National Academies Press: OpenBook

Transit Mega Projects: Legal Issues (2023)

Chapter: APPENDIX D: INTERVIEW SUMMARIES

« Previous: APPENDIX C: INTERVIEW QUESTIONS
Page 49
Suggested Citation:"APPENDIX D: INTERVIEW SUMMARIES." National Academies of Sciences, Engineering, and Medicine. 2023. Transit Mega Projects: Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/26912.
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APPENDIX D
INTERVIEW SUMMARIES

Interview No. 1

Interview 1 was conducted with a former senior attorney for a regional transportation entity and covered several rail transit projects and connected transit-oriented development. Topics that were covered included: financing and project structure (including discussion of P3 structures); compliance with NEPA; issues concerning acquisition of railroad property; governance and project coordination; and procurement. The interviewee discussed the challenges associated with maintaining a shared sense of purpose and cohesion among constituent members participating in the sponsor’s transit mega project, as well as the importance of political support for such projects. The interviewee discussed how political buy-in can come at the expense of a megaproject’s budget, for example, where the local improvements grow to exceed the local in-kind contributions to a project. The interviewee also discussed the dynamics of public participation during the federal environmental review process, and particularly the challenge arising from litigation based on federal environmental requirements, which can increase project costs considerably and effectively stymy a transit mega project even if challenging litigants are ultimately unsuccessful. The interviewee discussed how various federal requirements seeking to achieve public benefits, such as Buy America provisions, may also delay mega projects or result in higher costs.

Interview No. 2

Interview 2 was conducted with a senior official for a state transportation department and covered a multi-state transit mega project. Topics that were covered included: project funding and financing; project governance and delivery structure; rail property acquisition; liability, insurance, and indemnification. The interviewee discussed the scale and variety of funding sources for the mega project, including general and dedicated state funding, user fee revenues from toll roads, and the potential for federal funding, as well as contributions from freight railroads. The interviewee discussed the complex process of negotiating acquisition of rail property from railroads, and the unique and creative solutions required to satisfy rail property rights holders in this context, including liability issues and restrictions on federally owned property. This included securing special purpose legislation allowing for construction of rail service over property administered by a federal agency. The interviewee also discussed the challenges arising from establishing a stand-alone, special-purpose authority to oversee development and operation of the mega project, and the complexity of doing so while simultaneously negotiating nearly a dozen agreements for the project.

Interview No. 3

Interview 3 was conducted with the former senior official for a special purpose state transportation entity and covered a statewide transit mega project. Topics that were covered included project funding and governance; rail property acquisition; and environmental review. The interviewee discussed the intricacies of securing state funding as a means of pursuing complimentary federal funding support. The interviewee also discussed the benefits and process of establishing a new special purpose transportation authority, and the unique rights granted to enable the new authority to hire and maintain the appropriate staff. Often, transit agencies and local governments do not have the appropriate staff or capacity to handle the specific requirements of a transit mega project, and therefore attention must be paid to ramping up those skillsets. The interviewee expressed their view regarding the difficulty in complying with the overlapping requirements of different federal agencies, which is more likely with a transit mega project, as well as the challenges presented by environmental review processes when they are used by litigious opponents of transit projects. The interviewee noted that given the scale and cost of transit mega projects, attention to timing and coordination of environmental review and preconstruction activities such as property acquisition were critical.

Interview No. 4

Interview 4 was conducted with the former senior official for a state transit agency and covered a transit mega project. Topics that were covered included: project funding and financing; project delivery structure; and procurement processes. The interviewee described the innovative (for the time) structure for the mega project, which included a precursor to availability payments now common under P3 projects. The interviewee explained how the combination of one contract for both design/build and operations and maintenance allowed the public project sponsor to spread payment out to the project contractor beyond the period of construction, which would otherwise have been prohibited under state law. Such payment structures, which are now more common, are more important for transit mega project because the scale of the project often means that the cost cannot be paid for within the construction period. The interviewee also discussed the importance of properly allocating risk through the procurement and project delivery structure, and to ensure the public sponsor has an adequate understanding of the risks involved and clearly define the scope of work and allocation of responsibilities in the procurement documents. Because of the size and risk associated with mega projects, the likelihood of claims and disputes is higher.

