Md. Court Keeps Purple Line P3 Rail Project Team on Site In Long-Running Cost Dispute
A Maryland circuit court has granted state transportation agencies a restraining order to delay the private concession developing the troubled $2-billion Purple Line rail line from departing its worksites on Aug. 22. That date had been previously announced amid months of negotiation over cost and schedule disputes on the public-private partnership project.
Judge Jeffrey Geller in Baltimore said in his Aug. 10 order, announced by the state on Aug. 11, that Purple Line Transit Partners LLC is “enjoined and restrained from demobilizing and abandoning” the project and agreed with state agencies that they will “suffer immediate, substantial, and irreparable injury” if the consortium is allowed to depart before establishing a contractual right to do so, and without completing dispute resolution procedures detailed in in the P3 agreement.
The restraining order is in effect until Sept. 14, with a possible extension.
The order followed an Aug. 10 circuit court hearing in a lawsuit filed by two state transportation agencies against the consortium, which is made up of Fluor Corp., Meridiam and Star America.
Meridiam holds a 70% stake in the concession, with Fluor having a 15% share.
According to a statement from the agencies, the complaint also seeks a preliminary and a permanent injunction against PLTP's project departure and “compliance with the dispute resolution procedures set forth in the P3 agreement.” The suit followed the start of project demobilization by PLTP and its design-build contractor, Purple Line Transit Constructors, despite the state's “notice to PLTP that its termination based on disputed assertions is a breach” of its agreement.
Fluor also leads the building team, which includes Lane Construction and Traylor Brothers, for the 16-mile project across densely populated suburbs of Washington, D.C.
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Issues Pile Up
Unable to reach agreement on responsibility for a reported $755 million in cost overruns, the developer asserted its right under its 36-year design-build-operate-maintain agreement with the state to unilaterally leave the project, now more than two years behind schedule.
The state claims that the developer has refused to rescind its June 23 letter that notified the state of its intent to terminate the P3 agreement and, “instead, it has taken steps to demobilize” from the project.
The building team has begun to dismantle a Leibherr crane, but Maryland contends that in seeking alternatives, the closest comparable model is in British Columbia, with a replacement for the Purple Line taking six months to a year to put in place. The state also claims that the team said the crane would be among the last pieces of equipment to demobilize, but it “suddenly changed course.” The state also contends that full replacement of all affected equipment would approach $10 million and delay the project even further.
The state agencies dispute the consortium's and building team's departure claim based on project delay from “four alleged owner-caused” developments, which include several opponent lawsuits, right-of-way acquisition issues, alleged route design change complications with CSXT Transportation Inc. and changing state environmental approvals.
“However, as outlined in the complaint, all four of these issues are disputed assertions that are currently subject to and being processed through the dispute resolution procedures of the P3 Agreement,” said the state. “Yesterday’s court filing follows months of negotiations and daily discussions ... to resolve the parties’ disputes.”
In temporarily halting the contractor’s exit, Judge Geller agreed with Maryland’s contention that the state will “suffer immediate, substantial, and irreparable injury” if PLTP is allowed to abandon the project prior to establishing a contractual right to do so, and without completing dispute resolution procedures detailed in P3 agreement. Among the issues cited were the potential months-long delay in replacing a large crane currently being dismantled, and the loss of electricity to a new operations and maintenance facility that contains temperature-sensitive equipment.
According to the state announcement, the developer notified agencies on Aug. 7 “maintaining its right to terminate for extended delay,” and seeking from the state “a written assumption and assignment” of construction subcontracts by Aug. 10, or subcontract termination would begin.
With several contractual triggers looming as negotiations continued, Maryland began the process earlier this month of assuming management of the Purple Line, notifying the developer’s 171 subcontractors and suppliers that it would exercise its right to direct the work of contractors and suppliers, process invoices and applications for payment and resolve claims.
In an earlier statement, a state DOT spokeswoman said that “both parties are still continuing discussions, and MDOT and MTA remain open to a fair and reasonable settlement. There are some form of discussions almost daily.” She added that “as parties work in settlement discussions, there are certain dates and triggers in the contracts between the parties. This is another example of both parties protecting their interests.”
Attorneys for the developer claimed the state was unprepared to take over the contracts, and would face liability for any additional subcontractor costs incurred by the move.
The P3 developer said in a statement that it did not agree with the state’s claims and would “fully comply” with the judge’s order, but it also intends to “contest any motion for preliminary injunction,” brought by the state.
