Tuesday, July 31, 2012

Safety Just Isn’t Safe Any Longer

Egged on by well heeled lobbyists hired by American business interests, the Republican Luddites in the House have pushed through relatively unnoticed HR 4078 – a 92 page bill that threatens to grind to a screeching halt all the progress of the last 25 years in enhancing the safety of the jobs we go to, the cars we drive, the toys our children play with, the medicine we take, the food we eat, the water we drink, and even the air we breathe. Euphemistically entitled the “Red Tape Reduction and Small Business Job Creation Act,” the legislation bars all federal regulatory agencies from promulgating any significant new safety rules from the date of passage until the Secretary of Labor certifies that unemployment is below 6.0%. This has to be one of the most stupid bills ever passed by either house of Congress.

Although economists of every stripe have long since debunked the notion that federal safety rules hamper job creation, Republican politicians cling to that mantra. Truth is, Congress is powerless to eliminate the social costs of safety. All Congress can do – and this bill does it in spades – is shift those costs from a few pennies each paid by every citizen back to the shoulders of those few and nearly invisible families affected by the tragedy of hundreds of thousands or even millions of dollars in medical bills, lost income, and often permanent disability suffered when unsafe jobs, cars, toys, medicine, food or water sicken, injure or kill a family member. Republicans want, for reasons known only to the lobbyists from whom they receive their campaign donations, to take us back to the days at the beginning of the industrial revolution when it was a worker’s tough luck if an on the job injury cost him or her an arm, leg, lung or paralysis, and left his or her family destitute as a result. They would rather have a citizenry of amputees, invalids and cripples on the public dole than an additional 2% of able bodied unemployed workers.

If this legislation makes sense, it is only the political sense of pandering to a business constituency at the expense of Americans of all stations in life. There is not a shred of economic sense, social justice sense, or even common sense in this bill. Each and every one of us has benefitted from the advances in the safety and healthfulness of our jobs, cars, toys, medicines, food, water and air produced by the last quarter century or more of federal safety rules. The only ones who would benefit from passage of this horrible bill in the Senate are Republicans who collect huge campaign funds and Super Pac donations from special interest business lobbyists when they vote in favor of this law.

Pray for us all that the Senate leaves this piece of miserable and misery inducing legislation on the table in a darkened committee room where it belongs. Pray even harder that President Obama has the guts to veto it if it should ever reach the Oval Office.

WARN Notification Crisis Averted In Budget Deal

As we predicted in this space just a few hours ago, Speaker Boehner and Majority Leader Reid just announced a deal for a six month long continuing resolution maintaining federal government agency spending at the $1.047 trillion level for the first six months of federal fiscal 2013, which begins October 1, 2012. The announcement averts the spectre of hundreds of thousands - or even millions – of WARN Act notifications of impending layoffs to employees of government contractors whose businesses might have been affected by loss of revenue from federal contracts should an election eve budget battle in Congress have raised the possibility of a government shutdown a month before Presidential and Congressional elections.

While drafting of the actual continuing resolution could take a few more weeks, announcement of the deal should dry the sweat on the brows of dozens of government contractor employment lawyers who were facing a fish or cut bait decision deadline under the WARN Act in two days. Whew!! In their desire to take off for their six week recess, Congressmen and Senators have finally realized that the fallout from failure to act on this important matter would likely have resulted in a pox on both their houses in the forthcoming campaign season. The citizens can only hold out faint hope, though, that this announcement is a harbinger of any significant increase in the level of responsible leadership we can expect from Washington, D.C. politicians.

Is The Silver Line Burning Up The Gold?

According to a 44 page Inspector General report issued last week, lax Federal Transit Authority supervision over construction of the 29 station, 23 mile, $6.8 billion Silver Line rail service from Washington D.C. to Dulles International Airport is leading to cost overruns, schedule delays, and imperiling passenger safety on the trains scheduled to begin service on part of the project next year. Plagued by political battles over funding and passenger safety, the project has been attacked by politicians in some Virginia counties concerned that construction of the rail line will destroy the pastoral nature of their communities.

According to the IG report, FTA took 2 years to complete testing of bridge pilings criticized by the project’s chief bridge manager as unsafe for rail operations and below the FTA standard of 50 year useful life expectance, due in particular to excessive corrosion caused by stray electrical currents affecting the pilings nearest the power rails. Furthermore, the report points out, FTA has not yet insisted on a recovery plan from WMATA for late delivery of the rail cars to move as many as 60,000 riders per day expected to use the line once it opens next year.

Congress won’t approve a fiscal year budget, and attrition is taking a toll on the work forces of many federal government agencies as a result. Is it any wonder that bureaucrats in understaffed offices like the FTA are taking too long to act on problems they know about?

Chicago Bridge & Iron Acquires Shaw Group

In an engineering merger that will create one of the biggest professional service firms in the energy sector of the world economy, Chicago Bridge & Iron announced yesterday it is paying about $3 billion in cash and stock to buy up Baton Rouge based Shaw Group, another engineering and construction firm deeply involved in the energy sector. According to leaders at both companies, the resulting entity will “Become fully diversified across the entire energy sector.”

Shaw Group will become a business sector of worldwide CB&I under the brand name “CB&I Shaw.” Shaw Group Chairman J. M. Bernard is leaving the consolidated business once the deal closes in the first quarter of next year. Some speculate he will run for public office. Shaw Group’s shares traded up 65% to $44 per share in premarket transactions on the announcement.

WARN Layoff Notices Could Spur Congressional Budget Deal

Congressional leaders are working feverishly on a six month continuing budget resolution they hope to announce later today or tomorrow, which would avert the threats of huge defense contractors and other businesses trading with the federal government to issue their employees hundreds of thousands of layoff notices required by the WARN Act. That law requires employers of more than 100 workers to give 60 days warning of layoffs planned in response to foreseeable events – events like federal government shutdowns or deep spending cuts at government agencies. Some states have stricter laws requiring 90 days notice.

