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.

Adverse Jury Verdict Stuns Tampa Bay Water

HDR Engineering of Omaha received a not guilty verdict from a federal court jury in U. S. District Judge James Whittemore’ courtroom April 10, 2012, exonerating it from Tampa Bay Water’s claim that HDR design errors in the 15.5 billion gallon Bill Young Resorvoir at Lithnia, Florida caused cracks in the reservoir’s six year old retaining basin.  The verdict follows the water authority’s rejection of a $30 million settlement offer from HRD last October, after the authority accepted settlements of $6 million from its construction manager and $750,000.00 from the general contractor. Tampa Bay Water’s trial lawyers had asked the jury to award it $73.2 million from HDR for repairing the cracks. The utility contended that excess pore pressure in the embankment caused the cracks, while HDR defended that a contractor’s improper soil placement was the cause.

The jury deliberations leading up to the verdict lasted a mere four hours after the case was submitted to them following a month long trial. The water utility said its lawyers told it to expect up to $97 million from the trial, towards the $162 million cost of renovating and expanding the six year old facility.

Federal Construction Budget Tradeoffs

No matter where you may believe the federal Highway Trust Fund spending level will ultimately rest on the spectrum between the House measure’s $34.6 billion annually and the Obama administration’s $79.2 billion annually, the sad fact is that these appropriations are offset by dramatic cuts to other federal construction spending programs, to the ultimate long term continuing injury to this important sector of the American economy. Obama’s own budget proposal cuts $450 million a year from transit construction funding in Illinois alone.

HR 7 takes us “back to the dark ages,” according to Transportation Secretary Ray LaHood, eliminating all funding for building bike paths, bike lanes and pedestrian safety projects. With the current Highway appropriations expiring March 31, 2012, the industry is undoubtedly looking at another series of short term extensions, making government and industry planning impossible until a long term funding measure is ultimately passed through both houses.

Meanwhile, even the comparatively generous Obama budget slashes Defense Department construction spending by 20%, Corps of Engineers civil construction projects by 13%, clean water state revolving funds by 20%, drinking water state revolving funds by 8%, Veterans Administration construction by 10%, and airport improvement grants by 28%. While the heavy civil sector of the US construction economy will feel these cuts most severely, resultant price increases in construction materials and equipment, due to the loss in sales volume, will impact all construction businesses across the country. Our national elected leadership continues to fail our industry.

House Subcommittee Passes $315 Million Drinking Water Safety Bill

Wednesday the Energy and Environment Subcommittee of the House Energy and Commerce Committee passed by voice vote HR 3258, which would require USEPA to establish drinking water system standards for security against terror attacks. Rules promulgated under the bill would apply to all drinking water systems serving more than 3,300 people. The measure appropriates $315 million in 2011 to finance drinking water system upgrades away from use of high risk volatile purification chemicals.

Subcommittee Chairman Edward Markey noted that the legislation has the backing of the Association of Metropolitan Water Agencies. Republican members of the panel criticized the bill as "an environmental notion masquerading as national security." The measure requires drinking water systems to adopt what the USEPA will define as "inherently safer technology" for water purification.

Water Infrastructure Reauthorization Moves to Senate Floor

The Senate Environment and Public Works Committee voted 17-2 to report to the floor S 1005, the legislation reauthorizing $20 billion for the Clean Water State Revolving Fund and $14.7 billion for the Drinking Water State Revolving Fund , to fund approximately 1,700 water infrastructure projects per year through 2014. The bill includes Davis Bacon prevailing wage requirements.