Category: The Americas

1
K&L Gates Named a “Go-To Construction Law Firm”
2
An Overview of Pennsylvania’s New Arbitration Law
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K&L Gates Recognized Among Top Five Construction Law Firms by Construction Executive
4
Don’t Dump Stuff in the River
5
EPA to “Veto” Its Own Veto Authority under the Clean Water Act?
6
The Tenth Circuit’s Prediction: New York State Likely to Follow Trend Recognizing Damages Caused by Subcontractor’s Faulty Work is a Covered “Occurrence”
7
Insurance Policy Did Not Prevent Association Recovery from Subcontractors for Defective Work
8
Techniques to Maximize SDI Coverage and Streamline the Claim Process
9
Pennsylvania’s New “State Construction Notices Directory” and the Implementation of Significant Changes to Pennsylvania’s Mechanics’ Lien Law
10
Dispelling the Myths of Lean Construction and IPD

K&L Gates Named a “Go-To Construction Law Firm”

K&L Gates is pleased to have been named the “Best Firm to Handle the Construction Project of the Future” by Above the Law.

“The construction industry has been around for centuries, but that doesn’t mean it hasn’t adapted to the changing times. The Construction and Infrastructure Group at K&L Gates draws from vast past experience to focus on ensuring that construction projects are sustainable for the next generation. The firm’s lawyers specialize in niche areas like integrating technology and IP into construction projects and incorporating clean energy and green initiatives. When you’re planning a construction project for a better tomorrow, K&L Gates is thinking ahead.”

For the full article, please click here.

An Overview of Pennsylvania’s New Arbitration Law

By Richard F. Paciaroni and Justin N. Leonelli

Effective July 1, 2019, Pennsylvania has joined 20 other states in adopting the Revised Uniform Arbitration Act (RUAA) as the most current law governing agreements to arbitrate in Pennsylvania. The RUAA was originally promulgated by the Uniform Law Commission in 2000, which replaced the original Uniform Arbitration Act (UAA) enacted by the Commission in 1956. Recognizing the need to replace an outdated UAA, Pennsylvania adopted the RUAA as a more thorough and robust arbitration law to meet the needs of modern disputes. Now, the RUAA provides specific guidance on various aspects of arbitration, including but not limited to the initiation of arbitration proceedings, impartiality of arbitrators, arbitrator immunity, discovery proceedings, and sanctions.

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K&L Gates Recognized Among Top Five Construction Law Firms by Construction Executive

Washington, D.C. – Construction news outlet Construction Executive has recognized K&L Gates LLP among the top five firms in the publication’s inaugural rankings of the 50 leading law firms throughout the United States with dedicated construction practices. With nearly 150 lawyers in its construction practice, K&L Gates also ranks first among included firms by number of construction lawyers.

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Don’t Dump Stuff in the River

By David L. Rieser

So, you are managing a major construction site in downtown Chicago. It’s been raining and you have thousands of gallons of silty water which you need to get off site. You can: (a) store it in tanks and then truck it to a waste water treatment facility; (b) discharge it to the local sewer under proper sewer authority; or (c) pump it into the river in full view of thousands of commuters walking over the bridges from the local train stations.

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EPA to “Veto” Its Own Veto Authority under the Clean Water Act?

By Ankur K. Tohan, Cliff L. Rothenstein, Endre M. Szalay, and Tad J. Macfarlan

On June 26, 2018, in one of his final acts as Administrator of the U. S. Environmental Protection Agency (“EPA”), Scott Pruitt issued a memorandum [1] that has set in motion a process to amend the regulations that govern the agency’s exercise of its “veto” authority under Section 404(c) of the Clean Water Act. [2] The memo directs EPA staff to prepare a proposal, within six months, that would potentially curtail EPA’s authority to effectively bar development projects that require a Section 404 dredge-and-fill permit from the U.S. Army Corps of Engineers.

