Saturday, April 28, 2012

Side Issues Threaten Long Term Highway Trust Fund Legislation

Now on the table before the Joint US Transportation Conference Committee, the Senate’s two year, $109 billion surface transportation measure and the House’s temporary extension through September 30 this year should form the basis for serious discussion about the long term future of federal surface transportation funding in this country. Instead, the web sites of several of the 47 Senators and Congressmen appointed to the committee are already touting how hard these politicians will fight for money for their own states, or pet issues they hope to see incorporated into the final bill.

The conference committee, chaired by California Senator Barbara Boxer, consists of eight Democrat and 6 Republican Senators, plus 20 Republican and 13 Democrat Representatives. The Committee’s first meeting will be May 8. In order to avoid yet another band aid three month Highway Trust Fund extension, the conference committee must report out a bill and get it passed on the floor of both houses of Congress before June 30. While the conference committee is now charged with determining how much money the federal government will spend on roads, bridges, locks, dams, railroad tracks, drinking water and public transit construction over the next two years, early debates are likely to focus on the as yet unresolved issues particular committee members want to attach to this “must pass” legislation in order to get what they want from a gridlocked Congress that otherwise won’t even vote on their pet proposals.

Everybody knows that the Senate’s $109 billion over two years already severely underfunds infrastructure construction and repair in this nation, but the conference committee is unlikely to even consider new revenue raisers which could bring funding levels up near what is actually needed. Instead, its early discussions could center on the three major distractions certain committee members insist on pushing: a mandate for construction of the Keystone XL crude oil pipeline; the RESTORE Act to force spending 80% of Clean Water Act penalties from the Deepwater Horizon disaster to Gulf Coast states; and a provision prohibiting USEPA from regulating coal ash as a hazardous waste.

Politicians have a unique knack for distracting what could be productive debate on significant national concerns like our crumbling infrastructure by attempting to festoon legislative measures with unrelated pet proposals which couldn’t even get to the floor of one chamber on their own. The Conference Committee membership includes Republican Congressmen John Mica of Florida and Dave Camp of Michigan, both sponsors of the Keystone XL Pipeline mandate in HR4348, the House measure on the committee’s table. Despite the fact that one portion of the pipeline is already on its way to a federal permit, and that the whole XL project will likely get built anyway, now that Trans Canada has offered an alternate route aound the environmentally sensitive Nebraska Sandhills, these two want to call President Obama’s bluff on his threat to veto any bill containing an XL mandate, so Republicans can have campaign talking points in the fall. Why pass up an opportunity to characterize the Oval Office as using a job killing and gas price hiking veto stamp?

Another conference committee member, Alabama Senator Richard C. Shelby, vows to his constituents that the Gulf Coast states won’t be “robbed” of the 80% of Clean Water Act fines from the BP Deepwater Horizon disaster he wants allocated to those areas in the RESTORE measure. Shelby is joined on the conference committee by RESTORE sponsors Kay Bailey Hutichson of Texas, Bill Nelson of Florida, and David Vitter of Louisiana. This issue pitting their region against the rest of the country over money could also become a roadblock to long term infrastructure funding.

On the coal ash recycling issue, even the coal states are split. North Dakota Senator John Hoeven is a sponsor of the Coal Residuals Reuse and Management Act, which would promote use of coal ash in paving materials by prohibiting USEPA from regulating coal ash as a hazardous waste. Even West Virginia Senator Jay Rockefeller contends that adding this measure to a long term surface transportation funding extension is a mistake. “We should focus on finding common ground, not pushing unrelated issues,” Rockefeller said.

One again, as it has happened every time in the last 3 years that Highway Trust Fund reauthorization legislation has come up for debate in Congress, politicians could kill any hope for long term highway funding by fooling about with attempts to attach unrelated pet legislative projects to the measure in conference. We can only hope a majority of the conferees see the folly in this course of action, and report out a long term inrastructure  funding measure which will not only pass both houses, but avoid an Oval Office veto when it does.

Friday, April 27, 2012

Lend Lease To Pay $56 Million In New York Construction Corruption Settlement

Brooklyn’s U.S. Attorney has agreed to defer prosecution of Lend Lease (U.S.) Construction LMB, Inc., [formerly Bovis Lend Lease] based the agreement of the firm and its former top New York City executive James Abadie to pay $56 million in fines and victim compensation for a ten year long overbilling scheme involving timesheet padding and other abuses. Abadie left Lend Lease in 2009 at the start of the federal criminal investigation into overbilling mail fraud.

According to settlement documents, Abadie “explicitly and fraudulently directed his subordinates to carry out the practice of adding unworked hours to labor foremen’s timesheets, knowing that these unworked hours were billed to clients.”  Lend Lease also admits MBE/WBE fraud in that it self-performed work  it claimed was subcontracted to minority or woman owned businesses, particularly in building a Bronx courthouse in 2000. Other projects affected by the overbilling include a Post Office in Brooklyn, Mets’ baseball stadium in Queens, and demolition of a high rise damages in the 9/11 terrorist attacks.

While prosecution of the business entity has been deferred, Abadie faces $250,000 in fines and 20 years in prison in the ongoing criminal prosecution against him. Lend Lease has agreed to hire a full time auditor to vet union labor timesheets in New York City.