Employers face fines up to $100/day/employee for failing to give the required layoff warning. August 2 is the 60 day deadline before the October 1 start of the federal fiscal year. So, without Congressional action which can be predicted to keep government agencies spending next fiscal year, notices could go out later this week. If they do, each party will blame the other for the ensuing economic panic. The Obama administration’s Labor Department has already issued guidance to government contractors contending that no WARN Act notices need to be given at this point in time, but that guidance will not be binding on the courts which will apply the act – and the fines – should a shutdown actually happen, and result in contractor layoffs. Defense contracting giant Lockheed Martin says it may issue as many as 100,000 WARN notices if Congress does not pass a deal, or at least announce one. EADS is following suit. Boeing says it is planning for a “worst case scenario.”

Other government contractors have declined to comment, while their employment lawyers try to parse the latest Labor Department guidance.

Economists predict the worst for American businesses if mass notices go out. “If I’m being warned about my job,” Bank of America economist Ethan Harris says, “then I’m going to start acting as though there’s a real chance that I won’t be employed coming forward. It will have a freezing up effect.”

Whether or not a deal can be reached remains to be seen. The only certain thing is that the politicians on both sides of the aisle are more highly motivated by the uncertainty respecting who the voters will blame for the mess than they are about exercising real leadership for their constituents.

Wednesday, July 25, 2012

LEED Release Delayed Amid Controversy

The U. S. Green Building Council announced last week that it will delay release of Version 4 of its environmental rating system for construction projects, and extend the comment period through December 10, 2012, due to an unprecedented level of 22,000 comments on the current draft. After further comment, voting on the new version will likely be delayed until next June.

USGBC has already certified 40,000 construction projects in 130 countries worldwide, and it says 1.5 million square feet of new building space is certified daily. Special interests throughout the construction industry are seeking through comments to “fix” the latest draft. The U. S. Chamber of Commerce, National Association of Manufacturers, American Chemistry Council, and American High Performance Buildings Coalition all contend the proposed standards will unfairly affect market share for their products.

Isn’t that just what LEED is supposed to do? By getting building materials deemed harmful to the environment out of use, indoor air quality and people’s health are supposed to improve. Let’s hope the USGBC can hold the line against makers of noxious products who are just trying to hold onto the old ways.

Wind Energy Tax Credit Expiration Threatens Illinois’ Economy With Lost Billions

According to an Illinois State University report released this month, wind farms in the state will add $5.8 billion to the Illinois economy over the life of the projects. However, much of this economic resurgence is threatened by Congressional inaction over renewal of the wind energy tax credit which expires at the end of this year. ISU’s Center for Renewable Energy Director David Loomis says in the study report that Illinois wind farms have created 19,047 construction jobs here, plus 814 long term jobs in maintaining and operating the huge windmills. Landowners with turbines on their property earn $13 million each year from lease payments, and the wind generators pay $28.5 million per year in property taxes to local governments.

Loomis points out that wind farm construction is now at a standstill because of the threatened tax credit expiration. Sierra Club Illinois Chapter President Jack Darin says that renewal of the tax credit “is critical for the health of our environment.” Illinois’ wind farms already produce enough electricity to power nearly 200,000 homes per year. Great Plains Laborers District council Legislative Affairs Director Mike Matejka points out that “Wind jobs are very, very important as we bridge the recession.”

With all this economic activity at stake, it seems odd that nobody in Washington, D.C. is interested in passing a simple bill extending the tax credit before it is too late to prevent major hits to the wind industry here.

University Of Illinois To Rebid Tainted Architecture Contract

University of Illinois Trustees voted last week to rescind and rebid a controversial $4.6 million architecture contract awarded to BLDD Architects for renovation of the Urbana campus Natural History Building, now partly closed and crumbling 120 years after it was first built. The tainted contract was originally awarded to BLDD, where architect Bruce Maxey owns 8.9% of the company, and is married to U of I’s associate director of planning Jill Maxey, who is in charge of campus construction. Jill Maxey has been reassigned to a different job on campus.

According to board Chairman Christopher Kennedy, “It was a short discussion. We don’t want any more ethical issues associated with the university. We get public money and we have to hold ourselves to a higher standard.” Before the Trustees’ vote, university administrators had twice refused to go along with a Procurement Policy Board recommendation that the tainted contract be cancelled because of ethical violations. Randy West of BLDD said of the Trustees’ action: “While we are saddened by today’s decision, we are gratified that all involved agree that BLDD made all required disclosures, showing its strong commitment to transparency throughout the process.” Of course, in Illinois, the disclosure that “We have clout and the inside track to this contract,” is apparently all that is required to be “ethical” when it comes to taking millions of taxpayer dollars.

According to Mike Bass, the university’s senior associate vice president for building and financial services, rebidding the contract may delay the project and add to the cost of renovations. Any such added costs should be recovered from the Maxey family and any other university officials involved in letting this sordid episode run on for years before correcting the obvious ethical lapses.

Interior Releases 285,000 Acres For Solar Power Development

Interior Secretary Ken Salazar announced July 24 that the Obama administration has approved 17 tracts of federal lands in six western states for development of commercial scale solar power projects, streamlining the process of environmental review for developers seeking to site solar power plants on these federal properties. California has 153,627 approved acres, Nevada has 60,395 acres, New Mexico has 29,964 acres, Utah has 18,658 acres, Colorado has 16,308 acres, and Arizona has 6,465 acres. Salazar described the plan as “a roadmap for solar development for decades to come.”

Solar Energy Industries Association President Rhone Resch said the plan is a “detailed environmental analysis that will dramatically speed the permitting process.” Environmental groups also responded favorably to the announcement. “This is a huge step forward for the Bureau of Land Management,” said National Wildlife Federation’s Policy Director for Public Lands Kate Zimmerman. Helen O’Shea of the National Resources Defense Council echoed Zimmerman’s praise for the plan. “This is a really big milestone in terms of environmentally sensitive and responsible development.”

Salazar’s Interior Department has already approved 17 utility scale solar power projects which will produce electricity to power 1.7 million homes when completed. He predicts that solar power developments on federal lands could eventually generate enough energy for 7 million homes.

Friday, July 20, 2012

Apartments Likely Driver Of Any Chicago Construction Employment Upturn

Employment in Chicago’s construction industry has been declining by 5,000 to 6,000 jobs each month recently, dropping more steeply than any other significant metropolitan market in the United States. Ironically, the only hope for the near future arises out of the city’s and nation’s foreclosure debacle – the need for more rental apartments to house dislocated former homeowners. Though Mayor Emanuel has recently announced commitments by such corporate giants as Google, Sara Lee, MillerCoors and United Airlines to move office jobs into the city, much of that workforce will be located in existing vacant office space, such as Google’s lease of 400,000 square feet in the Merchandise Mart.