As background, Section 404 of the Clean Water Act authorizes the Corps (and state agencies with delegated permitting authority) to issue permits authorizing the discharge of dredged or fill material into regulated waters at “specified disposal sites.” [3] However, the statute provides EPA the authority to “prohibit” or “withdrawal” the specification of any area as a disposal site when it determines that a proposed discharge will have an unacceptable adverse effect on water supplies, fisheries, wildlife, or recreational areas. [4] This is commonly known as EPA’s “veto” authority because the EPA can effectively veto a project that would otherwise be authorized under Clean Water Act permits issued by the Corps by prohibiting construction in areas for which there is no reasonably available alternative disposal site. EPA currently administers its veto authority through regulations that were last amended nearly four decades ago, in 1979. [5] To date, EPA has used its final veto authority only 13 times. [6]

The new memo grows out of concerns surrounding EPA’s prior use of its veto authority before a Section 404 permit application had been filed—i.e., a “preemptive” veto—or after a permit had already been issued—i.e., a “retroactive” veto—rather than in the midst of the permitting process. [7] Recent examples include EPA’s proposed preemptive veto of a high-profile copper and gold mining project near Bristol Bay, Alaska in 2014 (which remains pending), [8] and its 2011 retroactive veto of a coal mining project in Logan County, West Virginia. [9] Both of these cases spawned substantial litigation [10] and caused many observers (including former Administrator Pruitt) to question whether in the future “the mere potential of the EPA’s use of its section 404(c) authority before or after the permitting process could influence investment decisions and chill economic growth by short-circuiting the permitting process.” [11]

In response to these concerns, former Administrator Pruitt’s Memo directs EPA staff to prepare and provide to the White House Office of Management and Budget a proposal within six months (before the end of 2018) that would consider and seek public comment on the following changes:

  • Eliminating EPA’s authority to veto a project before a permit application has been filed.
  • Eliminating EPA’s authority to veto a project after a Section 404 permit has been issued.
  • Requiring EPA regional administrators to obtain approval from EPA headquarters before initiating the Section 404(c) veto process.
  • Requiring the completion of environmental review under the National Environmental Policy Act before preparing and publishing a proposed veto determination.
  • Requiring EPA to publish and seek public comment on final veto determinations before those determinations take effect.

While former Administrator Pruitt is no longer in office following his July 5 resignation, all indications are that the new Acting Administrator, Andrew Wheeler, will forge ahead with the rulemaking process initiated by his predecessor. Administrator Wheeler has publicly expressed his commitment to the regulatory agenda pursued by Pruitt prior to his departure and he has strong ties to the mining industries which, of all industries, were most negatively impacted by EPA’s application of the agency’s veto power under the Obama administration.

The coming weeks should serve as a valuable window into whether Administrator Wheeler will indeed move forward with a new 404(c) rulemaking. In a letter dated July 19, Senator Tom Carper (D-Del.) and Representative Peter DeFazio (D-Ore.) urged Wheeler to “immediately and publicly revoke” Pruitt’s memorandum. [12] The letter requests that by August 15, 2018, Administrator Wheeler respond to several 404(c)-related questions, including his “view on the proper exercise of EPA’s section 404(c) authority, and how this view is consistent with the Congressional history and judicious use of this authority by your agency in the past.” [13]

Assuming Administrator Wheeler stays the course set by his predecessor, the upcoming rulemaking process will provide a critical opportunity for EPA leadership and the regulated community to shape the Clean Water Act regulatory landscape for years to come. Persons and industries with interests tied to high-profile, capital intensive development projects—such as oil and gas, mining, and large scale water supply/impoundment projects—should give particular consideration to participation in the rulemaking process, as it is these types of ventures that are most likely to be negatively impacted by a surprise veto under EPA’s current regulatory regime.

The anticipated rulemaking limiting EPA’s Clean Water Act veto authority is already generating considerable controversy, so interested stakeholders should consider weighing in with EPA even before any proposed rule is released. K&L Gates has a team of lawyers and policy professionals in Washington, D.C. and beyond that is positioned to assist with such efforts.