Page 50
Suggested Citation:"APPENDIX D: INTERVIEW SUMMARIES." National Academies of Sciences, Engineering, and Medicine. 2023. Transit Mega Projects: Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/26912.
×

Interview No. 5

Interview 5 was conducted with three attorneys for a metropolitan transit entity with experience in transit mega projects. Topics that were covered included project funding and delivery method; project coordination; intergovernmental jurisdiction over public utilities; and liability issues. The interviewees discussed the entity’s choice among delivery methods, including the use of procurement methods that allowed the contractor to participate earlier in the design process for projects involving more novel technical issues. The interviewees also discussed challenges raised by jurisdictional authority to relocate public utility lines. Interviewees stressed the benefits of having attorneys involved in mega projects early in order to interact with technical and executive teams in a solution-oriented manner.

Interview No. 6

Interview 6 was conducted with a senior official for a state transit entity covering two transit mega projects. Topics that were covered included project delivery method; project funding; jurisdictional issues regarding property and licensing; condemnation authority; risk allocation; dispute resolution; environmental review; and procurement (including Buy America requirements). The interviewee described specific issues regarding questions that came up during construction and in anticipation of operation, including jurisdictional authority of the public sponsor to construct and operate transit service on the street of a local government, and the form of state licensing required for vehicle operators. Both of these examples came up as a result of opposition from local jurisdictions seeking to limit or challenge the public sponsor’s authority to construct and operate the transit mega project. The interviewee noted that Buy America/Buy American requirements can create challenges in securing the property equipment and materials necessary for a project. The all-encompassing scope of such requirements and the size of transit mega projects can mean that complying with such requirements may slow down the development process and could result in contractor claims if determined not to be the contractor’s fault. The interviewee reflected on experience with pre-development due diligence regarding existing conditions, noting in their opinion, for instance with respect to subsurface projects, “the more borings, the better.” If a public sponsor does not adequately document its pre-design investigations, a public sponsor may not be able to easily challenge a contractor claim. However, the interviewee also acknowledged the limitations to obtaining accurate preconstruction information in urban areas, particularly for subsurface projects, and noted the tension between obtaining preconstruction and precontracting information and disturbance to existing communities. The interviewee also noted the importance of intergovernmental coordination and cooperation and advised public sponsors to retain government affairs staffing to ensure that the correct agreements and communications occurred between the public sponsor and other public entities.

Interview No. 7

Interview 7 was a follow up interview conducted with a senior attorney for a metropolitan transit entity. The interview covered preliminary engineering and investigations and dispute resolution and contractor claims. The interviewee described their experience with contractor claims that arose after commencement of construction of a light rail line project for which the public entity decided not to conduct extensive subsurface investigations, a decision that was made to avoid disrupting existing urban communities. Because the construction contractor encountered unexpected conditions, the project was delayed. The interviewee also described the public sponsor’s process for dispute resolution, noting in their experience that arbitration and dispute resolution panels were often costly and did not expeditiously resolve issues. The interviewee favored an escalation process where disputes were progressively raised to next levels of authority within the respective organizations, followed by an option for mediation, the outcome of which may generally be admissible in state court litigation. The interviewee’s experience was that dispute resolution panels were most valuable for the significant experience that their panelists had in the industry, which could lead to insights regarding negotiated solutions. However, for intractable disputes, the judicial process was a better means of resolution because judges were less prone to “splitting the baby” as often seemed to be the case in arbitration decisions. The interviewee did not believe that contractors held an advantage in jury trials, and therefore did not believe that public sponsors needed to avoid jury trials if they believed that they had a viable claim against a contractor. The interviewee also advised that public entities should insist on terms that require contractors to provide timely (e.g., 7 days) notice of claims encountered, so that the public sponsor has time to investigate and dispute if necessary, and to avoid allowing the contractor to wait until the end of the construction to make new claims. This issue becomes much more important as the project size and cost increase.

Page 49
Suggested Citation:"APPENDIX D: INTERVIEW SUMMARIES." National Academies of Sciences, Engineering, and Medicine. 2023. Transit Mega Projects: Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/26912.
×
Page 49
Page 50
Suggested Citation:"APPENDIX D: INTERVIEW SUMMARIES." National Academies of Sciences, Engineering, and Medicine. 2023. Transit Mega Projects: Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/26912.
×
Page 50
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Transit mega projects are unique, expensive, and often funded by a mix of federal grants and state and local funding. Federal agencies have specific legal requirements, including specific legal provisions to include in contracts and intergovernmental agreements, and provide valuable advice for managing and coordinating such projects.

The TRB Transit Cooperative Research Program's TCRP Legal Research Digest 60: Transit Mega Projects: Legal Issues includes lessons learned (successful and unsuccessful) from transit agencies that have overseen federally funded complex mega projects, such as insights from reviewing third-party contracts and intergovernmental agreements, FTA guidance, pertinent legal decisions, and other valuable references.

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