On the other hand, new apartment construction in the city is showing some slow but hopeful growth. Recently launched projects in the residential high rise market include the Kennedy family’s 500 unit, 50 story apartment tower on Wolf Point, and the 42 floor, 332 unit Summit on Lake at 73 East Lake Street, now under construction. Chris Kennedy describes the family’s Wolf Point project as “a billion dollars coming into the city when all is said and done,” including not only the 50 floors of small apartments appealing to “young people without cars” and two office towers to be built later. Forty-second ward Alderman Brendan Reilly is still dealing with community opposition to the Wolf Point project, which will obstruct the delightful views of neighborhood residents recently purchasing expensive condos nearby.

It will be years before we know whether these new rental units will be abandoned by their tenants when the housing market finally turns around, if ever, but the apartment developers are betting billions on substantially full occupancy, at least until their apartment projects can be fully depreciated and sold off as condos.

Much Ado About Nothing In Englewood Flyover Minority Deal

Congressman Bobby Rush wouldn’t give the press a look at the “memorandum of understanding” he says he negotiated with IHC Construction/Illinois Constructors Joint Venture, the successful bidder on METRA’s $93 million Englewood Flyover rail overpass construction contract to boost minority employment on the project, probably because the deal is essentially meaningless for increasing employment in the Englewood neighborhood. The project is intended to untangle one of the most congested rail bottlenecks in the United States, and reduce freight train interference with commuter rail service on Chicago’s south side.

Ballyhooed last week as a boosting employment for Englewood residents, the deal really does little or nothing for jobs in the neighborhood. According to METRA officials, the deal sets up a community liaison to facilitate contacts between contractors on the project and minority businesses and workers, and provides mentoring for African American owned companies. What it doesn’t do is require the general contractor to hire companies not included in its bid to METRA. If it did, that would violate state bid shopping laws. While IHC President David Rock says “It’s my goal to get some local folks jobs,” he quickly adds “They still have to be able to do the work.” Given the high rate of gang related shootings in Englewood, what happens when skilled construction tradespeople in Englewood get work, is that they move out of the neighborhood.

The contractors and subcontractors on this project will be required to submit certified payrolls including the ZIP Codes of each worker on the site. It would be an interesting academic exercise for some local Ph.D. social science student to use the Freedom of Information Act to obtain them, and do an analysis of the worker migration out of Englewood during the course of the construction work. However, it’s doubtful anyone will go to such lengths to test whether Congressman Rush has actually done anything at all to improve overall employment of Englewood residents by this headline grabbing, legally unenforceable “memorandum of understanding.”

University Of Illinois Gets Second Rap On The Knuckles Over Architect Contract

Wednesday, July 18, the Illinois Procurement Policy Board unanimously rapped University of Illinois administrators on the knuckles over the award of a $4.3 million architecture contract to a firm partly owned by the husband of a university administrator involved in the architect selection process. This second stinging rebuke will sent the matter to the Illinois Inspector General for investigation. The Procurement Policy Board again voted 4-0 to recommend voiding the two year old architecture deal, based on findings that the university administration violated state law when it failed to bring the potential conflict of interest to the attention of the state’s chief procurement officer for higher education Ben Bagby at the time the contract was initially awarded in 2010. Bagby, however, has remained adamant in his defense of the arrangement.

On completing its review of the situation, the Illinois Inspector General’s office can recommend referral of the issue to state or federal prosecutors, or the firing, fining or suspension of university officials. Procurement Policy Board member Ed Bedore could not hold back his disgust with the callousness of university administrators to their ethical obligations to taxpayers. “I just hope the university does a better job with their law students than they do with their attorneys in their offices,” Bedore said. “I would hope that the U of I would take this back, or the board of trustees would open the windows and raise the blinds and shed some light on this.”

University Board of Trustees Chairman Christopher Kennedy indicated that the board would be reconsidering the matter of the architecture contract during its retreat and monthly board meeting in Chicago this week. “The taxpayer should have confidence that their money is being spent without conflict. We don’t want any appearance of conflict when it comes to contracting,” Kennedy said. “We take a lot of public money, and people ought to trust the University of Illinois. The board will hold the university staff to the high standard of no perception of conflict of interest.”

Only the ultimate outcome of this disgusting incident will tell, however, whose “perception of conflict of interest” counts for anything in Illinois public contracting.

Wednesday, July 18, 2012

IDOT Ordered To Pay McDonough $2 Million And Lift Suspension

When a controversy about accounting treatment of certain design firm expenses factored into contract overhead rates turned up after IDOT neglected to audit the billings of consultant McDonough Associates for nine years, IDOT’s chief Procurement Officer Bill Grunloh suspended the firm for three years in a fit of pique, and held back nearly $2 million in contract payments billed by McDonough. Now a Chicago U. S. District Judge Milton Shadur has ordered IDOT to cough up the money and lift the suspension.

Describing the suspension as violating the procedures provided for in the Illinois Administrative Code for contractor suspension, Judge Shadur said “Grunloh’s actions were in clear absence of jurisdiction and exceeded his authority.” Last Friday Judge Shadur chided IDOT’s lawyers for the agency’s suspension of McDonough for “an illegitimate reason.” He went on to say “this is the way the agency performs on a continuing and regular basis … If applied to every project … we would still be operating with horse and buggy because IDOT would never get anything done.”

Judge Shadur’s orders put an end to what McDonough’s lawyers describe as “an abuse of power,” and yesterday IDOT began paying out the $2 million owed to McDonough.

Tuesday, July 17, 2012

Baker’s Dozen Chicagoland Specialty Contractors In Midwest Top 50

ENR won’t be issuing its Top 50 Midwest specialty contractor list until the September 24 issue this fall, but when it does, there will be at least 13 Chicago area contractors on the list. These companies represent 10 different specialties, and they are: demolition contractor Break Thru Enterprises of Lombard; electrical contractors Broadway Electric of Elk Grove, Kelso-Burnett of Chicago, and Maron Electric of Skokie; erection contractor Area Erectors of Rockford; excavators Ryan Inc. of Janesville Wisconsin and Stark Excavating of Bloomington; foundation contractor Case Foundation of Roselle; glazing contractor MTH Industries of Hillside; masonry specialist James McHugh Construction of Chicago; paving contractor L. Keeley of Sauget; piping contractor Mechanical, Inc. of Freeport; and roofer Tecta America of Rosemont.