Wal-Mart Foreign Corrupt Practices Act Investigation Expands

The Congressional investigations into Wal-Mart’s bribery of Mexican officials to get building permits for construction of new stores in that country have widened to include issues surrounding participation by Wal-Mart executives in trade association lobbying efforts to gut the Foreign Corrupt Practices Act. California congressman Henry A. Waxman of the Energy and Commerce Committee and Maryland Congressman Elijah E. Cummings of the Oversight and Government Reform Committee have each written letters to the U.S. Chamber of Commerce and the Retail Leaders Industry Association, inquiring about the participation of Wal-Mart executives in the business organizations’ lobbying efforts to weaken enforcement provisions of the law against U.S. businesses bribing foreign government officials.

Last December the Department of Justice launched an investigation into Wal-Mart payment of $24 million in bribes to obtain store building permits for new stores as the retailer expanses across Mexico. Apparently Wal-Mart corporate officers, including its top ethics officer Thomas D. Hyde, were advised as early as 2005 of the bribery in Mexico. The company launched an internal investigation into the Mexican corruption, then shut it down without reporting findings to U.S. government agencies, as the Foreign Corrupt Practices Act requires. Throughout the company’s internal bribery investigation, Hyde, who left Wal-Mart in 2010, also sat on the Board of Directors of the U. S. chamber of Commerce Institute of Legal Reform, where he was privy to the business group’s lobbying efforts to limit corporate liability under the Foreign Corrupt Practices Act for actions of foreign subsidiaries, and limit the definition of “foreign official” to whom payment of bribes would be forbidden.

The inquiring Congressmen also want to know about the lobbying involvement of Wal-Mart President and CEO Bill Simon, who sits on the Board of Directors of the Retail Industry Leaders Association. Wal-Mart’s carefully worded statement from Vice President for Corporate Communications David Tovar simply says, “Wal-Mart never lobbied on FCPA,” clearly leaving open the likelihood that the company’s efforts to gut the law were conducted through the two trade associations where Wal-Mart had senior executives in leadership positions, all while Mexican Wal-Mart businesses were busily bribing Mexican building department officials in flagrant violation of the FCPA.

Justice Department enforcement actions under FCPA have increased dramatically in the recent past. In 2004 DOJ brought just 2 cases, but by 2008 there were 20, and 48 in 2010, including a record $800 million fine against Siemens. The number of prosecutors dedicated to working on FCPA cases rose from just 2 in 2002 to 15 now, with the addition of dedicated FCPA units at FBI and SEC. It’s no wonder Wal-Mart has been feeling the heat.

Thursday, April 26, 2012

Construction Corruption Charged In Suburban Montreal

Fifteen people have been arrested so far in an ongoing investigation of construction corruption in suburban Montreal, including the mayor of Mascouche, and the owners of a Mascouche heavy civil construction contractor and a Laval construction firm. Mascouche Mayor Richard Marcotte was arrested April 20 at Trudeau International Airport on arriving home from a Cuban vacation, and charged with fraud, corruption, breach of trust and conspiracy. Also arrested were Normand Trudel, owner of Mascouche based Transport et Excavation Mascouche, Inc., and Antonio Accurso, owner of Laval based Simard-Beaudry Construction, Inc.

A total of 47 charges have been filed against the 15 arrested thus far, including fraud against the government, acts of corruption in municipal affairs, conspiracy, influencing a municipal official, breach of trust by a public official, and use of forged documents. Quebec Premier Jean Charest is convening an independent commission to begin hearings in the fall into construction industry corruption involving construction firm executives, political parties, and the award of municipal contracts.

California Community College Bidding Probe

The project architect has entered a misdemeanor guilty plea, and is cooperating with the San Diego County district attorney’s investigation of construction corruption in connection with construction managers’ bids on Southwestern Community College District’s Corner Lot conference center, restaurant bookstore, and gallery multiuse construction project in Chula Vista. The $54.9 million, 141,500 square foot project, was put out to bids for at risk construction management. The project was awarded to Echo Pacific Construction, at a bid price of $4.06 million for construction management services, though competing bidder Barnhart Balfour-Beatty had a lower bid of $3.69 million. Examination of the bid documents disclosed that Echo Pacific’s bid was based on a construction budget of $59 million, while the Barnhart bid was based on a budget of only $55 million.

The investigation centers on how the differing construction budgets were provided to competing bidders on the same project. Project architect Paul Bunton pleaded guilty to violating California’s Fair Political Practices Commission rules in not reporting $2,800 in gifts to Southwestern Community College Vice President Nicholas Alioto, who handled most of the analysis of the competing construction manager at risk bids.

The corruption investigation is ongoing, and has delayed completion of this project for at least a year.

Playing Politics With The Postal Service

Late Wednesday, April 25, by a vote of 62-37, the Senate passed SB1789, its version of Postal Service reform. The House has yet to take up HR2309, its competing Postal Service reform measure. As usual in the current Congress, these two bills from opposite sides of the capitol rotunda threaten gridlock over reforms the Postal Service itself is fully prepared to make in a last ditch effort to stave off explosive growth of the “independent” corporation’s $12 billion debt. In an election year with both political parties clamoring for deficit reduction and government fiscal responsibility, it’s another symptom of that chronic Congressional disease “we have to live within our means, unless, of course, it hurts.”

Postal service leaders themselves have written the prescription for the bitter fiscal medicine their agency will have to swallow to regain some modicum of fiscal health: save $6.5 billion per year by ending Saturday mail deliveries;  closing 220 redundant mail processing centers and 3,700 local post offices; cutting 100,000 jobs; and stretching out a 10 year payment schedule for funding $5.5 billion a year into retiree health benefits from 10 years to 40 years. Not content to let the appointed Postal Service business managers do such budget slashing in an election year, Senators have intervened in SB1789 to make it nearly impossible for Postal Service managers to meet the needs of their own agency’s financial soundness.

