by Mark Kriss Esq., Legislative Counsel
2022 NYS Legislative Session

The 2022 New York State Legislative Session is moving toward its traditional June recess and legislators are focusing upon the upcoming primary elections to be held on June 28th and August 23rd (Congressional and NYS Senate), as well as the general elections on November 8th. The primary elections for U.S. Congress and NYS Senate were moved to August 23rd due to challenges to the original district maps, drawn by NYS lawmakers, which were held to be invalid by the courts and judicially redrawn to eliminate widespread gerrymandering. Notwithstanding the legislative focus on election year politics, the Society has remained vigilant in protecting both the professional engineering community and the public by preventing the erosion of professional engineering licensure and advocating for public health safety and welfare as the circumstances require. Following are key proposals requiring the Society’s attention and intervention

1. Indemnification Reform –
This legislation, which was previously vetoed by ex-Governor Cuomo, addresses the issue of design professional contractual indemnification on public sector projects (state and local) and is strongly supported by NYSSPE. The legislation addresses public sector contracts wherein municipalities, state agencies and other governmental entities have inordinate leverage over the terms of indemnification. Presently, governmental entities can and do unfairly shift the burden to design consulting firms for the cost of future contingent events such as property damage, personal injury and attendant attorneys’ fees.

Broad form defense and indemnification provisions subject design professionals to liability arising out of the circumstances that are well beyond the design professional’s scope of work and for matters over which the design professional has no control. Design professionals in many instances are unable to secure insurance to cover the scope of claims these provisions can generate. Many of the most highly qualified engineering firms simply refuse to participate in RFQs when confronted with adhesion contracts of this nature. As a result both public owners and taxpayers are deprived of the opportunity to benefit from their participation.

This bill addresses indemnification inequity by voiding contractual provisions requiring defense and indemnification involving a public work to the extent that a design professional is required to defend and indemnify a municipality, state agency, and other governmental entity or other parties for damages that are not the result of the negligence, recklessness, or willful misconduct of the design professional. Responsibility for losses related to the actions or failures of other parties that are unrelated to the design professional services rightfully rest with the at-fault party or parties. Design professions simply should not be compelled to provide indemnification for such conduct.

The Society, together with others in the design community, have been examining the developments in sister states regarding indemnification reform. A number of states have adopted meaningful reforms and our internal discussions with sister design organizations have focused upon these states with the goal of refining a model bill for New York. The process has taken longer than we had hoped, but we are optimistic that model legislation to be put forward later this year will provide the best chance for passage in New York.

2. Design Professional Service Corporations –
ESOP Ownership Liberalization S5261B/A1891-B Senator Kennedy/Assemblyperson Lupardo
Approximately ten years ago NYSSPE was instrumental in securing legislation liberalizing the ownership structure of design firms (Design Professional Service Corporations) in New York State. Prior to the Society’s intervention, with the exception of grandfather corporations, ownership in design firms was completely limited to licensees (professional engineers, architects, land surveyors, etc.). This paradigm created a unequal playing field giving grandfather corporations an enormous advantage in attracting talented employees in fields such as IT and marketing. Legislation has now passed both houses which again addresses Design Professional Service Corporations and will permit all of the shares of a firm to be owned by an ESOP vesting membership interests in bona fide employees of the firm without limitation as to the percentage of stock owned by the ESOP. (Currently the ESOP is limited to a maximum ownership of 24.99 % of the firm.) However, the legislation vest control of the ESOP in a Board of Trustees or a Management Committee with a key provision requiring that 75% of the members of the Board of Trustees or Management Committee be licensees. This new structure will ensure that professionals retain control of the key decision-making respecting professional practice and allow local engineering firms to flourish and not exacerbate the acquisition of local firms by grandfather corporations as has historically taken place.

3. QBS – Support
A8504 –Comptroller’s Program Bill
This legislation requires the use of Qualifications Based Selection by Public Authorities and Public Benefit Corporations, in addition to state agencies. Expanded utilization of QBS has been a long sought-after goal of NYSSPE. In fact, due in substantial part to the Society’s efforts, similar legislation passed the Assembly in 2010. QBS assures that price is not the sole criteria in the selection of professional engineering services by affording due consideration to the respective qualifications of consulting firms participating in the procurement process. Adoption of QBS also helps to avoid steering of service contract to politically favored firms. Since former Governor Cuomo opposed expanding QBS, his departure from office has enhanced our assessment of the prospects for this bill. In fact NYS Comptroller Thomas DiNapoli has advanced the legislation with the goal of to preventing some of the abuses identified under one or more prior administrations.

4. Statute of Repose – Support
A1706/S4127 – Assemblyman Pretlow/Senator Griffo
This legislation creates a 10-year Statute of Repose requiring that actions for personal injury and wrongful death against a design professional and construction contractors be commenced not more than 10 years after a project is completed. The bill continues to face strong opposition from the New York State Trial Lawyers Association. NYSSPE has been assisted in its fight by other organizations including associations representing general contractors and AIA. [Read more…]