This looks like some good news for our neck of the woods, but final analysis awaits the September 24 issue of ENR and the accompanying financial data on these companies.

METRA Approves $141 Million Flyover Contract With Increased MBE Quota

METRA’s board yesterday approved award of the construction contract for the $141 million Englewood flyover project to reduce freight train conflicts with commuter rail operations on Chicago’s south side, after three Congressmen withdrew their objections to limited minority employment in connection with the construction. The Congressmen, led by First District Democrat Bobby Rush, pulled back their resistance based on agreement by IHC Construction/Illinois Constructors, the winning bidder, to increase MBE participation from the contractually required 25% up to 40%.

Though details of the MBE increase remain undisclosed, it is unclear how more MBE subcontracting can significantly increase the number of jobs for workers living in the predominantly black Englewood neighborhood. There is no way to guarantee that the black owned businesses in the neighborhood can find the increased number of skilled minority tradespeople the Congressmen want, living in Englewood. As construction on this project proceeds, it will be very interesting to learn whether the certified payrolls of the participating MBE subcontractors actually include increased numbers of workers with Englewood ZIP codes.

Sunday, July 15, 2012

University Of Illinois Chooses To Ignore New Anti Corruption Law

In the wake of the impeachment and corruption conviction of former Illinois Governor Rod Blagojevich, the Illinois Legislature created a five member Procurement Policy Board to review and advise state agencies about public contracts where potential conflicts of interest could arise. Governor Quinn appoints one member, and each of the legislative leaders in the Illinois House and Senate appoints a member. Now, in another display of the rampant arrogance which has recently rocked the administration of our state’s biggest and most important public institution of higher learning, University of Illinois officials have chosen to ignore the Board and its contract review process in connection with awards of $4.67 million in design contracts for the $70 million renovation of the school’s 120 year old and partially closed crumbling Natural History Building. The design contracts in question were awarded to BLDD architects, a firm partly owned by the husband of University of Illinois Associate Director of Planning Jill Maxley, who also formerly worked at BLDD.

Despite the obvious conflict of interest in the awards of these 2010 and 2011 design contracts, the university administration refused to alert the Procurement Review Board about the situation until March, 2012. And now, in the face of a unanimous Review Board vote recommending that these contracts be voided for conflict of interest, has announced its intention to go ahead with the conflict laden contracts anyway. Ben Bagby, our state’s chief procurement officer for higher education, has boldly asked the Procurement Review Board to waive the obvious conflict of interest. According to Bagby, “You take a situation and you learn from it. Hopefully these things won’t have reoccurrence so things can be looked at early on and ahead of the game.”

Bagby protests too much, as The Bard says. In the past two years the Procurement Review Board has looked over 678 potential procurement conflicts of interest, and stung the submitting agencies with recommendations that contracts be voided only four times. Three of those recommendations involved University of Illinois contracts with BLDD, including the Natural History Building situation. In the case of the Natural History Building the University claims it put up a so called “Chinese Wall” to keep Jill Maxley out of decisions involving her husband’s firm, but Jill Maxley was still copied on e-mails discussing the project while the BLDD proposal was pending, and Maxley delegated the selection process to her subordinate Tony Battaglia, whose brother in law works for BLDD. Battaglia himself also plays in a band with BLDD employees.

University officials claim they “didn’t realize” they needed to send the conflicts of interest to the Procurement Review Board. For a University boasting one of the state’s premiere law schools, this sort of thinking is unimaginable. There must be dozens of law faculty members who could have been consulted about the issue for free. The winds of arrogance in Champaign blow the stench of corruption all across our state.

Wind Power Tax Credit Debate Goes Political

With the current federal wind energy production tax credit of 2.2 cents per kilowatt hour expiring December 21, 2012, layoffs in the wind energy and related industries, and rapidly falling natural gas prices are driving the debate over extension of the tax credit into the public arena. Spain based Gamesa Technology Corporation will lay off 20% of its U.S. workforce in September because of uncertainty over the fate of the expiring tax credit, according to spokesman David Rosenberg. Though Florida based NextEra energy will finish out currently ongoing developments to add 1,300 megawatts of capacity, there are no new projects slated for 2013, according to spokesman Steve Stengel. Wind turbine parts maker Mitsubishi Power Systems is mothballing a brand new $100 million parts factory in Arkansas as the tax credit expires, and taking a $250 million loss on write down of its turbine inventory.

In Texas, the nation’s largest generator of wind power, development is grinding to a halt. “Without the tax credit, I don’t think Texas will see any wind farm development,” according to Pecos County Economic Development Director Doug May. Texas wind power industries are facing the twin challenges of plummeting natural gas prices and maxed out power transmission grid capacity for moving wind power from the arid plains to population centers.

Since 1992, Congress has renewed the wind power tax credit seven times, and allowed it to expire three times. Each expiration was followed by a 73% to 93% drop in turbine installations. This year will be no exception, according to Alex Klein, research director for HIS Emerging Energy Research. Expiration of the federal production tax credit, he says, “shifts the costs of the renewable portfolio from the federal taxpayer to the electricity consumers in that state. The market will be pretty challenged without the PTC.”

Speaking in favor of renewal of the production tax credit at the opening of Spain based IngeTeam’s wind energy component factory in Menomonee Valley, Wisconsin Thursday, U. S. Energy Secretary Steven Chu urged prompt Congressional passage of a bill extending the tax credit. From the other side of the political aisle, Texas Republican Congressman Michael Conway is urging a phase out of the wind energy incentives, and a return to purely economic forces within the electric power market. “Scaling back the production tax credit will affect jobs. I get how hard that is,” Conway says, “But for the greater good of this country, we can’t continue to do things the way that we have.”

Without regard to the policy considerations surrounding development of renewable energy resources of all descriptions in our nation, it seems election year politics are going to decide which way the wind blows.