A decade ago, the Postal Service handled 202.8 billion pieces of mail annually – last year, the agency handled only 168 billion. The advent of E-mail and on line bill payment accounts for the largest part of that volume loss. But, while agency leaders are fully prepared to close facilities and cut employment to reflect the continuing decline in mail volume, Senators are clearly not. After considering 39 proposed amendments over two days, the measure as passed prohibits the Postal service from closing any rural post office if the nearest alternative location is more than ten miles away. The bill also requires the agency to maintain next day delivery of mail sent to nearby communities, and to continue Saturday mail deliveries for at least two more years. In the face of predictions that the Postal Service will reach its congressionally imposed debt ceiling of $15 billion within this year, the Senate’s action is unconscionable.

California Congressman Darrel Issa, lead sponsor of HR2309, calls the Senate bill “wholly unacceptable,” and he’s right. Issa’s measure would allow the Postal Service to end Saturday mail service, streamline postage rates, and require postal employees to pay the same health insurance premiums as federal government employees. Rather than permitting Postal Service managers free reign in mail handling center and post office closings, though, Issa’s legislation sets up a commission to vet postal facility closures. It seems neither Senators nor Congressmen can stand to give up their right to be free themselves from the effects of government cost reduction.

Downsizing government in their own districts to save taxpayers money is a medicine politicians can’t bring themselves to swallow under any circumstances.

Wednesday, April 25, 2012

Congress Won’t Fund California’s Ambitious High Speed Rail Any Time Soon

Over the course of construction, the latest business plan for the California High Speed Rail Authority calls for infusion of $42 billion in federal funds. So far the state has received $3.3 billion. The remaining $38.7 billion won’t be coming in any time soon. April 19 the Senate Appropriations Committee approved its version of funding legislation for transportation of all sorts, and there isn’t a dime in the measure specified for any high speed rail construction. While the only House legislation to fund transportation projects passed thus far has been two bills extending the Highway Trust Fund for three months each, and the final transportation funding bill will come out of a conference committee, the House already passed a measure sponsored by Congressman Jeff Denham to explicitly block any further funding for high speed rail in California.

While California high Speed Rail Authority Chairman Dan Richard denies Congressional reluctance to provide any more money is a setback, saying, “In our business plan, we do not expect any additional federal funds for at least three years,” he does not go on to predict that billions will be forthcoming in that short a time period. Elizabeth Alexis, co-founder of Californians Advocating Responsible Rail Design, states the obvious: “We continue to have the risk of either stranded investments, or the even bigger risk that California is forced to spend money it does not have to salvage something.”

Chicago City Council Passes Infrastructure Trust Ordinance

By a vote of 41 to 7 on April 24, Chicago’s City Council approved Mayor Emmanuel’s $1.7 billion private public partnership Infrastructure Trust ordinance, following six weeks of behind the scenes maneuvers, and the mayor’s agreement to nine key changes in the original proposed ordinance. Likening the current ordinance to former Mayor Daley’s deal leasing city parking meters to a private contractor, the seven dissenting aldermen complained about lack of City Council oversight and public transparency in the final measure as passed.

After six weeks of vetting by the Better Government Association and City Council committees, Mayor Emmanuel did accept the following changes to his initial proposal:
1.    Originally, all five board members were required to have finance experience. Now, one of the board members must be an Alderman.
2.    Originally, the ordinance appointed Boeing CFO James A Bell to the board. Now, all board seats are open and subject to City Council approval.
3.    Originally, the board could remove one of its members by a majority vote. Now, only the Mayor can remove a board member, and removal must be for cause.
4.    Originally, there was no recusal provision for a board member’s financial conflict of interest. Now, a board member must refuse to participate in discussion or voting on any trust deal involving personal or financial interest of the member, including a trustee’s business performing work for the Trust, or receiving Trust funds for deposit.
5.    Originally, the Trust board was required only to develop “criteria” for financing infrastructure projects. Now, the Trust board must directly develop the details of each Trust financing.
6.    Originally, there was no provision for public disclosure of the details of trust transactions. Now, each investor will be required to make full financial disclosure, which will be made public on line.
7.    Originally, Trust board meetings and records were not directly subject to the Illinois Open Meetings Act and the Illinois Freedom of Information Act. Now, they are expressly subject to both statutes.
8.    Originally, Trust contracting was not subject to City of Chicago MBE and WBE contracting requirements. Now, all projects financed by the Trust are subject to city of Chicago MBE/WBE set asides.
9.    Originally, City Council approval was not required for each Trust project involving city property. Now, City Council approval is needed for any Trust project involving “present or anticipated funds, revenues, assets or properties of the City.”

The last of these nine changes did not satisfy the dissenting aldermen, since a lot of projects to be funded by the Trust could involve property owned by Chicago Public Schools, The Public Building Commission of Chicago, the Chicago Park District, and the Chicago Transit Authority. All of these other agencies are separate units of local government under Illinois law, and though they are headed by mayoral appointees, none of them is subject to City Council oversight.

Dissenting 32d Ward Alderman Scott Waguespack introduced an alternative ordinance that would have placed each and every Trust investment under City Council approval, but his proposal was rejected. Chicago’s Inspector General Joseph Ferguson objected to the fact that the ordinance, as passed, does not subject Trust dealings to the City of Chicago ethics ordinance, city personnel rules, or a federal prohibition on taking politics into consideration when hiring and firing employees. Several aldermen mentioned projects in their own wards which could be financed by Trust money, but so far the only specific Trust project disclosed is retrofitting City owned buildings with energy efficiency improvements, and paying back Trust investors with the resulting utility bill savings.

