table 1 of section 5144 to determine respirator protection factors. Using respirators can help manage lead exposure, but they must be used correctly to be effective.
Stop Guessing the Price – Use Material Escalation Clauses to Protect Your Bid in a Volatile Tariff Climate
In today’s market, contractors often find themselves playing The Price is Right when bidding material costs — trying to hit the number just right without going over. But with new (and changing) tariffs targeting steel, aluminum, and other goods in 2025, that guessing game just became even riskier.
Should contractors base bids on current prices and absorb the risk of dramatic cost increases down the line? Or should they build in a buffer against future uncertainty and potentially price themselves out of the job? Another move may be to include a material escalation clause in your contracts.
In fixed-price or lump-sum contracts, general contractors, subcontractors, and suppliers typically bear the brunt of material price increases. However, supply chain disruptions and price volatility are increasing in the current economic climate, so builders have an incentive to address cost escalation more directly.
A material escalation clause allows parties to adjust the contract price if material costs rise significantly during the course of the project. It effectively shifts risk away from the contractor and toward the project owner. Material escalation clauses can be either “cost-based” or “index-based.” A cost-based clause compares the contractor’s actual incurred material cost to bid-day estimates, while an index-based clause ties pricing to published indexes such as the Producer Price Index (PPI) from the U.S. Bureau of Labor Statistics.
A typical material escalation clause would provide a contractor with entitlement to a change order if a significant change in the price of material occurred after the contract was executed. A significant price change would be defined contractually and tied to a threshold percentage increase in the cost of the material. Many clauses also include a cap on the amount of a price increase that an owner would be required to absorb.
Convincing an owner to include a material escalation clause can be a challenge, especially if they’re focused solely on keeping upfront costs low. Here are two strategies to make the conversation easier:
Offer Bid Transparency – Explain that bidding based on current material costs, rather than padding your bid with risk premiums, is only possible if the contract allows for later adjustments. In short, escalation clauses can lower the base bid.
Include a De-Escalation Component – Consider a two-way clause that benefits the owner if material prices drop beyond a certain threshold. This gives owners comfort that the clause isn’t just a one-sided windfall for the contractor.
Even though it may be a difficult conversation with an owner, spending the time to sort through material cost escalation clauses prior to contracting may be beneficial to both parties by providing more certainty around price risk during a period of expected volatility in global markets.
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New York Enacts Amendment to Limit Frequency of Pay Damages for Manual Workers
On May 9, 2025, Governor Hochul signed a budget bill into law that includes an amendment (“the Amendment”) to the New York Labor Law (NYLL).
This Amendment took immediate effect, applies to pending and future actions, and dramatically changes the relief employees can seek for first-time violations the pay frequency provisions for “manual workers” found in NYLL Section 191.
The Amendment substantially reduces potential damages from 100% liquidated damages to lost interest on delayed payments for first-time violations of the NYLL’s frequency of pay requirements where employers otherwise paid manual workers’ wages on regular pay days, no less frequently than semi-monthly. For future violations, liquidated damages will only be available for a second or subsequent violation if there is a finding and order by the New York State Department of Labor (“NYS DOL”) or court of competent jurisdiction of a prior violation for employees performing the same work.
What is a “Manual Worker”?
NYLL Section 191(1)(a) requires that employers pay “manual workers” on a weekly basis, with limited exceptions. The Labor Law defines a manual worker as a “mechanic, workingman or laborer.” The NYS DOL takes a long-standing position that “individuals who spend more than 25% of working time engaged in ‘physical labor’ fit within the definition of ‘manual worker.’” The term “physical labor” has likewise been interpreted broadly to include “countless physical tasks performed by employees.”
The New York Industrial Board of Appeals, the independent body within the NYS DOL that reviews petitions concerning orders, determinations, rules, and regulations issued by the Commissioner of Labor, looks at not only the time spent performing the physical labor, but also the type of labor performed (i.e., whether it is the type of interchangeable physical labor that can be done by multiple individuals with little to no skill or practice). In short, the determination of whether an employee is considered a “manual worker” is a fact intensive inquiry that must be determined on a case-by-case basis, making it difficult for employers to ensure compliance with the law’s requirements.
If a business’ workforce is large enough[1], it can seek an authorization from the NYS DOL to pay manual workers less frequently than weekly. To obtain the authorization for this variance, employers must submit an application to the NYS DOL with specific documentation. The NYS DOL considers a number of factors, including documents related to the financial stability of the employer and a history of compliance under the Labor Law. Where the manual workers are represented by a labor organization, a variance will not be granted without consent from that organization.
Background on Frequency of Pay Claims
As we have reported previously, New York’s appellate courts have been divided as to whether NYLL § 191 was intended to provide litigants with a private right of action for pay frequency claims. On September 10, 2019, the Appellate Division of the New York Supreme Court for the First Department held in Vega v. CM & Associates Construction Management, LLC that a private right of action does exist for NYLL’s frequency of pay provisions and that employees could seek to recover liquidated damages equal to all late-paid wages for violations of the law. The decision in Vega prompted the filing of hundreds of private court actions claiming companies failed to pay “manual workers” on time pursuant to Section 191.