Nationwide Insurance To Exclude Coverage For Fracking Waste Damages

In an apparent response to legislative maneuvers intended to restrict natural gas fracking activities, and the attendant negative publicity surrounding the practice, Nationwide Insurance confessed Thursday that an internal underwriting memo circulating on environmental group websites which states that fracking risks will now be excluded from Nationwide liability insurance policies covering gas companies, the landowners who lease property for fracking operations, and the contractors who provide water, pipe, lumber and heavy equipment to fracking operators, is in fact genuine. According to the internal memo, “After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore,” the memo states. “Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto coverage.”

Nationwide spokesperson Nancy Smeltzer says the Columbus, Ohio insurer did not intend its personal and commercial lines policies to cover fracking risks. Smeltzer admitted the memo is genuine, but says it was not intended for public dissemination. Aon risk solutions Director of Environmental Practice Jeffrey Hanneman describes Nationwide’s move as really unique, and denies it is the beginning of an insurance industry-wide trend to limit coverage for fracking operators and ancillary contractors. On the other hand, Associated General Contractors of New York State President Mike Elmendorf says Nationwide’s move is bad news for his members who provide goods and services to gas well drillers. Elmendorf points to an extensive record of safely handled fracking operations across the nation, and, in a play on Nationwide’s TV advertising slogan, says, “It’s hard to fathom the rationale for this decision. It would seem Nationwide is not on job creation’s side.”

Wednesday, July 11, 2012

Texas Facing Major Road Funding Woes

By 2015, Texas may be all out of money to keep highway construction abreast of population and job growth, according to Texas Department of Transportation CFO James Bess, who describes the perilous fiscal status of his agency as “entering into an era of uncertainty.” El Paso State Representative Joe Pickett echoes the concerns of Bess. “People don’t believe there’s a crisis because there are plenty of orange barrels. … How long before the borrowed money dissipates and we don’t have any more money to build?”

Apparently, the answer is the end of 2014. The Texas legislature has authorized TDOT to borrow $17.3 billion for transportation projects, but repayment will cost as much as $31.1 billion over 25 to 30 years. Nevertheless, TDOT will spend morrow than it is authorized to borrow in the next two years: $10.5 billion this year, and $9.3 billion next year. Of that total $19.8 billion, $6.7 billion is from one time sources that won’t be available in the future.

Texas motor fuel tax revenue – the state’s major funding source for road building – generates $2.6 billion annually, but the state needs $14 billion per year to keep up with population growth. Part of the problem has been the penchant of legislators over the years to raid highway funds for fire and police salaries and operating expenses, and now that big chicken is coming home to roost. One proposal is to raise auto and truck license plate fees by $50 per year, but that would hardly fill the budget gap. Even in Texas there aren’t half a billion cars and trucks.

If you plan to drive through Texas in the future, make sure you have a good spare tire. You will probably run into lots of potholes.

Illinois Jobs Now, Just Not In Chicago’s Suburbs

Proportionality and fairness has never been a big part of Illinois politics, and yesterday’s joint press conference by Governor Quinn and Transportation Secretary Ray LaHood to announce $1.6 billion in new state borrowing to leverage federal highway dollars for job creation in the state is no exception. Though the state’s population is heavily concentrated in Chicago and its nearby suburbs, the City of Chicago is getting only 5.8% of the money, and the collar county suburbs are getting about 12.8% of the major projects, according to the list released by IDOT at the press conference.

Why the Chicago metropolitan area, with over 28% of the state’s population, is getting only 18.6% of the money and the jobs remains a mystery. Why the mostly Democratic City of Chicago, with 21% of the population, is getting only 5.8% of the jobs and the money doled out by Democratic Governor Quinn’s administration remains an even deeper, darker mystery. Maybe once the construction contracts are let, the fog will clear and a check of campaign donor lists will reveal the truth about all this government largesse.

Illinois Coal Gasification Hits A Lump In the Road

Nebraska based Tenaska, Inc. ran over another lump in the road to construction and operation of its proposed $3.5 billion coal gasification plant in Taylorville, Illinois, when Illinois EPA acquiesced in USEPA’s request for reconsideration of the emissions permit for the proposed facility earlier this week. The 716 megawatt generation facility is proposed to provide power for 600,000 homes. Illinois EPA’s initial permitting determination failed to require carbon dioxide emissions from the plant to be sequestered, based on IEPA’s determination that carbon capture and sequestration is not feasible at the site. USEPA says carbon capture technology is feasible, and asked IEPA to reconsider any site specific uncertainties before omitting a sequestration requirement from the permit.

Meanwhile, Tenaska faced another failure in the Illinois legislature to cram down 30 year take or pay power purchase agreements on the utilities which would buy power from the proposed plant. During the regular legislative session, Tenaska even floated the idea of initially operating the power generators with cheap natural gas until the legislature can agree on compromise take or pay requirements for the electric utilities. Massive opposition to coal gasification from environmental groups and to 30 year take or pay contracts from the Illinois business community sunk the legislative proposal, and Tenaska’s lobbyists went back to Omaha when the legislative session ended with no resolution to their four year campaign.

Coal gasification may be an energy technology whose time has come, but it hasn’t come to Illinois just yet.

Monday, July 9, 2012

Sentencing Next Month In Rhode Island Weatherization Bribery Case

Saul Lemoi, convicted of bribery and kickbacks in a scheme involving the stimulus funded home weatherization program in Rhode Island, faces possible imprisonment for 15 years and fines of up to half a million dollars at an August 23 sentencing hearing. Acting as a senior energy auditor for not for profit Comprehensive Community Action Program which received $1.5 million in Department of Energy home weatherization grants, Lemoi persuaded a co-conspirator to form a company named Weathertight Solutions, then steered $75,000.00 in work to the new business, and prepared invoices to CCAP for Weathertight work which was never performed, and collected kickbacks from the company.

The Weathertight investigation was handled by agents from the Department of Energy and the HHS Inspector General, and the prosecution was headed by U. S. Attorney Peter Neronha.