Two of the dissenting aldermen succinctly summed up objections to the ordinance during the more than two hours of City Council debate.  Fifteenth Ward Alderman Toni Foulkes said, People have been promising us over and over and over again to trust. And we’ve been let down. And now people are afraid. They’re terrified.” Thirty fifth Ward Alderman Rey Colon quipped, “We have something called PMT. It’s parking meter trauma.” Mayor Emmanuel would only respond, “There’s medication for that.”

Tuesday, April 24, 2012

Chinese Firm Acquires Concrete Pump Maker Schwing

Xuzhou Construction Machinery Group of Xuzhou, China, has acquired a controlling interest in German concrete pump maker Schwing, according to XCMG Chairman Wang Min. Min says German management of Schwing will remain in charge of day to day operations of the construction equipment maker.

China is the world’s largets market for truck mounted concrete pumps, accounting for sales of 4,000 units among the total of 6,000 truck mounted pumps manufactured worldwide in 2011. Schwing employs a worldwide staff of about 3,300 in seven countries, but is expected to cut 170 positions at its Herne headquarters, about 20% of the workforce at the Herne location. Schwing America, the German concern’s U.S. subsidiary based in St. Paul, emerged from chapter 11 bankruptcy in 2010, following deep cuts in American concrete construction equipment spending.

UK Offshore Wind Farm Claims Fluor Caused Foundation Defects

Edinburgh based electric utility SSE plc claims welding defects in 52 of 140 steel tube foundations for windmills in its under construction offshore Greater Gabbard wind farm are causing a two year delay in completion of the Fluor $1.8 billion, lump sum turnkey project. Fluor CEO David Seaton disputes the claim. The turbines in question are located in waters up to 32 meters deep, and the tubes themselves are as large as 6.3 meters in diameter, weighing 700 metric tons.

The Chinese fabricated steel tubes are the basis of Fluor’s charges against the project of $343 million in 2010, and another $60 million last year, as reported in company filings. Ownership of the project has changed hands while under construction, with Fluor selling its interest to SSE, which also acquired Dublin based Airtricity Holding Ltd. Airtricity had been co-owner of the project with Fluor. Then in 2008 SSE sold half interest in the project to Essen, Germany based RWI Innogy GmbH.

Senate Committee Investigates OSHA Foot Dragging

According to testimony before the Senate Health, Education, Labor and Pensions Committee, OSHA takes far too long to adopt new safety standards in response to industrial and construction injuries and deaths. A report from GAO points out that promulgation of new OSHA rules takes just a little less than eight years. Washington state’s former OSHA director Michael Silverstein told the committee, “We have created barriers based on false alarms, and the need now is to lower them so that worker protection can proceed again without delay. It is no exaggeration to say that lives are at stake.”

Senate HELP Committee Chairman Tom Harkin echoed Silverstein’s sentiments. “It is simply unconcsionable that workers must suffer while an OSHA rule is mired in bureaucracy,” he remarked. In delivering the agency’s report to the Committee, GAO’s Director of Education, Workforce and Income Security Revae Moran testified, “Why it would take 19 years to set a scaffolding standard doesn’t necessarily make sense.” The GAO report found that a quarter of OSHA regulations approved since 1981 have taken more than a decade to complete. As one extreme example, the GAO report notes that OSHA has been studying silica dust exposure since 1974, but still has not issued even a proposed regulation.

OSHA issued 47 new safety rules between 1980 and 1999, but has issued only 11 new rules since the beginning of 2000. HELP Committee Ranking Member Mike Enzi also bemoaned the Obama administration’s reluctance to use voluntary safety programs, such as OSHA’s Voluntary Protection Programs, to fill in safety regulation gaps. “Voluntary programs involving employees and management such as the Voluntary Protection Programs have been shown to make workplaces considerably safer and save money,” Enzi said. “Yet under the current administration VPP has been threatened and undermined.”

BP Oil Spill Engineer Arrested For Obstruction Of Justice

Kurt Mix, a former BP engineer who deleted over 300 text messages describing the failure of BP’s “top kill” attempts to plug its leaking Gulf of Mexico Macondo well, was arrested today, April 24, by federal agents and charged with two counts of obstruction of justice. These accusations, the first criminal charges arising out of the spill, come just one day before scheduled fairness hearings before New Orleans District Judge Carl Barbier on the proposed $7.8 billion settlement between BP and class plaintiffs in the civil lawsuit claiming medical and business damages for the losses caused by the spill.

The Department of Justice charges that Mix, age 50, of Katy, Texas, deleted more than 200 messages sent to his boss in October 2010 containing details about how much oil was leaking from the wellhead. Accurate flow rate estimates are essential in determining not only the amount of civil and criminal penalties BP and the other businesses involved in the Deepwater Horizon disaster could face, but also in deciding whether the “top kill” approach was even capable of plugging the leak at the time it occurred. The Justice Department also charges Mix with erasing 100 more messages in 2011, after he was notified several times that he was legally required to preserve the information. The deleted messages contained Mix’ estimates that the flow rate of the leak was over 15,000 barrels per day – more than BP said the top kill method could ever handle.

In response to the arrest of Mix, BP issued a statement that it is cooperating with the Justice Department and other agencies investigating the oil spill: “BP had clear policies requiring preservation of evidence in this case and has undertaken substantial and ongoing efforts to preserve evidence.” Bail for Mix was set at $100,000.00. If convicted, Mix faces up to 20 years in prison and fines of up to $250,000.00 on each count.