On January 17, 2024, the Appellate Division of the New York Supreme Court for the Second Department held in Grant v. Global Aircraft Dispatch, Inc. that no private right of action exists, thereby creating a split between New York State Appellate Divisions. A request for review of the Grant decision by the New York Court of Appeals (New York’s highest court) is pending.
The confusion created by these conflicting decisions and the potential for employers’ significant exposure to damages set the backdrop for the legislative action.
What the Amendment Does
The budget bill (SB 3006C)[2] adds language to NYLL Section 198(1-a), which provides for the costs, remedies, and recoverable damages an employee or the New York Commissioner of Labor can seek for wage claims. The new language substantially reduces the amount of potential damages from 100% liquidated damages to lost interest (currently at an interest rate of 16% per annum) on delayed payments for first-time violations where employers otherwise paid manual workers wages on regular pay days, no less frequently than semi-monthly.
For future violations, liquidated damages equal to 100% of late-paid wages will only be available for a second or subsequent violation if there is a finding and order by the NYS DOL or a court of competent jurisdiction of a prior violation for manual workers performing the same work.
Although the Amendment is not the panacea employers wished for,[3] it is welcome news for the hundreds of employers subject to litigation or threatened litigation that have otherwise paid their manual workers’ wages on a regular basis, albeit not weekly.
What Employers Should Do Now
The Amendment is by no means the end of pay frequency litigation, and the potential for significant exposure is still possible, particularly if an employer has a finding and order issued against it and is found to have subsequently violated the frequency of pay requirements for the same group of workers again. As such, there are steps employers can take immediately to ensure compliance with the Labor Law’s frequency of pay requirements.
In addition, because of the fact intensive nature of determining whether an employee is a “manual worker,” it is important that employers ensure they are complying with the frequency of pay requirements in the first instance by auditing their pay practices, ideally with the assistance of counsel, to analyze whether certain categories of employees fall within the broad definition of “manual worker,” and, if so, to ensure that all manual workers are paid properly. Employers should also take this opportunity to consult with counsel to determine whether they meet the requirements to obtain a variance from the NYSDOL in order to pay manual workers less frequently than weekly.
ENDNOTES
[1] i.e., has an average of 1,000 employees in New York for the three years preceding the application, or an average of 3,000 out of state employees for the three years preceding, and an average of 1,000 employee in New York for the year preceding the application.
[2] The relevant text of the amendment to the NYLL can be found in Part U of the NYS Budget Bill, S3006-C.
[3] Governor Hochul’s Executive Budget Proposal for fiscal year 2025 (see “Part K”) had included proposed language that would have eliminated liquidated damages as a remedy altogether for manual worker frequency of pay claims.
Maintenance Obligations on a 30-Year-Old Project Let an Owner Sidestep Tennessee’s Statute of Repose
In Tri-State Insur. Co. of Minn. a/s/o Campus Chalet, Inc. v. East Tennessee Sprinkler Company, Inc., the Court of Appeals of Tennessee recently addressed whether the state’s four-year statute of repose could shield a contractor from liability in 2020 where the initial construction project was completed in 1992. The court found that the trial court improperly granted the contractor a motion to dismiss on its statute of repose defense because the owner’s complaint properly pled breach claims arising out of a separate ongoing maintenance agreement between the parties.
East Tennessee Sprinkler Company, Inc. (ETS) installed a sprinkler system at Campus Chalet in 1992. Campus Chalet also contracted on an ongoing basis with ETS to inspect, repair, and maintain the sprinkler system. A waterline in the sprinkler system burst in 2020, damaging Campus Chalet’s property.
Tri-State Insurance Company of Minnesota, Campus Chalet’s insurer, filed a complaint against ETS. The complaint alleged negligence and breach of contract, specifically claiming that ETS had failed to properly inspect, test, and maintain the sprinkler system since its installation. Tri-State argued that the proximate cause of the sprinkler line burst was improper sloping, a condition that ETS should have identified and corrected through its ongoing maintenance work.
ETS responded by moving to dismiss the case, citing Tennessee’s four-year statute of repose. This statute generally bars claims arising from the design, planning, supervision, observation of construction, or construction of improvements to real property after four years from substantial completion of the improvement. ETS argued that the claims were time-barred because they related to the original installation of the sprinkler system. Tri-State countered that its claims were based on ETS’s continuing obligations to inspect and maintain the system. The trial court sided with ETS, granting the motion to dismiss on the grounds that the claims were time-barred under the statute of repose.
The Court of Appeals of Tennessee reversed the trial court’s decision. The appellate court emphasized that, when reviewing a motion to dismiss, it must construe allegations in the complaint liberally and give the plaintiff the benefit of all reasonable inferences. The appellate court reasoned that a plain reading of the complaint revealed “that the essence of Tri-State’s allegations arise out of ETS’s ongoing maintenance of the system,” which ETS performed “deficiently in years following the sprinkler system’s initial installation.”