Bayonne Launches Intermodal Rail At Seaport

Using a grant of $11.4 million from the Obama administration stimulus package, announced late last month, the Port Authority of New York and New Jersey is beginning construction of the South Hudson Intermodal Facility, which will permit annual transfer of 250,000 seaborne containers directly to rail cars, rather than trucking them to a rail yard in Elizabeth. The federal grant will fund rail track construction, plus installation of two huge cranes to be leased to terminal operator Global Container Terminals by the Port Authority. The Port Authority itself is contributing $100 million to construction and expansion of the Bayonne seaport intermodal capacity, to enabling handling of the next generation Panamax container ships which will begin arriving in much greater numbers once widening of the Panama Canal is completed in 2014.

Bayonne will remain the only east coast seaport able to handle Panamax traffic until a $1 billion project to elevate the Bayonne bridge is completed no sooner than 2016. The South Hudson Intermodal Facility’s ship to rail direct connection will simplify and speed cargo shipment by rail to final inland destinations. In announcing the federal stimulus grant, New Jersey Senator Bob Menendez said, “This is going to help us continue to be the mega-port of the East Coast.”

Sunday, July 8, 2012

Waterway Funding Bill Languishes In Committee

Now that Congress has passed a welcome though wimpy 27 month reauthorization of our nation’s Highway Trust Fund, it’s high time for that body to turn its attention to funding the red headed stepchild of America’s surface transportation system: our navigable waterways. HR 4342, dubbed the “WAVE4 Act,” is a simple 10 page legislative measure that could do just that, if it ever comes off the table of the House Ways and Means Committee and the House Transportation and Infrastructure Committee, where it has languished since March 29.

Cargo moving by water up and down and across America is the least visible and least noticed detail of the surface transportation picture, but it has a big, big central role in the landscape of cargo shipment. And, few citizens ever become aware of the utterly deplorable condition of the infrastructure of our nation’s navigable waterways. Here are some of the cogent facts about cargo moving by water in the U.S.:

There are several methods of evaluating the efficiency of differing modes of cargo movement, but even adjusting for point to point routing differences, the ton miles of bulk cargo moving by water per gallon of fuel consumed is in the same narrow range as rail and road transport. A single 15 barge tow moving up or down America’s navigable waterways can deliver 22,500 tons of bulk cargo – as much as 13,050 semitrailers, each 53 feet long, on the highways, or 3,375 traffic snarling jumbo hopper cars on the rails. In a typical year, 800 million tons of bulk cargo moves by water in the United States. If waterway traffic gets stopped up by failing lock walls or gates, or inoperable dams which don’t maintain navigating water depth, each year that would mean 464 million more trucks on the highways, or 120 million more of those jumbo hopper cars snaking past your local grade crossing at 15 miles per hour. Much of the cargo moving unseen and unheard along the nation’s waterways consists of grain for our food products and coal for our power plants. Imagine if it never gets delivered.

Most of us don’t give a thought to the precious resource we have in a network of lakes and rivers which remain navigable, unless a hurricane spawned flood breaches a levee and drowns New Orleans, or flood protection dams farther upriver fail and submerge hundreds of thousands of acres of fertile farmland in the Midwest. Nevertheless, each day of the week beleaguered tugboat captains face the nasty hazards of stretches of river where lock walls are collapsing without any hope of repair in sight, or century old locks too short for a 15 barge tow require them to break up their barges into smaller units and make multiple passes through already overburdened and equally ancient operating machinery, just to make it to their designated destination.

Oh, yes, the Army Corps of Engineers has a grand 20 year plan to repair and improve our country’s navigable waterways. It was promulgated in 2010 and it is grandly entitled the “Inland Marine Transportation System Capital Projects Business Model.” Problem is, Congress has been far less than grand in funding the model, and the Inland Waterways Trust Fund is so broke as a result, that many lock repair projects can only advance in fits and starts as cash is available, multiplying their cost many times over as contractors on these projects demobilize and remobilize again and again

The simple little bill HR 4342 would do these simple things: 1) require the Corps of Engineers to update its Capital Projects plan annually; 2) require funding of approved construction projects to come half from the Waterways Trust Fund and half from general revenues; and 3) raise the tax on tugboat diesel fuel from 20 cents per gallon to 26 cents per gallon, beginning January 1, 2013. As for that tax increase, the barge and tug operators are lobbying hard in favor of the increase, so they can keep their vessels moving. This little legislative measure also has the support of major bulk cargo shippers, including Cargill, Bunge North America, Valero Energy and Vulcan Materials. The bill, if passed, will increase annual inland waterway lock and dam funding from $160 million per year to $380 million per year – a helpful though still inadequate capital program budget. Without this funding increase, replacement of the Depression era lock and dam at Olmstead, Illinois will, all by itself, bankrupt the Waterways Trust Fund.

Opponents of the bill point out that half the funding for the increased capital budget must come from general revenues, and characterize that as a “taxpayer bailout” of the barge and tug operation industry. They are dead wrong. If the bill does not pass soon, all our air conditioners will go off, and the bread and cereal aisles in our grocery stores will be barren of product. Life is difficult enough already. If you value cool air during this heat wave, and some cereal or toast for breakfast every day, write your Congressman and demand that this little bill be taken off the committee tables, passed through the House, and forwarded to the Senate for immediate action.

Broward County Inspector General Reports Construction Corruption

In a 77 page report released late last month, Broward County Inspector General John W. Scott charges three local construction companies conspired to cheat county government by using small business set asides improperly. Based on this report, County Administrator Bertha Henry has ordered the county attorney to pursue all available remedies to rectify the fraud.

According to Inspector General Scott’s report, Giannetti Contracting, of Sterling Heights, Michigan, was awarded a contract to supervise construction of a $6.5 million sewer and water construction project in Dania Beach. Giannetti falsely claimed that certified small business Chin Diesel of Pembroke Pines worked on the project. Giannetti issued its check to Chin Diesel for $369,530.00. Although Chin Diesel was listed a subcontractor to Stanford & Sons Trucking, Stanford Trucking’s owner Stanford Amritt, Jr. attempted to pressure Leon C. Chin-You of Chin Diesel into depositing the check and taking money off the top when writing a check back to Amritt for most of the amount. Chin refused to cooperate in the scheme, and falsely claim his company worked on the job.

Giannetti replaced Chin with Spearhead Development Group of Miramar, owned by Amritt’s brother Donovan. Spearhead wrote a check to Stanford Trucking for everything Spearhead received from Giannetti on the project.