Monday, April 23, 2012

Rolling Stock Without Tracks

Inter-city high speed rail in the United States is still just an engineering dream on paper, with no more than 20 miles of high speed trackage, running between two no account rural towns in Central Illinois anywhere near completion. In most locations slated for high speed bullet train operation, federal, state and local governments have yet to cobble together financial commitments to even begin construction of tracks capable of handling trains traveling over 100 mph. Nevertheless, on April 20 the Federal Railroad Administration began the bidding for construction of 130 high speed rail cars to operate on the as yet imaginary high speed railroad tracks.

FRA’s RFP is budgeted at $551 million. The 130 standardized bi-level cars are intended for use on high speed rail routes in California, Illinois, Indiana, Iowa, Michigan and Missouri. So far, the only high speed railroad track anywhere near completion is a 20 mile stretch between the small rural towns Dwight, Illinois and Pontiac, Illinois. A high speed rail bi-level is 85 feet long, so if all 130 cars were coupled end to end, the entire length of available high speed track will be only 10 trains long. Admittedly, this new rolling stock is intended for use on a Los Angeles to San Francisco route, plus Midwestern routes linking Chicago to Carbondale, Detroit, Dubuque, Grand Rapids, Kansas City, Moline, Port Huron, Quincy, Rockford, and St. Louis. However, no one has committed anywhere near the billions and billions of dollars needed to upgrade existing right of way, acquire new trackage rights, and build new tracks along any of these proposed routes. It seems just a bit premature to commit over half a billion dollars to rolling stock which presently has nowhere to go.

FRA is already planning a second round of bids for construction of locomotives capable of pushing or pulling these cars 125 mph should tracks capable of handling such speeds ever be built. Nobody in government has explained what will be done with 130 bi-level, high speed passenger cars when financing for track and station construction crumbles in Congress, state legislatures and local city councils and village boards across the country in today’s climate of high taxes, high unemployment, and deficit government budgets. Even the most imaginative high speed rail proposals acknowledge that government operating subsidies would be required to keep any of these trains running should tracks for them to run on ever magically materialize across our countryside. Are we busy building high speed railroad tracks to nowhere?

Can A Single County Block Silver Line Trains to Dulles Airport?

The first phase of building Washington, D.C.’s $5.6 billion Silver Line Metro commuter tracks into Dulles International is on schedule for completion next year, and will run from Tysons Corner to Reston, but the next leg of trackage through Loudoun County is in jeopardy before the all Republican Loudoun County Board. Loudoun County must vote its stretch of track up or down by early July. If the Loudoun portion of the Silver Line fails, the project would have to be rerouted at best and might get killed altogether at worst.

Loudoun County’s projected share of the track and station construction cost is projected at $275 million, plus $16 million in annual operating subsidies to Metro once trains to Dulles begin operating. Despite a study from George Mason University’s Center for Regional Analysis reporting that completing the commuter line through Loudoun County will produce 40,000 jobs to the county by 2040, and drive more than $55 billion in potential economic activity, Republican board members are taking their cues from Virginia Governor Robert E. McDonnell, whose tepid support for the Silber Line construction has not included more than a 5% state contribution towards the cost of building the tracks. Battles over a labor agreement signed by the airport authority which the Republican governor considers unduly pro-labor have stalled final gubernatorial approval of a preliminary commitment of $150 million in operating subsidies for the commuter rail project.

Even if the project could survive a pull out by Loudoun County, financing for construction and operation of the commuter line would have to be renegotiated, a route redesign performed, and new right of way acquired; and the resulting loss of time would undoubtedly drive up the finished project budget by another $1 billion or so. Rather than looking to Richmond for guidance on this issue, Loudoun County should be listening to its own constituents – every major business group in the county supports Silver Line construction as presently planned.

Changing Trains Across The Hudson

April 19 the Senate Appropriations Committee reported out a measure approving $20 million for continued design and engineering work on Amtrak’s Gateway Project, the last survivor among three projects to build a new pair of tunnels under the Hudson River to relieve rail congestion in the Northeast Corridor leading to Manhattan’s Penn Station. The Access to the Region’s Core rail tunnel project was scotched by New Jersey Governor Chris Christie, and a proposed extension of the Number 7 subway into Seacaucus, was scuttled by the New York MTA. Gateway is projected to cost a total of $14.5 billion, and would provide tunnels for both commuter trains and high speed rail into Penn Station.

Of course, Senate Appropriations approval is just one step in the process. The bill will still have to pass floor votes in both houses of Congress, and get President Obama’s signature. Gateway was originally announced in February 2011, with a projected price tag of $13.5 billion and a completion date of 2020. Now the price has increased by $1 billion, and the timeline extended to 2025. And the Gateway project has detractors, even among rail and transit advocates. Long Island Railroad’s Director of Planning Joe Clift points out that Gateway is designed more for inter-city high speed rail than cross Hudson commuters, and Amtrak spokesman Cliff Cole acknowledges that Gateway will not double peak hour commuter service, and that northern New Jersey commuters will have to change trains to reach Manhattan.

Gateway would increase NJ Transit commuter service from 20 trains per hour up to 36 per hour. So, while planning funds may materialize soon, there is no final agreement among the various agencies involved about cost sharing, nor is there any immediate prospect that $14.5 billion in construction funds will be committed to the Gateway project.

Sunday, April 22, 2012

Will Sturgeon Topple The New Tappan Zee Bridge?