The Court of Appeals of Tennessee remanded the case to the trial court for further proceedings. While Tri-State survived the motion to dismiss, that does not necessarily mean it has escaped the statute of repose. If the facts bear out that Tri-State’s claims arose from the initial sprinkler construction contract, ETS may assert the statute of repose defense on a motion for summary judgment or at trial.
A copy of the court’s entire decision can be found here. A video of the arguments on appeal can be found here.
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Paul Hastings Adds International Energy & Infrastructure Partners in Abu Dhabi
Paul Hastings Adds International Energy & Infrastructure Partners in Abu Dhabi. Paul Hastings LLP is continuing to grow its international energy and infrastructure bench with the arrival of Stefan Mrozinski and Habeeb Rahman as partners in its recently opened Abu Dhabi office. Both come from White & Case LLP and bring a wealth of experience […]
Antitrust Compliance for North Carolina Construction Companies: Avoiding Legal Pitfalls
The construction industry has long been a target for antitrust enforcement.
For construction company owners and managers, understanding antitrust laws and implementing effective compliance measures isn’t just good business practice, it’s essential protection against potentially devastating legal consequences.
Why Antitrust Matters in Construction
Antitrust laws are designed to protect consumers and the competitive marketplace from behaviors that restrict competition or trade. They apply to businesses of all sizes, including construction companies, and carry serious penalties for violations.
The construction industry faces particular scrutiny for several reasons. The project-based nature of the business creates numerous opportunities for competitors to interact on bids and contracts. The prevalence of subcontractor relationships often blurs the lines between competitors and partners. Local trade associations often bring competitors together, creating environments where improper discussions may occur. Additionally, the substantial dollar values involved in many construction projects naturally increase regulatory interest in ensuring fair and competitive practices.
Understanding the Legal Landscape
Antitrust laws operate at both federal and state levels and can create both civil and criminal liability. The core federal antitrust statutes include three primary laws that construction company managers should understand.
The Sherman Act serves as the foundational antitrust law, outlawing conduct that unreasonably restricts trade and criminalizing monopolization. It creates both civil and criminal liability for anti-competitive behaviors, making it particularly powerful in enforcement actions.
The Clayton Act, prohibits specific anti-competitive practices. These include price discrimination between customers when harmful to competition, “refusal to deal” arrangements, “tying” arrangements that stifle competition, and selling goods at unreasonably low prices specifically to destroy competition.
The Federal Trade Commission Act broadly bans “unfair methods of competition” and “unfair and deceptive acts or practices,” providing a flexible tool for regulators to address emerging anti-competitive behaviors that might not fit clearly into other statutory frameworks.
While these laws might seem abstract, courts have translated them into very specific prohibitions that affect day-to-day decisions in construction management.
“Per Se” Violations: The Highest Risk Activities
Certain behaviors are considered so inherently anti-competitive that they are deemed “per se” violations—meaning they’re automatically illegal regardless of their actual effect on competition. For construction companies, the most common per se violations fall into three categories: price fixing, market division, and bid rigging.
Price Fixing
Price fixing occurs when competitors agree to raise, fix, or maintain prices rather than allowing market forces to determine them. This doesn’t require an explicit agreement to charge exactly the same price—almost any coordination on pricing elements can violate the law.
Common examples in construction include agreements among competitors to establish or adhere to certain price discounts, hold prices firm, adopt standard formulas for computing prices, or adhere to minimum fee schedules. Each of these practices undermines the competitive pricing that antitrust laws are designed to protect.
Several warning signs might indicate potential price fixing. These include identical prices among competitors, especially when they previously varied; simultaneous price increases not supported by increased costs; or elimination of discounts that were historically offered. Any of these patterns should prompt careful review of competitive practices.
Market Division
Market division schemes involve competitors agreeing to divide markets among themselves, whether by geographic area, customer type, or project category. For example, if two contractors whose footprints previously overlapped agree that one will only pursue projects in eastern North Carolina while the other focuses on the Piedmont region, that may be an illegal market division.
These agreements also can manifest in more subtle ways. Even bidding behaviors like consistently declining to bid in certain areas or for certain customers, or submitting intentionally high bids outside your “territory,” can suggest market division. Both refusing to sell in certain markets and quoting intentionally high prices in those markets can raise suspicions of market allocation agreements.
Bid Rigging
Bid rigging is particularly relevant to construction companies and takes many forms. In bid suppression schemes, competitors agree that some will refrain from bidding or withdraw bids so that another can win. The winning bidder often rewards the others with subcontracts as compensation for not competing. With complementary bidding, competitors submit “cover bids” that are intentionally too high or contain special terms ensuring they won’t be accepted, creating the illusion of competition while guaranteeing a predetermined winner. In bid rotation schemes, all competitors submit bids but take turns being the lowest bidder according to a predetermined pattern.
Each of these practices artificially inflates prices and undermines the competitive bidding process that public and private owners rely on to obtain fair market prices. Government enforcement agencies are particularly vigilant about bid rigging in public construction projects, where taxpayer funds are at stake.