The net result is that no small business ever actually worked on the job, and Stanford profited from the fraudulent representations that the set aside was met. “The incidence of contractor misconduct, misrepresentation, falsehoods and scheming necessitates immediate attention by the county,” according to County Administrator Henry.

Corruption Investigation Stymies World Bank Funding For Bangladeshi Bridge

Last year’s arrest of two former executives of Canadian engineering giant SNC Lavalin, coupled with ongoing construction corruption investigations in Canada and Bangladesh prompted the World Bank to announce June 29 that it has canceled funding participation in a $3 billion road and bridge project which would have included construction of the AECOM designed Padma Bridge southwest of Dhaka. The World Bank commitment of $1.2 billion in financing, withdrawn as a result of the corruption charges, leaves in limbo both the future of the project and the fate of financing commitments for an additional $1.7 billion promised from the government of Bangladesh, the Asian Development Bank, Japan International Cooperation and the Islamic Development Bank. Though Bangladeshi officials have promised to find another way to finance completion of the project, its future is imperiled with the World Bank out of the picture and corruption investigations underway since last September.

World Bank President Jim Yong Kim approved the cancelation. The World Bank says it has presented credible evidence of a high level corruption conspiracy among Bangladeshi government officials, SNC Lavalin and others to Bangladeshi Prime Minister Sheikh Hasina, Finance Minister Abul Maal Abdul Muhith and Anti-Corruption Commission Chairman Ghulam Rahman. World Bank officials are urging the Bangladeshi government to prosecute anyone found responsible for corruption on the project.

Perini Spinoff Coming To Chicago To Reposition Distressed Developments

Four top executives have amicably parted from Sylmar, California based Tutor Perini Corp. subsidiary Perini Building Company to form a new construction business focused on acquisition and repositioning of distressed commercial developments The quartet is partnering with Portland, Oregon based venture financer Bighorn Capital in the creation of Las Vegas based Caspers Construction Company LLC. According to Caspers new President Pat Hubbs, “Our goal is to generate $400 million in revenue within the first 12 months.”

The new business is named after departing Perini Building CEO Mark Caspers, and he and Hubbs are joined in the new venture by former Perini executives operations vice president Joe Miller and general counsel Scott Ryan. “We will be looking at mostly private negotiated work in the residential, hotel, office and retail markets, as well as data centers,” Hubbs explained. The new design-build-development firm will be 100% turnkey. “We will be fully integrated handling everything from estimating and design to construction and development in house,” according to Hubbs.

Founded in 1894, Tutor Perini started this year with an annualized revenue rate of $3.65 billion. The four departing executives have been involved in construction of such major projects as Las Vegas’ Cosmopolitan and City Center, and Queens, New York’s Aqueduct Casino. Tutor Perini does not expect direct competition from Caspers Construction.

Though it will have its origins in Las Vegas, Caspers Construction has already announced plans to expand during first quarter 2013 into the Chicago and Miami markets, focusing on properties in the $40 million to $150 million range, with financial backing from Bighorn Capital. The founding executives of Caspers Construction predict annual profit growth of 10% to 15% over its first five years.

Saturday, July 7, 2012

California High Speed Rail Plans Under Attack In Washington

July 6 the California Senate voted 21-16 to approve a $4.5 billion bond issue funding construction of passenger rail transportation improvements in the state, including $2.6 billion for construction of the initial 130 mile run of high speed railroad tracks in the Central Valley, despite growing opposition in Congress to any further federal funding for the project. The California Senate vote came on the last day possible to permit the state to claim a grant of $3.2 billion in federal funds already allocated to the project since Florida, Ohio and Wisconsin have rejected grants for high speed rail development in their states which were approved under the 2009 stimulus legislation.

The party line California Senate vote drew praise from high speed rail supporters, and opprobrium from opponents, while in Washington, D.C. Republican determination to squelch the project grows stronger. The initial track run from Madera to Bakersfield is part of a proposed San Francisco to Los Angeles high speed line costing a projected $68 billion. The $1.9 billion balance of the bond proceeds approved Friday will go toward construction of passenger rail improvements elsewhere in the state, including electrification of Caltran, a commuter line from San Francisco to San Jose, and southern California Metrolink upgrades.

High speed rail supporters lavished praise on the bill. U. S. Secretary of Transportation Ray LaHood said, “No economy can grow faster than its transportation network allows. With highways between California cities congested and airspace at a premium, Californians desperately need an alternative.” Bay Area Council President and CEO Jim Wunderman called the vote “a courageous step forward for California’s future.

On the other side of the political aisle, Huntington Beach Republican Senator Tom Harman said, “It’s unfortunate that the majority would rather spend billions of dollars that we don’t have for a train to nowhere than to keep schools open and harmless from budget cuts.” Granite Bay Republican Senator Ted Gaines lamented that the project “will require endless subsidies and will blast a hole into our budget.” Finally, Palo Alto Democratic Senator Joe Simitian expressed doubts the LA to SF high speed line will ever see completion: “Is there additional commitment of federal funds? There is not. Is there additional commitment of private funding? There is not. Is there a dedicated funding source we can look to in the coming years? There is not.”

Senator Simitian’s dour outlook is not at all out of touch with reality. Republican opposition to high speed rail construction projects in general, and the SF to LA line in particular, peppered the final days of debate over the 27 month Highway Trust Fund reauthorization bill Congress just passed. June 29 the House voted 239-185 in favor of a proposed amendment to the measure which would have expressly prohibited any more federal dollars being spent on the California high speed rail construction project. Although that amendment was dropped from the final measure by the conference committee, Republican Congressmen from California remain adamant in opposition to further federal money going to high speed rail in their own state.

“In light of the federal government’s trillion dollar budget deficits, there is no money for a lot of things, including the poorly planned, massive boondoggle of high speed rail,” according to California Republican Congressman Devin Nunes. The House Appropriations Committee’s official report decries “unrealistic new high speed rails to nowhere.”

Mass transit in general, and high speed rail in particular, are popular targets for Republican congressional sniping. California Republican Congressman Jeff Denham, speaking in support of the proposed amendment banning further expenditures on California high speed rail development summed up the sentiment: “We need to make sure that our gas tax dollars get used for their intended purpose of actually improving our roads and highways.” It seems doubtful we will ever get those California Republican Representatives out of their Bentleys and onto the rails.

