When the federal government is in charge of construction contracts, things can get interesting. As we have discussed extensively on the blog, public projects are not subject to mechanics liens. Instead, payment and performance bonds are required by the Miller Act. The federal government has other considerations on public projects, too. A Trump executive order from last week aimed at some of these other considerations. The order calls for streamlining the planning process and for the removal of some environmental regulations. Trump received a lot of backlash for the order, but there were some voices of support as well.
This is not the first time an Obama-era construction regulation has been shot down. As you may recall, The Fair Pay and Safe Workplaces Order is dead.
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Trump Executive Order
The response to the Trump executive order can be broken down into two categories: environmental deregulation and streamlined review. So that’s exactly what we’ll do…
Outside of green construction, we don’t discuss the environment an awful lot on the blog. However, the Trump executive order forces the issue. Under the order, President Trump peeled back some environmental regulations instituted during the Obama presidency. The regulations called for federal projects to take into account flood projections related to climate change. Trump stated that the removal of these regulations would streamline the approval process, and that projects not up to environmental standards will not be approved.
Understandably, this move has drawn lots of criticism. We’ve recently seen historic flooding in Louisiana and in West Virginia, so any move to disregard environmental effects on construction will be scrutinized. Regardless, the Trump executive order will not keep states from imposing their own requirements.
The Trump executive order aims to dramatically overhaul the pace at which federal projects go forward. According to Trump himself, “It’s going to be quick, it’s going to be a very streamlined process.” The approval of federal infrastructure projects can take as long as 17 years and can cost hundreds of millions of dollars, Trump said. Currently, it takes an average of seven years for complex highway projects to get through environmental reviews.
Under the Trump executive order, such a review will be cut down to two years. The review process will also become more transparent- deadlines will be made public, and penalties may be considered when they are not met. The response to streamlining was a mixed bag. Construction groups applauded the move, while many others expressed concern. One of the strongest shows of support came from an unlikely source.
A former member of the Obama administration, Cass Sunstein, wrote the article: Trump Did Something Good This Week. In the article he explains the different issues the current regulatory system imposes. In an interesting note, he mentions is that under the Trump executive order the cost of environmental reviews will be measured. Considering these reviews take years of manpower, those figures could be considerable. Still, the concern that too much streamlining could result in errors and oversights is a valid one. Many argue that taking such a businesslike approach will pose serious risks.
It was not hard to predict that infrastructure and deregulation would be affected by electing Donald Trump. What’s more, Trump has made it very clear where he stands on environmental issues. It should come as little surprise that this Trump executive order affects all three topics. Speeding up the approval process for infrastructure projects seems to be the right move, but only time will tell if this was an overcorrection.
For more on the construction payment laws in your state, head over to our Construction Payment Resources and select your state..