High-Risk Situations: When to Be Especially Vigilant
Certain business situations potentially create higher antitrust risk and deserve special attention from construction company managers and owners.
Interactions with Competitors
Direct communication with competitors presents the highest risk of antitrust violations. When interaction becomes necessary, construction managers should keep communications concise and strictly business-related. Any discussion of pricing, costs, or bidding strategies should be scrupulously avoided. It’s important to remember that all written communications, including emails and text messages, are potentially discoverable in litigation. Never fall into the trap of justifying questionable practices because “everyone else is doing it”—this provides no legal protection and may actually make the violation appear more deliberate.
Trade Association Meetings
Trade associations are typically the first place government investigators look when suspecting antitrust violations. While these organizations provide valuable industry benefits, they also create regular opportunities for competitors to interact. When participating in trade association activities, construction managers should avoid any discussions of prices, terms or conditions of sale, costs, future production, or marketing plans—even in informal settings like dinners or social events. Reviewing meeting agendas in advance can help identify potentially problematic discussion topics. If conversations venture into sensitive competitive areas, consider leaving the meeting to avoid even the appearance of participating in improper discussions. Having legal counsel review any information-sharing programs before participation can provide additional protection.
Joint Ventures and Partnerships
Joint ventures between competitors can serve legitimate business purposes but require careful structuring to avoid antitrust issues. If you’re considering a joint venture with a potential competitor, consulting legal counsel at the earliest possible stage can help ensure the arrangement is properly structured to achieve business objectives without creating antitrust exposure.
Communications About Pricing and Bidding
Any exchange of price information between competitors is dangerous under antitrust laws—even if the information is publicly available. This extends to all discussions about competitive bids, which are legally equivalent to discussions about prices and other sales terms. Even seemingly innocent sharing of pricing strategies or bidding approaches between competitors can create significant legal risk.
While you cannot discuss pricing with competitors, antitrust laws don’t prohibit gathering market intelligence from non-competitor sources. Customers, vendors, and publications can provide legitimate market insights without creating legal exposure. These channels allow construction companies to understand market conditions without engaging in direct communications with competitors.
Practical Compliance Strategies for Construction Managers
To protect your company and yourself from antitrust liability, several practical strategies can be implemented:
Developing a clear compliance policy is essential—this written document should clearly identify prohibited behaviors and provide guidance for high-risk situations. Regular review and updates ensure this policy remains current with changing enforcement priorities.
Implementing regular training for all employees involved in pricing, bidding, or competitive decision-making ensures everyone understands not just what’s prohibited but why these rules matter. These educational efforts should be documented and refreshed annually.
Establishing standardized protocols for bid development emphasizes independent decision-making and creates documentation showing the legitimate business basis for bidding decisions. These procedures help demonstrate that pricing decisions reflect individual business judgment rather than collusion.
Creating confidential channels for employees to report potential violations without fear of retaliation supports early internal detection of problems, allowing for corrective action before government involvement. This reporting system should include protections for whistleblowers and clear procedures for investigating concerns.
Maintaining clear records that show the legitimate business justifications for pricing decisions, market strategies, and joint ventures with competitors provides valuable evidence if questions ever arise. These records should document the business rationale, market factors, and cost considerations that drove important competitive decisions.
Implementing thorough due diligence procedures for activities like joint ventures and trade association participation helps identify and mitigate antitrust risks before they become problems. This assessment process should involve legal counsel when appropriate.
If You’re Contacted by Investigators
If government investigators contact you about a potential antitrust matter, your initial response is critical. Always treat investigators professionally and courteously, but avoid answering substantive questions until speaking with legal counsel. Limit your responses to basic identification information regarding your employment, and politely explain that any document requests must be directed to company legal counsel.
Resources
For additional guidance, valuable resources include the Department of Justice’s primer on “Price Fixing, Bid Rigging, and Market Allocation Schemes” and the FTC’s Competition Guidance Documents, both available online.
More Good News for Housing Production: Mass. Appeals Court Rules Legislative Permit Extensions Stack on Top of Equitable Tolling
Last week, in an important decision for land-use and development lawyers, the Massachusetts Appeals Court ruled in Palmer Renewable Energy, LLC v. Zoning Bd. of Appeals of Springfield that permit extensions granted by the Legislature “stack” on top of equitable tolling triggered by the appeals process. The Land Court had found that permit extensions under the Great Recession-era “permit extension act,” St. 2010, c. 240, § 173, ran concurrently with the tolling period arising from litigation. The Appeals Court reversed, concluding that the four-year extension of building permits issued to Palmer Renewable Energy, LLC for its biomass-fired power plant began to run after the term of the permit as extended by “litigation tolling.” The Appeals Court also ruled that the litigation tolling started when the City Council appealed to the zoning board of appeals (ZBA) from the building commissioner’s decision to issue the permits.
