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The Construction Advantage

Asha Echeverria, Meredith C. Eilers, Michael R. Bosse

In this new edition of The Construction Advantage, Mike Bosse explains the features of some of the 2015 Global Project Award winners recently announced by ENR. Asha Echeverria reports on a new final EPA rule governing wastewater effluent guidelines, and Meredith Eilers discusses a recent Connecticut case where personal liability applied against the principal of a general contractor on a residential construction project.

2015 Global Projects of the Year – Channeling Winston Churchill

By Mike Bosse

Winston Churchill once said: “We shape our buildings, and afterwards our buildings shape us.” On September 10th, the Engineering News-Record (ENR) held the Global Construction Summit in New York City. At the summit, ENRpresented awards for the best global projects in 2015. Let’s face it, we are intensely focused on the projects that we are working on every day in our little corner of the globe. So, I thought that highlighting some of the 20 award winners, truly from around the world, would be worthwhile, and interesting. Check out the article and the projects!

  1. Global Project of the Year – 162,000 square foot Innovation, Science and Technology Building at Florida Polytechnic University. Built by Skanska USA with a budget of $60 million, the building features a curvilinear roof structure that has a 250 foot long bilaterally symmetrical skylight shading system with 945 aluminum fins some up to 62 feet long that move based upon the position of the sun throughout the day. Each fin can rise to 65 degrees above and 48 degrees below the horizontal plane and together shade the roof skylight from the sun. The subcontractors and vendors came from many different countries, including Mexico, China, and Canada, and the project was delivered on time and on budget. For more information, click here.
  2. Best Sports/Entertainment Project – Baku National Stadium in Baku, Azerbaijan. Built in just 24 months in the capital city of one of the former Soviet states, the 60,000 seat $640 million stadium opened in June of 2105 for the first European Games. The project sits on a peninsula and required a design for severe seismic loads, like California, and received the award in part for its constant inspection program at every stage of the project. The completed stadium contains imagery that evokes “wind and fire” and is intended to serve as an urban landmark in Baku. It was completed on schedule. Maybe the Patriots can play there in 2016 (can you say field trip?). Check out images of the stadium here.
  3. Airport Project of the Year – Prince Mohammad Bin Abdulaziz International Airport. Built in Medina, Saudi Arabia, the $1.2 billion international airport is the first public-private aviation project both in Saudi Arabia and in the Gulf region generally. The project, actually an addition to the first facility built in 1950, involved the creation of a three-level 150,000 square meter (492,125.984 square feet for the nerds out there) main terminal with 10 kilometers of taxiways (6.2 miles for you non-runners). The project relied heavily on modular construction, with a large roof structure that was manufactured in kits off site and installed with mobile cranes. The project heralded no fatalities among its 5,000 workers and 22.8 million work hours and only had a 0.17 lost-time injury frequency rate. Safety site notices were posted in five different languages, and the project boasts a LEED Gold certification. To read more about the airport, click here.

I hope that you found these projects interesting. I know that I did. We should all remember that we have the honor of working in an innovative and ever changing industry that harnesses new technologies and ideas every day for the benefit of projects in which we are involved. Channel Winston Churchill.

Steam Electric Power Effluent Guidelines: Another headache for power plants?

By Asha Echeverria

On Wednesday this week the U.S. Environmental Protection Agency (EPA) issued its final 2015 Steam Electric Power Generating Effluent Guidelines, which establish the first federal limits on the levels of toxic metals that can be discharged in wastewater by power plants operating as utilities. Steam electric power plants use nuclear or fossil fuels (such as coal, oil and natural gas) to create steam to drive turbines connected to electric generators. Wastewater from these plants include arsenic, lead, mercury, selenium, chromium, and cadmium.

Updating regulations from 1982, the EPA indicated that the guidelines were necessary to keep up with technology improvements in the steam electric power industry. “New technologies for generating electric power and the widespread implementation of air pollution controls over the last 30 years have altered existing wastewater streams or created new wastewater streams at many power plants, particularly coal-fired plants. The 2015 rule addresses these changes in the industry.” The EPA indicated that the 1982 regulations were inadequate as they only focused on particulates, rather than addressing dissolved pollutants.