Friday, July 6, 2012

It’s Official: Chicago Boasts World’s Largest Green Roof!

Next week’s issue of Engineering News Record will officially recognize Chicago’s lakefront crown jewel – Millennium Park – as by far the world’s largest green roof. The park’s green roof area of 99,127 square meters dwarfs by far the second place contender – Frankfurt International Airport, in Germany – which at 80,000 square meters is really an aggregation of several smaller terminal buildings.

Millennium Park has several features beyond size to distinguish it from the other green roof projects honored in the ENR July 9 issue. It isn’t just a roof – it provides chair and lawn seating for 11,000 concertgoers who listen to the Grant Park Symphony and other groups performing in the Frank Gehry ornamented Pritzker Pavilion’s outdoor concerts all summer long. The roof includes 2.5 acres of native Illinois plants in the Lurie memorial garden. There’s a mirror surfaced bean shaped sculpture named “Cloudgate” by Anish Kapoor reflecting the skyline and street wall along Chicago’s famed Michigan Avenue, and a delightfully fanciful Crown family memorial fountain featuring the faces of animated anonymous Chicagoans spitting cool water for children and adults to splash in when the weather reaches this week’s hundred degree highs.

The park was the brainchild of former Mayor Richard M. Daley, who managed to put together a coalition of generous corporate and very well heeled private donors to fund about half its total cost, which ran around half a billion dollars by the time the park roof was completed. One of the first public/private partnership construction projects in the city, ultimately completed by Chicago based general contractor Walsh Construction, the donors of the rooftop enhancements formed a tax exempt organization to contract for and pay for their part of the job, then made a tax deductible gift to the City of both the funds to pay for construction of their enhancements and their contracts with Walsh to build them.

Fieldwork by the tradesmen who put up the Crown Fountain’s Jaume Plensa designed twin 50 foot high glass block towers housing the multiple projectors which create the “spitting images” of Chicago citizens, those who assembled the Kapoor Cloudgate sculpture and then polished it to a mirror finish, and those who erected the intricate free form aluminum Frank Gehry panels adorning the Pritzker Pavilion was so highly skilled and unique to the trades involved that Walsh Construction published a coffee table picture book of progress photos from the project heralding the dedication of these tradespeople. The title of that book, handed out to folks involved in building and paying for the project: “Better Than Perfect.”

According to the forthcoming article in ENR, green roof construction in the U. S. and Canada grew 115% between 2010 and 2011. American Society of Landscape Architects Executive Vice President Nancy Somerville touts the economic incentives for green roofs: “Green roofs have a higher cost up front, but the payback over time is significant,” she says, “not just in energy savings. It’s protecting your roof membrane – you can skip one or two or three roof replacement cycles.”

None of the big green roofs presently under construction around the nation and the world even comes close to the size of Millennium Park, and even if a bigger one were to be erected, it is quite doubtful any green roof built in the foreseeable future could ever rival Chicago’s crown jewel in accessibility to the public, scenic grace, or entertainment value. Chicago’s visionary politicians, business people and philanthropists who contributed their money and their genius to design and creation of Millennium Park have undoubtedly left their city a legacy which will stand the test of time.

Thursday, July 5, 2012

White House Stumps For Wind Power Development

Obama Administration officials are using the Independence Day holiday week to press for more development of wind power around the country. Administration officials speaking in North St. Paul Minnesota and along the Atlantic coast are busy urging Congress to quickly pass an extension of the wind power tax credits which will expire at year end, and touting completion of the federal environmental assessment of 164,000 acres of potential offshore wind turbine leases by the Bureau of Ocean Energy Management.

Senate Appropriation Subcommittee on Interior and Environment Chairman Jack Reed says he is “striving to make Rhode Island a national leader in offshore wind development, and helping to bring assembly and manufacturing jobs to the state.” Interior Secretary Ken Salazar says the United States is now harnessing 21% of global wind power capacity, emerging as a leader in the field. Ocean Energy Management Director Tommy Beaudreau says completion of the environmental assessment “sets the stage for moving forward aggressively with lease sales” in the area running along the Atlantic coast from 11 miles south of Martha’s Vineyard to 13 miles east of Block Island.

Meanwhile, White House Council on Environmental Quality Chairman Nancy Sutley, speaking at a news conference from the base of a 115 foot Minnesota Municipal Power wind turbine in North St. Paul, urged Congress to act now by passing legislation extending tax credits of 2.2 cents per kilowatt hour for wind power generation, and 30% tax credit for investment in equipment used to manufacture clean energy components in this country. “When Congress puts its mind to it, something can be done fairly quickly,” Sutley said.

Other speakers representing wind developers, engineering concerns and manufacturers of wind generating equipment at the same conference pointed out, however, that Congressional inaction on the tax credit extension has already produced staff cuts at their companies, and the last time the production tax credit expired, new wind farm installations fell by 73% on a year over year basis.

Pennsylvania Legislature Passes Public/Private Transportation Bill

Saturday, June 30, Pennsylvania’s legislature passed and sent to Governor Tom Corbett a measure setting up a seven member state panel to approve transportation projects funded by a mixture of public and private money. Though the bill, if signed into law, would make Pennsylvania the thirty-third state to have such a law on the books, it does nothing to solve the state’s road funding budget deficit which leaves Pennsylvania with over 5,000 structurally deficient bridges and 8,000 miles, or 26% of state highways, in very poor condition.

The bill is designed to permit private companies to propose “capacity enhancing” projects like adding variable toll “congestion relief” lanes to interstate highways, where tolls could be factored on number of vehicle occupants and level of traffic congestion in the neighboring free road lanes. The bill specifically prohibits leasing the Pennsylvania Turnpike to a private toll operator, without separate legislative approval. Pennsylvania State Representative Richard Geist predicts that the measure will promote creation of additional construction jobs in the state despite the road building budget deficit, while opponent State Representative Steve Santarsiero argues that the bill will take away taxpayer control of road building priorities in the state. A Santarsiero sponsored amendment which would have required construction companies working on projects approved under the measure to give hiring preference to Pennsylvania workers, and use steel produced in Pennsylvania mills, was defeated.

Governor Corbett has not proposed any revenue raisers to address the crumbling roads and bridges across his state, or to close the state’s $3.5 billion annual transportation budget shortfall.