The case turned on the meaning of statutory language extending the tolling period by four years “in addition to the lawful term of the approval,” and whether those four years ran concurrently with litigation tolling. Because the Legislature is presumed to be “aware of the statutory and common law that governed the matter in which it legislates,” the Appeals Court presumed the Legislature was aware that building permits may be extended by litigation tolling. The Appeals Court found that the language of the statute was unambiguous and that “lawful term” plainly included a term of approval that had been extended by litigation tolling, so the four-year extension was “in addition” to the lawful term.
The Appeals Court also took a close look at when the litigation tolling began, and found it began once the City appealed the building permits to the ZBA, rather than when the ZBA revoked the permits. Because “an appeal from the grant of a permit has been recognized as a real practical impediment” to the use of the permit, and “practical consideration[ ]s militating against a course of action under attack” underpin the purpose of litigation tolling, the Appeals Court found that the appeal at the local level was a sufficient “impediment” to the exercise of the building permits.
Finally, the Appeals Court rejected the City’s argument that M.G.L. c. 40A, § 6, which requires construction under a building permit to begin within one year of issuance, applied to invalidate the subject building permits after one year, thus requiring the project to comply with a 2013 zoning amendment mandating a special permit for the project. It also rejected the City’s argument that the state Building Code requires commencement of construction within 180 days. Both the Building Code and M.G.L. c. 40A were expressly overridden by the language of the permit extension act, which applied “[n]otwithstanding any general or special law to the contrary.”
The Appeals Court remanded the case to the Land Court for entry of a judgment instructing the ZBA to reinstate the building permits.
This decision provides important clarity as developers seek to exercise permits that have been extended due to the COVID-19 permit extension act, St. 2020, c. 53, § 17(b) (iii), and the Mass Leads Act, St. 2024, c. 238, § 280 (b)(1). Like the 2010 act, the Mass Leads Act also extends permits for two years, “in addition to the lawful term of the approval.” The decision also pours much-needed cold water on would-be appellants who seek to stop projects by delaying them through litigation.
DOE Set to Eliminate Presidential Permit Requirement for Cross-Border Transmission Facilities and Streamline Electricity Export Authorizations
On May 12, 2025, the U.S. Department of Energy (DOE) announced a proposal to streamline the application process for authorizations to transmit electricity from the United States to other countries (e.g., Canada and Mexico).[1] At the same time, DOE issued a “direct final rule” rescinding its regulations regarding applications for presidential permits “authorizing construction, connection, operation, and maintenance of facilities for transmission of electric energy at international boundaries.”[2] Taken together, these actions, if implemented as proposed, likely will make it faster, easier, and less expensive for companies to access cross-border markets and reduce their attendant regulatory obligations, including reporting requirements. Comments on the Proposed Rule will be due on or about July 15, 2025 (60 days from expected publication in the Federal Register). The Final Rule will take effect on the same date unless DOE receives “significant adverse comments”[3] within 30 days of publication.
These actions comprise part of what DOE calls its “largest deregulatory effort in history, proposing the elimination or reduction of 47 regulations that are driving up costs and lowering quality of life for the American people.”[4] DOE claims that, overall, the changes “will save the American people an estimated $11 billion and cut more than 125,000 words from the Code of Federal Regulations.”[5] Indeed, the Proposed Rule would reduce the relevant regulations from approximately 1,300 words spanning nine sections to just one 85-word section that would empower applicants to include only such information in their filings that they “deem[] relevant” to the requested authorization under the Federal Power Act (FPA), with DOE exercising a “strong policy in favor of approving applications, and doing so quickly and expeditiously.”[6]
Citing President Trump’s Executive Order (EO) 14154 (Unleashing American Energy) and EO 14192 (Unleashing Prosperity Through Deregulation), DOE states that it is rescinding the cross-border facility regulations and proposing to amend the export authorization regulations because they “impose economic, administrative and procedural burdens” that “impede private enterprise and entrepreneurship and run contrary to the President’s goal of unleashing American energy.”[7]
The export authorization regulations flow from Section 202(e) of the FPA, which provides that “no person shall transmit any electric energy from the United States to a foreign country without first having secured an order of [DOE] authorizing it to do so.”[8] It continues that DOE “shall issue” such approval orders “upon application unless, after opportunity for hearing, it finds that the proposed transmission would impair the sufficiency of electric supply within the United States or would impede or tend to impede the coordination in the public interest of facilities” subject to its jurisdiction.[9]
DOE proposes to amend those regulations “to reduce burden and remove out of date requirements while simultaneously bolstering American energy dominance by increasing [electricity] exports and subsequently the reliance of foreign nations on American energy.”[10] The amended regulations “will simply allow applicants to include information the applicant deems relevant to such an authorization for consideration by the DOE” under the FPA.[11] Specifically, 10 C.F.R. § 205.300 would be amended to read, in full: “To obtain authorization to transmit any electric energy from the United States to a foreign country, an electric utility or other entity subject to DOE jurisdiction under part II of the Federal Power Act must submit an application or be a party to an application submitted by another entity. The application shall include information the applicant deems relevant to DOE’s determination under section 202(e) in the Federal Power Act. DOE has a strong policy in favor of approving applications, and doing so quickly and expeditiously.”[12]
In the Final Rule, DOE states that because the authority for presidential permits for cross-border transmission facilities “rests in Executive Order, it is at the discretion of the Executive branch as to how the order is applied.”[13] Accordingly, DOE states, it is rescinding the relevant regulations for the same reasons—namely, to reduce burdens, remove outdated requirements, bolster American energy dominance by reducing barriers to constructing cross-border facilities, and increase exports and foreign reliance on American energy.[14]
DOE seeks comment from interested parties on “all aspects” of both issuances, including on the prior rules’ “consistency with statutory authority and the Constitution [and] national security, whether the prior rules are out of date, the prior [rules’] costs and benefits, and the prior [rules’] effect[s] on small business, entrepreneurship and private enterprise.”[15]
While DOE regularly grants export authorizations, the streamlined application and authorization process, if adopted as proposed, would make obtaining such authorizations easier and less expensive and could provide sellers seeking broader market opportunities greater access to markets in Canada and Mexico. Moreover, elimination of the presidential permit requirement for cross-border transmission facilities, if finalized as proposed, will reduce the administrative burden on entities seeking to develop such facilities, further enhancing access to foreign markets. The energy regulatory team at Foley will continue to monitor developments in this area. Please feel free to contact us with any questions.