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The Tenth Circuit’s Prediction: New York State Likely to Follow Trend Recognizing Damages Caused by Subcontractor’s Faulty Work is a Covered “Occurrence”

By Frederic J. Giordano, Stephanie S. Gomez                     

The United States Court of Appeals, Tenth Circuit recently issued a favorable decision for policyholders finding property damage arising from a subcontractor’s faulty work arose from an accidental “occurrence” under New York law.  In Black & Veatch Corp. v. Aspen Ins. (UK) Ltd,[1] a 2–1 Tenth Circuit panel agreed with Black & Veatch Corp. (“B&V”) that its excess policy — which contained a New York choice-of-law provision — covered claims for property damage to a third party caused by its subcontractor’s faulty work.[2]  The Tenth Circuit reversed the district court’s ruling that B&V’s subcontractor’s faulty work caused damage to only B&V’s own work and, therefore, was not a covered “occurrence.”[3]  The Tenth Circuit concluded the New York Court of Appeals would likely find the subcontractor’s faulty work was an accidental “occurrence,” following the growing trend of other state high courts that have addressed this coverage issue under commercial general liability (“CGL”) polices.[4]  Policyholders — whose policies are governed by New York law — should take notice and consider the implications of this decision on whether New York will soon join the majority view that faulty workmanship by a subcontractor can be an occurrence under CGL policies.

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Insurance Policy Did Not Prevent Association Recovery from Subcontractors for Defective Work

By Justin L. Weisberg, K&L Gates, Chicago              

On February 17, the First District Appellate Court issued an opinion regarding the Implied Warranty of Habitability in the case of Sienna Court Condominium Association v. Champion Aluminum Court et al.  The opinion involved three separate appeals: the first relating to claims by Sienna Court Condominium Association (“Sienna”) against an insolvent developer and an insolvent general contractor; the second involving the dismissal of Sienna’s claims against the architect, the engineers, and suppliers; and the third involving the dismissal of the general contractor’s claims against its subcontractors.

To read the full alert on K&L Gates HUB, click here.

Techniques to Maximize SDI Coverage and Streamline the Claim Process

Newark partner Christopher Barbarisi was published by Construction Executive magazine on the topic of “Techniques to Maximize SDI Coverage and Streamline the Claim Process.”

Design-builders, general contractors and “at risk” construction managers are all vulnerable to the risk of a subcontractor default. Aside from contract-related safeguards, such as increased retention, joint checks and letters of credit, subcontractor surety bonds have been the traditional mechanism for third-party risk transfer.

First introduced in the mid-1990s, subcontractor default insurance (SDI) provides a viable “first-party” insurance alternative to traditional surety bonds. To compete with surety bonds, SDI policies are heavily marketed as having a more efficient claim processes. In practice, the SDI claim process is not without its challenges. Effective techniques can be employed to streamline the process and keep the project funded and on track.

To read the full article on Construction Executive, click here.

Pennsylvania’s New “State Construction Notices Directory” and the Implementation of Significant Changes to Pennsylvania’s Mechanics’ Lien Law

By William D. Wickard, Erin D. Fleury

Important changes to Pennsylvania’s Mechanics’ Lien Law recently took effect on December 31, 2016, with the launch of an online State Construction Notices Directory. These amendments to the Mechanics’ Lien Law (which were passed by the Pennsylvania legislature in 2014) modify the process and deadlines applicable to subcontractors, contractors and owners with respect to mechanics’ liens on projects costing over $1.5 million.  In short, these amendments require subcontractors to comply with an earlier lien notice requirement by providing a “Notice of Furnishing” within 45 days of beginning work or providing materials if the owner has filed a “Notice of Commencement” to the online directory with respect to a “searchable project” prior to commencement of work on the project.
To read the full alert on K&L Gates HUB, click here.

Dispelling the Myths of Lean Construction and IPD

By Justin L. Weisberg, K&L Gates, Chicago

The text of this article first appeared in the December 2016 issue of SubStance, a publication by the Illinois Mechanical & Specialty Contractors Association.

Over the last year we have witnessed a successful Congress in Chicago by the Lean Construction Institute, a growing number of projects adopting Lean Construction Processes (“LCP”), in Illinois, and the recognition of the completion of at least one significant project in Illinois, which utilized Integrated Project Delivery (“IPD”). Nevertheless, I have perceived that there is confusion in the industry relative to LCP and IPD based upon comments made at presentations given by practitioners in the construction industry, who have not been involved with, or studied Lean Construction. The following article provides a brief overview and a comparison of LCP and IPD to address the myths created by some of these comments.

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