According to the EPA:

  • On an annual basis, the rule is projected to reduce the amount of toxic metals, nutrients, and other pollutants that steam electric power plants are allowed to discharge by 1.4 billion pounds and reduce water withdrawal by 57 billion gallons
  • Estimated annual compliance costs for the final rule are $480 million
  • Estimated benefits associated with the rule are $451 to $566 million

Generally, the rule establishes new or additional requirements for wastewater streams created by the steam electric power generation process. The rule also phases in the new, more stringent effluent limits for arsenic, mercury, selenium, and nitrogen in discharged wastewater and establishes zero discharge pollutant limits for flue gas mercury control wastewater. More stringent limits on arsenic, mercury, selenium and total dissolved solids in coal gasification wastewater was also introduced based on available evaporation technology. Some other rules are phased in through 2023, while more stringent controls apply to any new coal or petroleum coke plants that may be built in the future.

The EPA estimates that 12% of steam electric power plants will need to make capital investments to meet the requirements of this rule. Each such plant must comply between 2018 and 2023 depending on when its Clean Water Act permit comes up for renewal. If you own or operate a power plant, you will want to review the rule carefully to ensure your regulatory compliance.

Suppliers and Contractors – Beware of Personal Liability for Unfair Trade Practices Claims

By Meredith Eilers

Typically, an officer of a corporation does not incur personal liability for a corporation’s torts (i.e., acts of negligence) merely because of his or her official position. However, if that agent or officer personally commits or participates in that wrongful act, whether or not he or she is acting on behalf of the business entity, the agent or officer may be liable to an injured third party.

This summer, the Connecticut Supreme Court expanded this reasoning to apply to violations of Connecticut’s Unfair Trade Practices Act (“UTPA”), holding the principal of a construction corporation personally liable for his participation in wrongful conduct. See Joseph General Contracting, Inc. v. Couto, — A.3d —, 317 Conn. 565 (2015). In the Joseph General case, the owner and principal of the construction corporation repeatedly misled homeowners about zoning requirements for a new construction project, lied about financing opportunities and requirements, and caused material changes to the design during construction that affected the functionality of the house, among other transgressions.

Relying on a framework established and currently applied by federal courts, the Connecticut Court determined that an individual will be held liable if, after a showing that the entity violated the Act, it is proven that the individual either participated directly in the entity’s deceptive or unfair acts or practices, or that he or she had the authority to control them. A plaintiff must also prove that the individual had knowledge of the wrongdoing.

Controlling shareholders or officers of a closely-held corporation are presumed to have the ability to control the acts of the corporation, but this presumption is rebuttable. However, even an employee who is not an owner or officer may, under certain circumstances, have that authority. Authority to control may be established by evidence of a particular individual’s conduct, such as active participation in business affairs or the setting of company policy, as well as evidence that other employees deferred to that individual.

Knowledge of the wrongdoing may be established through evidence of actual knowledge or an awareness of a “high probability” of fraud and “intentional avoidance” of the truth. However, a good faith belief in the truth of a misrepresentation may preclude individual liability.

In the Connecticut case, the Court concluded that the president and sole shareholder of a general contracting corporation controlled the corporation and was actively engaged in the business relationship with the homeowners who were harmed. He was personally untruthful with the homeowners with respect to certain financing opportunities, he misled them and pressured them into an unfavorable restructuring of the transaction, and he willfully prevented them from accessing a sewer line to which they were entitled after the homeowners withheld a payment they did not in fact owe. In short, this individual either directly participated in the wrongdoing, or, by virtue of his position in the company and day-to-day involvement, had the ability to control it. The Court concluded that, under the circumstances, he was personally liable for the UTPA violations.

Although the Maine Supreme Court has not addressed this issue to the level of detail used by the Connecticut Court, the Maine Supreme Court has applied the same reasoning to hold a corporate officer liable where that officer’s individual representations and conduct constituted violations of the UTPA. See Advanced Construction Corp. v. Pilecki, 2006 ME 84, 901 A.2d 189. The Maine Court has also noted that establishing personal liability for corporate officers who participate in wrongful acts is distinct from “piercing the corporate veil” because the personal liability stems from the officer’s participation in the act, not the facts that must be established to pierce the corporate veil. Similarly, employees who commit an unfair trade practice within the scope of their employment may be held personally liable.

Upcoming events

Next week Asha will be attending the Fall Meeting of the ABA Forum on Construction Law in Austin, Texas. In our next edition, she will report on interesting new developments in Alternate Dispute Resolution, including key elements of arbitration clauses, strategies in multi-party construction defect cases, and insights into managing the arbitration processes to reduce cost but without sacrificing success. Asha is an active member of the ABA Forum on Construction Law, serving as a co-chair for the 2016 Regional Program on Contract Law and is a member of several committees.