[1] Application for Authorization to Transmit Electric Energy to a Foreign Country, 90 Fed. Reg. _____ (unpublished version dated May 12, 2025) (to be codified at 10 C.F.R. pt. 205) (the “Proposed Rule”).
[2] Application for Presidential Permit Authorizing the Construction, Connection, Operation, and Maintenance of Facilities for Transmission of Electric Energy at International Boundaries, 90 Fed. Reg. _____ (unpublished version dated May 12, 2025) (to be codified at 10 C.F.R. pt. 205) (the “Final Rule”).
[3] According to DOE, “significant adverse comments” are those that “oppose the rule and raise, alone or in combination, a serious enough issue related to each of the independent grounds for the rule that a substantive response is required. If significant adverse comments are received, notice will be published in the Federal Register before the effective date either withdrawing the rule or issuing a new final rule which responds to significant adverse comments.” Final Rule at 1.
[4] U.S. Dept. of Energy, Energy Department Slashes 47 Burdensome and Costly Regulations, Delivering First Milestone in America’s Biggest Deregulatory Effort, https://www.energy.gov/articles/energy-department-slashes-47-burdensome-and-costly-regulations-delivering-first-milestone (May 12, 2025) (“DOE Press Release”).
[5] Id.
[6] Proposed Rule at 10.
[7] Final Rule at 2.
[8] 16 U.S.C. § 824a(e) (2018). This authority moved to DOE from the Federal Energy Regulatory Commission under Sections 301(b) and 402(f) of the DOE Organization Act, 42 U.S.C. §§ 7151(b) and 7172(f).
[9] 16 U.S.C. § 824a(e).
[10] Proposed Rule at 3.
[11] Id.
[12] Id. at 10.
[13] Final Rule at 3.
[14] Id.
[15] Proposed Rule at 3; Final Rule at 3.
The Importance of Indemnification Clauses in Managing Post-Completion Project Risk
Claims against design professionals often pose unique challenges when such claims are dually rooted in both tort and contract theories, and therefore subject to competing time limitations. In order to reconcile these differences, Massachusetts courts have historically looked to the “gist” of a given claim, rather than the label, to assess the appropriate limitations. A determination that the “gist” of a claim lies in tort will subject that claim to a shorter statute of limitations, as well as the statute of repose, which bars tort claims arising out of construction projects brought more than six years after the project is either completed or open for use.
The Massachusetts Supreme Judicial Court (SJC) recently addressed the statute of repose in this context in the matter of Trustees of Boston University v. Clough Harbour & Associates LLP. Docket No. SJC-13685 (Mass. Apr. 16, 2025). There, the SJC held that the six-year time limitation set forth in the tort statute of repose, Mass. Gen. Laws c. 260, § 2B, did not apply to bar a contractual indemnification claims for damages allegedly caused by an architect’s negligence. The decision arose out of a dispute concerning alleged defects in the design and construction of a brand-new synthetic turf athletic field on Boston University’s campus. In 2012, the university entered into a contract with the architect for design and construction administration services, which included an indemnification provision, providing that the architect would indemnify the university for any and all expenses caused by the architect’s negligence. The work was completed, and the field opened for use in the summer of 2013.
After experiencing numerous problems with the field after opening, the university demanded indemnification from the architect for costs spent remedying the issues pursuant to the parties’ contract. The architect refused, and well over six years after the field opened, the university sued for contractual indemnification. The architect was ultimately granted summary judgment by the Superior Court, which reasoned that because the indemnification obligation was contingent on the architect’s negligence, the gist of the claim was actually rooted in tort and therefore time barred by the statute of repose. The university appealed, arguing that its indemnification claim was based on distinct, express contractual obligations specifically negotiated and agreed to by the parties, and therefore did not fall under the ambit of the statute of repose.