Although New York presently plans to break ground this August for construction of a new bridge to replace the 57 year old, seven lane Tappan Zee bridge connecting Nyack and Tarrytown, New York, threatened environmental litigation against the project could significantly delay completion of the new span down the road.  Nick Robinson, co-director of White Plains’ Pace Law School Center for Environmental Legal Studies says, “Shortcutting the process actually adds time because things get tied up in court.” Environmental group Riverkeeper’s Hudson River Program Director Phillip Musegaas adds, “We may wind up in a legal battle over this. We don’t think the current project should go forward the way it is. We don’t think it complies with environmental law on a range of issues, everything from the lack of a mass transit option to how to deal with endangered species.”

Musegaas complains that the state has done a poor job of studying the effects bridge construction will have on Hudson River sturgeon, a prehistoric fish recently added to the endangered species list. Additionally, the Clean Air Act requires New York to demonstrate that the new bridge will improve air quality by lowering car and truck tailpipe emissions.

BP Settles While Congress Dawdles

Two years ago, the vessel Deepwater Horizon exploded at British Petroleum’s Gulf of Mexico Macondo well, killing 11 oil workers and spilling over 200 million gallons of crude oil into the seafood rich waters of the Gulf. A National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling was promptly appointed to investigate the disaster and recommend meaningful government corrective actions. One year ago that Commission issued its report and recommendations.

Last week the Commission issued a report card and progress report on federal government and industry response its report, and to the human, economic and environmental impacts of the spill, and the grades were not pretty. The Obama administration got a B for reorganizing and improving federal agency response to spills, strengthening environmental review of offshore drilling permit applications, and eliminating conflicts of interest in the regulation of offshore well drilling and operation. The petroleum industry got a C+ for creating two consortia to respond to and contain offshore oil spills.  

Congress got a D for lacking the ability or gumption to enact any legislation whatsoever in response to the disaster. Specifically, the Commission report card notes that Congress has done nothing at all in response to Commission recommendations that offshore oil and gas companies be required to bear the costs of federal oversight through fees imposed on leasing and permit applications, and that the $75 million liability cap on liability for oil spills be significantly increased.  This Congressional inaction is especially galling in light of three more significant offshore oil and gas rig leaks in the past ten months.

Remarks in the report on lack of Congressional response include the following: “Risks will only increase as drilling moves into deeper waters with harsher, less familiar environmental conditions.”
Meanwhile, the same day the disgusting two year report card came out, lawyers for BP and over 100,000 class action litigants petitioned U. S. District Judge Carl Barbier in New Orleans for approval of a $7.8 billion dollar settlement which would resolve claims arising out of the disaster. If approved, the settlement would be one of the largest class action settlements in the history of the federal courts.  The figure of $7.8 billion is the estimated cost to BP of the proposed agreement, but the settlement would not cap BP’s exposure at any specific overall amount. Under the proposal, oil cleanup workers would be eligible for up to $60,700.00 each, plus actual hospital and medical bills caused by exposure to the toxic crude. Shoreline residents exposed to the spilled crude or its fumes could get compensation up to $5,450.00 each, plus health care expenses incurred as a result of their exposure. In addition, BP would set up a fund of $105 million to establish medical expenses and health monitoring programs for the next five years.

Lawyers for the plaintiff class want an interim award of fees and expenses of $75 million, plus future fees and costs capped at an additional $535 million. BP agrees to pay $57 million to promote Gulf Coast tourism and an additional $5 million for publicity on how businesses and residents can participate in settlement funds.

The proposed settlement agreement does not include the $6.2 billion BP has already paid out on 221,000 claims submitted to the Gulf Coast Claims Facility which was established shortly after the spill. It also excluder claims by federal and state governments for environmental damages, claims by banks, casinos and racetracks for lost tourism revenues, and claims of competing oil industry businesses for losses caused by the federal moratorium on deep water drilling.

Some seafood businesses expect to opt out of the settlement and proceed individually against BP if the proposed class agreement is approved by Judge Barbier. They argue that the proposed settlement shortchanges businesses losing millions of dollars in seafood sales as a result of the oil pollution in the Gulf. Judge Barbier has not yet scheduled any date for a fairness hearing on the settlement proposal.

Middle Class Assistance Stymied In Congress

In the ongoing Congressional battle of meaningless legislative measures designed to gain election campaign talking points, but having no change at all of ever becoming law, both sides of the capitol are wasting time on bills our leaders say are meant to help middle class citizens, but will never go on the statute books. Last Thursday, April 19, the House voted 235 to 173 to pass a 20% income tax cut for small businesses employing fewer than 500 workers. Though House Majority Leader Eric Cantor of Virginia says the bill could create 100,000 jobs annually, the Senate will never vote on the measure, and President Obama has vowed to veto the bill if it ever does reach the Oval Office.

Meanwhile, across the capitol rotunda, Iowa Senator Tom Harkin proposes increasing the minimum wage from $7.25/hour to $9.80/hour, and index minimum wage increases to the cost of living after that. Tipped worker minimum wages would go up from $2.13 to $6.85 under the Harkin bill, and be indexed at 70% of the minimum for non-tipped workers after that. Harkin’s proposal doesn’t stand much of a chance of passing the employer dominated House.

If our elected leaders were half as thoughtful about compromising across the aisles of Congress and actually passing some measures that would promote business development and job growth as they are about introducing headline grabbing, meaningless, unpassable bills, economic growth could suddenly materialize.

Libya And Bangladesh Troubles Complicate SNC – Lavalin Probe

In addition to the Royal Canadian Mounted Police execution of a search warrant at engineering giant SNC – Lavalin’s Montreal headquarters, looking for financial records respecting improper payments to foreign agents, the company has been barred from bidding on a $2 billion World Bank funded bridge project in Bangladesh, amid corruption allegations there, and one of the engineering firm’s vice presidents has been linked to a Canadian woman jailed in Mexico, who is charged with trying to smuggle one of former Libyan dictator Muammar Gadhafi’s sons into that country. SNC – Lavalin sans the missing funds sought by the search warrant are not related to the company’s Libyan operations, but refuses to comment further on the relatedness or unrelatedness of the various ongoing corruption probes.