The SJC agreed with the university. In resolving the question, the SJC noted that a key distinction between actions of contract versus those of tort is that contract actions are based on express promises set by the parties, as opposed to tort standards imposed by law. Thus, notwithstanding the parties’ decision to incorporate the negligence standard into the indemnity provision, the indemnification obligation still represented a distinct contractual promise, the breach of which requires a different showing than for negligence. With its findings, the SJC reversed the lower court and restored the contractual indemnification claim thus underscoring the importance of contractual indemnification clauses in managing project risk.
Although the SJC’s decision is generally consistent with a “gist of the claim” evaluation, it nevertheless suggests a departure from prior applications that may pose far-reaching effects for the construction industry moving forward. Though the Court found that the university’s indemnification claim was not barred by the statute of repose, it also confirmed that, for an owner to prevail on its claim, it must show, amongst other things, the occurrence of an event triggering the duty to indemnify. Assuming that a finding of negligence against the architect is the necessary trigger for purposes of the university’s claim, it seems that a paradoxical procedure has been created, wherein the university, to prove an element of its viable indemnification claim, will first need to prove a time-barred negligence claim. The impact of such a paradox remains to be seen.
Calculating Chapter 93A Damages: Takeaways from Diprio v. Ground Up Construction, Inc.
In Diprio v. Ground Up Constr., Inc., the Massachusetts Appeals Court considered the appropriateness of an award of attorneys’ fees to pro se litigants—homeowners who sued a contractor for violating a Massachusetts Home Improvement Contractor Statute (HICS)—and the proper measure of damages under 93A, Section 9. At trial, a jury found that (i) the plaintiff homeowners breached their home improvement contract and (ii) the contractor breached the HICS—each causing damages for the same amount and effectively “canceling out” the payment of damages. However, the trial court concluded that the contractor’s violation of the HICS violated Chapter 93A, Section 9 and awarded attorneys’ fees to the pro se homeowners.
The trial court’s attorney fee award focused on fees incurred before the pro se homeowners’ counsel withdrew from the case. However, as the award was based on a factual issue that had some record support, the Appeals Court did not vacate the award and factual finding that the fees were incurred “in connection with said action” as Section 9(4) requires.
As to damages, the Appeals Court disagreed with the homeowners’ assertion that the trial judge erred in ascertaining the base damages on which to calculate multiple damages under Section 9. According to the homeowners, the trial judge should have multiplied their damages using the total amount of the judgment entered and not using the single damages figure the jury determined. As the Appeals Court explained, however, the judgment amount included prejudgment interest and attorneys’ fees, which are not elements of damages under Section 9(4).
This case demonstrates that parties and counsel should consider each element of damages when seeking and defending against Chapter 93A claims to avoid improper multiplication of amounts that are not properly included in a multiple damages award. Specifically, when considering multiple damages, a court should calculate interest on the single damages award only (absent some claim that fees and costs should be damages), and then add the interest and fees to the single damages once they are multiplied. That way, interest and fees are not inappropriately inflated by a multiple damages finding.
Navigating Tariffs in Construction Contracts: Creative Strategies for Owners and Contractors
Introduction: Steering Through the Storm of Tariff Uncertainty
Tariffs on critical construction materials—steel, aluminum, lumber, and more—are roiling project budgets and schedules, leaving owners and contractors adrift in a sea of cost uncertainty. As tariff negotiations remain murky and unresolved, these financial headwinds are likely to persist, threatening the stability of ongoing and future projects. Yet, within this storm lies a chance to chart a steadier course. By embedding strategic, tariff-savvy provisions in construction contracts, owners and contractors can shield their projects from volatility and seize control of their financial destiny. This article explores creative strategies to address tariff challenges, empowering stakeholders to navigate uncertainty with confidence.
Strategic Contract Provisions to Mitigate Tariff Risks
Carefully crafted contract language is the cornerstone of managing tariff-related uncertainties. Below are innovative strategies to consider when negotiating and drafting construction agreements, designed to balance risk allocation and maintain project viability:
1. Incorporate Material Cost Escalation Provisions
Tailored material escalation clauses allow for adjustments to the contract sum when tariffs significantly increase material costs post-contract execution. Such a clause limits relief to tariffs enacted after the contract is signed, ensuring that only unforeseen regulatory changes trigger adjustments. This incentivizes contractors to lock in pricing early while protecting owners from absorbing pre-existing tariff burdens.
2. Require Fair and Timely Notice of Tariff Impacts
To prevent disputes over tariff-related claims, contracts should mandate prompt notification of tariff impacts. A sophisticated strategy is to require contractors to identify tariff-driven cost increases within a short window (e.g., 7-14 days) of a tariff’s enactment or application to a project. This “fair notice” provision ensures owners receive early warnings, enabling proactive budget adjustments or alternative sourcing strategies. Contractors benefit from clear timelines, reducing the risk of waived claims due to delayed reporting.
3. Embed Tariffs in Change Order Processes
Change orders are a natural mechanism for addressing tariff impacts. Consider explicitly including tariff-related cost increases within the definition of permissible change orders. Contracts can require contractors to submit detailed documentation—such as supplier invoices, tariff notices, or government regulations—to substantiate claims. This transparency builds trust and streamlines owner approval. For owners, consider setting a threshold for tariff-related change orders requiring owner approval, such as 5% of a subcontract’s value or a specific scope division. This balances flexibility with oversight, ensuring significant cost increases are vetted.
4. Cap Total Tariff Adjustments
To manage financial exposure, contracts can impose a cumulative cap on tariff-related cost adjustments, such as $500,000 across the project (excluding subcontractor errors or omissions). With this approach, owners gain predictability, while contractors retain a pathway for relief within reasonable limits. Also, considering pairing the cap with a shared savings clause, where cost savings from tariff reductions (e.g., repealed tariffs) are split between the parties, incentivizing collaboration.
Conclusion: Building Resilience Through Collaboration
Tariffs are an unavoidable reality in modern construction, but they need not derail projects. By integrating thoughtful, tariff-specific provisions into construction contracts, owners and contractors can manage risks collaboratively and creatively. From escalation clauses and fair notice requirements to change order thresholds and cost caps, these strategies empower stakeholders to navigate tariff uncertainties with confidence. Proactive contract drafting remains a powerful tool for ensuring project success in an unpredictable economic landscape.
Illinois Moves Closer to First-Ever Energy Storage Procurement
The Illinois Commerce Commission staff (ICC Staff) announced recommendations laying the groundwater for Illinois’ first procurement of energy storage resources expected to occur this summer.
The state is preparing for an August 26 statutory deadline. In this post, we summarize the ICC Staff’s recommendations for project eligibility requirements, contract structure, and future procurements.
Background
Earlier this year, Illinois enacted the Electric Transmission Systems Construction Standards Act, which we covered in detail here. The Act required the ICC to conduct a workshop process to design the initial energy storage procurement. Under the law, the Illinois Power Agency (IPA) must receive bids by August 26.
According to the ICC Staff, energy storage is an important tool for Illinois to meet its goal of 40% renewable energy by 2030 and 50% renewable energy by 2040. Because solar and wind energy are intermittent, these resources do not always generate energy when consumers want to use electricity. Energy storage can help bridge this gap. Storage can also help make the energy system more reliable and efficient by charging when there is surplus, cheap energy on the grid and dispatching power when electricity is scarce or expensive.
Program Recommendations
The ICC Staff confronted three core questions in recommending the design of Illinois’ maiden storage procurement, which projects are eligible, what contract structure to use, and how much capacity to procure.
The ICC Staff recommended six required criteria for eligible projects:
Projects must be standalone, not storage combined with electricity generation. This is a statutory requirement for the initial procurement.
Projects must be at least 20 megawatts (MW).
Projects must have four-hour duration, meaning they are capable of continuously dispatching power for four hours.
Projects must be at least 85% efficient, meaning they discharge at least 85% of the power it takes to charge them.
Projects must be currently in the grid interconnection queue or demonstrably in late-stage development.
Projects must meet the Minimum Equity Standard and project labor requirements used in Illinois’ renewable energy certificate (REC) program.
For contract structure, the ICC Staff selected a 20-year indexed storage credit (ISC) contract instead of a tolling contract. An ISC works like a hedge or option contract. The storage developers bid a “strike price,” which is a guaranteed price for the energy dispatched from the storage unit, and the electric utility contracts with the lowest-priced bidders. If market conditions are such that the storage unit makes less money for its storage services than the strike price, then the utility pays the difference to the developer. If market conditions allow the storage unit to make more money than the strike price, the developer pays the excess to the utility. The purpose of this arrangement is to provide a guaranteed income to the developer so the developer can obtain financing to construct the storage. An ISC works by essentially transferring some of the risk of market fluctuations from the developer to the utility.
A tolling contract, which the ICC Staff did not recommend for this procurement, operates like a lease. The storage developer essentially leases operation of the storage resource to the utility in exchange for a fixed payment. Under this structure, the utility operates the storage unit and receives the benefit of using it. This structure transfers even more risk from the project developer to the utility than an ISC. The ICC Staff recommended against a tolling structure because (1) Illinois’ REC program already uses an ISC model and (2) a tolling contract is treated as a liability on utility balance sheets, making it harder for utilities to get favorable loan terms.
Last, the ICC Staff recommended that the IPA procure 1,038 MW of storage resources, less than the up to 1,500 MW authorized by the Act. The ICC Staff recommended procuring 450 MW from Ameren’s utility territory and 588 MW from ComEd’s territory based on stakeholder feedback. Other than this division, the ICC Staff generally recommended against locational preferences in selecting projects, with the exception that projects located in an Enterprise Zone or Energy Transition Community area be given a preference in the event of a tied bid price.
The ICC Staff also recommended that the IPA conduct up to three additional procurements between 2025 and 2027 to obtain at least 3 gigawatts of storage resources. It also recommended that the IPA plan to conduct additional procurements in 2028 and 2029 to meet Illinois’ needs in the 2030s.