Tampa Bay Water Board Won’t Cut Its Losses

The long and sorry saga of litigation between Tampa Bay Water and HDR Engineering over needed repairs to the six year old C. W. Bill Young Regional Reservoir has taken yet another turn for the worse as TBW’s board apparently will insist on pursuing an appeal from the federal court jury trial it lost earlier this month. The estimated cost of such an appeal is up to $400,000.00, and TBW General Manager Gerald Seeber announced April 16 that the utility will be filing a motion for a new trial in the case.

A federal judge granting a new trial after a jury verdict is a thing as rare as a flawless yellow diamond, but the motion is required if TBW intends to appeal from the adverse verdict. No one at TBW has said what the grounds for the new trial motion might include. Federal Rules prohibit TBW from raising anything on appeal that is not included in the new trial motion.

A brief review of the history of this case reveals that reversal of the jury’s verdict on appeal is about as likely as a man flying to the moon by flapping his arms. TBW initially brought the lawsuit against not only HDR, but also against TBW’s general contractor and construction manager. HDR was blamed for claimed design defects in the reservoir plans, and the construction manager and contractor were blamed for improper soil placement during construction. In the lawsuit, TBW claimed damages of as much as $140 million, including prejudgment interest. After mediation efforts, TBW accepted settlements from the construction manager for $6 million, and from the general contractor for $750,000.00. Apparently everybody thought there was some merit to the improper soil placement issue. HDR offered a $30 million settlement in the mediation, and the TBW board initially voted to accept that sum and put an end to the case, but a month later, reversed itself and directed its lawyers to take the case to trial against HDR.

While TBW and its trial lawyers could have blamed HDR for failing to discover the improper soil placement under HDR’s contractual responsibility for “quality control” during construction, TBW’s trial lawyers conceded in their closing arguments to the jury that they were making no quality control claims against HDR, probably because if a verdict against HDR was based in part on lack of quality control, TBW’s settlements of $6.75 million from the other parties would be deducted by the judge from any verdict against HRD. Judge James A. Whittemore instructed the jury accordingly.

After four hours of deliberations at the end of the case, the jury sent out a question to Judge Whittemore, asking whether or not “quality control” included “execution of design” – an obvious reference to the improper soil placement issue. Upon the conclusion of discussions with all the attorneys, Judge Whittemore answered the jury’s question, stating that overseeing construction to ensure it met design specifications fell under the definition of “quality control.” Within minutes afterward, the jury returned its verdict exonerating HDR.

If there were mistakes in these legal proceedings, they occurred first when TBW rejected HDR’s $30 million offer, and second when TBW’s trial lawyers conceded it was making no quality control claims against HDR, in an effort to avoid an offset of the earlier settlements against any verdict in TBW’s favor. For TBW to spend another quarter million or more in pursuing an appeal from this jury verdict is clearly throwing good money after bad.

Saturday, April 21, 2012

California High Speed Rail Chairman Urges $2.6 Billion Bond Approval

On April 18, High Speed Rail Authority Chairman Dan Richard urged two California legislative committees to approve $2.6 billion in state bond issues to start construction of high speed train tracks across the state’s Central Valley this year. This first phase of a proposed Los Angeles to San Francisco high speed rail line would cost a total of $5.9 billion, with the remaining $3.3 billion coming from the federal government. In 2008, California voters conditionally approved a total of $10 billion in state bond issues to finance the bullet trains.

Though no action was taken at Wednesday’s hearings, California legislators are vetting the possibility of budgeting for a total of $7 billion in state and federal high speed rail projects in their 2012-2013 budget. The pending proposal for the LA to Frisco bullet trains has a total projected cost of $68 billion, and has state lawmakers wondering whether a cash strapped federal Treasury can come up with the remaining $39 billion Chairman Richard’s plan is counting on from Washington to pay for construction.

At the hearings, Chairman Richard acknowledged that there are certain financial uncertaities in his proposal. “It’s just part and parcel of the transportation world that people don’t know these things now. The key then is, as you build, knowing you don’t know what you’ll be able to build next, can you build something of value?” he remarked. Long Beach State Senator Alan Lowenthal responded to Richard’s sentiments, “Don’t you think this is kind of a high risk strategy?” Lowenthal and other opponents  of potentially building a “bullet train to nowhere” oppose the concept of Governor Jerry Brown’s administration for using greenhouse gas emissions revenues from the 2006 California cap and trade program to pay for any portion of high speed rail construction not covered by the $10 billion in potential state bond issues, should the anticipated additional $39 billion in federal funds fail to materialize.

Trans Canada Proposes Keystone XL Pipeline Reroute Bypassing Nebraska’s Sandhills

On April 18, the owner of the proposed 1,700 mile, $7 billion Keystone XL crude oil pipeline between Alberta and Texas proposed a series of new routings across Nebraska, all of which would bypass the environmentally sensitive Sandhills region which overlies the Ogallalla aquifer supplying drinking and irrigation water to eight states. Earlier last week, Nebraska Governor Dave Heineman signed a bill allowing that state’s relevant agencies to review the proposed pipeline’s routing, regardless of federal action or inaction on permits for the project.

President Obama has already directed the responsible federal agencies to fast track the 485 mile southern segment of the new pipeline, from Cushing, Oklahoma to the Gulf Coast. Approval of the routing and permits for construction of the northern segment has been delayed because of concern over the possibility of massive groundwater pollution in the eight midwestern states supplied by the Ogallalla aquifer should the pipeline be buried in the Sandhills, and spring a leak there. The proposed new Nebraska routes are designed to overcome this particular objection to construction of the entire project.

Two More Oversight Measures Introduced In The Wake of GSA Scandals

Besides Missouri Senator Claire McCaskill’s Accountability In Government Act introduced earlier in the week, each chamber of Congress has introduced another bill in response to the spending abuses revealed during the four Congressional subcommmittee hearings into the 2010 Las Vegas conference put on by GSA’s Region 9 under Jeffery Neely.  Oklahoma Senator Tom Coburn has introduced the Conference Accountbility Amendment, to cap government agency conference spending on any single meeting at $500,000.00, unless the agency is a primary sponsor of the event. Interestingly, this measure would not have applied to the offending Las Vegas GSA conference. The amendment would also require quarterly reporting of conference expenses on each federal agency’s website, including an explanation of how each conference advanced the mission of the agency, who paid the costs of the conference, and a listing of government employees in attendance, together with all meeting minutes, presentations and recordings.

In the House, Congressmen Darrell Issa of California and Mark Warner of Virginia are co-sponsoring reintroduction of the Digital Accountability and Transparency Act, a measure languishing in the cloak rooms of Congress for years but now expected to garner renewed support in the aftermath of last week’s hearings. The so-called DATA Act would require standardized reporting of every federal agency’s spending on a single government website, accessible to the press and the public. The Issa/Warner bill would create a new federal agency named the Federal Accountability and Spending Transparency Board [FAST Board] to replace the Recovery Accountability and Transparency Board [RAT Board], and be responsible for making sure all government spending was reported and accessible to public scrutiny.

If one thing became clear during last week’s subcommittee hearings, it was that the highest officers of GSA in Washington, D.C., did not have ready access to spending information within their own agency, and that the GSA Inspector General took well over a year to ferret out what went on in Las Vegas in 2010 and who was responsible for authorizing the excesses.  Spreading detailed expense information respecting millions of transactions at hundreds of federal agencies across the internet is obviously not the answer. These three feel good “transparency” bills will not be any sort of substitute for good management practices and strong Congressional oversight regarding spending of taxpayer dollars by federal bureaucrats.

Friday, April 20, 2012

USEPA Releases Fracking Emission Regulations

USEPA’s new fracking emission standards, released Wednesday, April 18, require shale gas fracking owners and operators to either flare volatile emissions, or employ green completions technologies to reduce air pollution from fracking well operations. After January 1, 2015, permissibility of emission flares will be eliminated and all fracking wells will be required to use the green completion technology to reduce 95% of VOC emissions from shale gas recovery operations.

Colorado and Wyoming already regulate fracking well emissions. USEPA’s Assistant Administrator for Air and Radiation Gina McCarthy describes the new regulations as “practical, flexible, affordable, and achievable.” American Petroleum Institute’s Director of Regulatory and Scientific Affairs Howard Feldman acknowledges that EPA’s just published final rule is better than the agency’s initial proposal. “EPA has made some improvements in the new rules that allow our companies to continue reducing emissions while producing the oil and natural gas our country needs,” Feldman remarked.

On the other hand, Natural Resources Defense Council staff scientist Miriam Rotkin-Ellman complains the rules are far too long in coming: “The rapid expansion of oil and natural gas drilling without modern air pollution controls has exposed millions of Americans to a toxic brew of cancer-causing, smog-producing, and climate-changing air pollutants. … The oil and gas industry has failed even to adopt pollution controls that pay for themselves.”

Illinois Tollway Design Contracts May Signal A Brighter Future

An Illinois Tollway committee approved almost $170 million in engineering contracts for proposed highway construction Wednesday, April 18, signaling what could be the beginning of a turnaround in the sorry state of the state’s construction industry economy. Most of the contemplated work involves widening of the Jane Addams Tollway and construction of the new Elgin-O’Hare West Bypass. The contracts are expected to receive approval of the Tollway board at its April 26 meeting.

The engineering proposals selected for by the committee include $66.8 million to CH2M Hill Inc., for the Elgin-O’Hare project, plus Jane Addams proposals of $26.9 million for V3Companies; $24.1 million for HDR Engineering; $23.4 million for Parsons Brinckerhoff, Inc.; $16.4 million for Crawford, Murphy & Tilly, Inc.; $5.4 million for the joint venture of Bernardin, Lochmueller & Associates with 2IM Group; $3.4 million for HR Green, Inc.; and $2.7 million for ABNA of Illinois. The total construction budget for the Elgin-O’Hare project is projected to be $3.4 billion and the Jane Addams widening project could range between $1.9 billion and $4.6 billion, depending on which mass transit options, if any, are included in the project.

These Tollway engineering contracts are part of a nationwide increase in design firm revenues for the first time in three years. The overall design revenue of the industry’s top 500 firms rose 6.6% in 2011, to $85.06 billion from $79.82 billion a year earlier. However, most of the increase is due to a 20.4% rise in revenue from international projects, as opposed to a mere 1.6% gain in domestic design revenues. Domestic sewer and wastewater design revenue declined 8.3%, domestic water supply design revenue declined 3.7%, and domestic transportation design revenue declined 0.1%. In private sector work, design revenue increased 24% in industrial processes, 23.3% in telecommunications, 4.6 $ in the oil industry, 4% in electrical power, and 2.9% in buildings design.

While these overall numbers are mildly hopeful, they don’t yet represent any real return to stability for American design professionals.