APCA Journal 3rd Quarter 2021

The Publication for Merit Shop Pipeline Contractors AMERICAN PIPELINE CONTRACTORS ASSOCIATION Military Personnel in a Civilian Workforce: 5 Frequently Asked USERRA Questions 2021 APCA Membership Directory and Buyer’s Guide Trade Groups File Lawsuit Against DOI’s Indefinite Federal Leasing Pause Ownership Transfer and Management Succession 3rd Quarter 2021 Infrastructure Bill Includes Some Opportunity for Pipelines

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3rd Quarter 2021 Officer Directors Of f i c ial Publ i cat ion of the Amer i can Pipel ine Cont rac tors Assoc iat ion Board of Directors Publication Staff PO Box 638 Churchton, MD 20733 (703) 212-7745 • www.americanpipeline.org ©2021 American Pipeline Contractors Association Nick Bertram Jomax Construction Co., Inc. Mike Castle, Jr. Castle Scott Coppersmith (Advisory) Mears Group, Inc. David Dacus (Advisory) Troy Construction, LLC Ricky Dyess M.G. Dyess, Inc. John Fluharty Mears Group, Inc. Chris Jones HardRock Directional Drilling, LLC Kevin LaBauve WHC Energy Services Max Nichols (Advisory) WB Pipeline, LLC Sean Renfro Sunland Construction, Inc. Aaron Simon (Advisory) Troy Construction, LLC James Schettine (Advisory) Meridien Energy William Schettine Meridien Energy Publisher TimothyWagner Editor Michael Ancell Advertising Sales Stacy Bowdring Information Technology Greg Smela Accounting James Wagner Layout & Design JosephWagner President Taylor Dacus Troy Construction, LLC Vice President RoyWeaver Weaver, LLC Treasurer Nick Bruno Bi-Con Services AMERICAN PIPELINE CONTRACTORS ASSOCIATION Senate Approves Infrastructure Legislation with Some Opportunity for Pipelines 7 By Eben Wyman In early August, a bipartisan group of senators unveiled its nearly $1 trillion infrastructure bill, formalized into text following a 67-32 vote to advance the legislation. The bill would invest billions of dollars in electric transmission and grid infrastructure, new advanced nuclear plants, as well as some carbon capture, hydrogen, and other clean energy resources of interest to APCA. Inside Washington provides a description of where things stand for the pipeline industry right now. Ownership Transfer and Management Succession: Positioning Your Organization for Long-Term Success 16 By Jake Appelman and Alex Miller Transferring ownership of an engineering and construction firm to a new owner, another entity, or a group of employees is a complicated process that requires thoughtful planning, preset goals, and an exit strategy that’s focused on a win-win outcome for everyone involved. And while every transition may not go as smoothly as planned, having these pieces of the puzzle in place before making this monumental move can position the company and its new owners for long-term success. APCA Membership Directory & Buyer’s Guide 32 Human Resources | By Greg Guidry 13 News Briefs 21 Member News 29 Industry Calendar 49 Advertiser Index 49 Last Word | By Mark Bridgers 50

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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 7 Continued on page 8 INSIDE WASHINGTON EbenWyman APCA Government & Industry A!airs eben@wymanassociates.net (703) 740-6126 By Eben M. Wyman I n early August, a bipartisan group of senators unveiled its nearly $1 trillion infrastructure bill, formalized into text following a 67-32 vote to advance the legislation. The vote to advance the bill included the support of 17 Republican senators. The bill, some 2,700 pages long, would invest billions of dollars in electric transmission and grid infrastructure, new advanced nuclear plants, as well as some carbon capture, hydrogen, and other clean energy resources of interest to APCA. While the infrastructure debate will likely continue into the fall, here is a description of where things stand for the pipeline industry right now. The “Three Gases” and Continued Importance of Pipeline Infrastructure Earlier this year, APCA released a position paper that recognized the national movement toward a clean energy America but warned against shortsighted policy proposals that would undermine the very path toward these ambitious energy goals. Specifically, APCA made the case for three critical gases and the continued need for robust pipeline infrastructure, and we backed up these positions with a few solid points. Natural Gas • The concept of having to choose between using natural gas and renewable energy presents a false choice. Use of abundant, clean-burning natural gas enables the use of renewable fuels. • The intermittent nature of renewables (i.e., wind and solar) demonstrates that these energy sources alone do not have the capacity to meet current and future demand. • America cannot achieve its clean energy goals without continued production of natural gas and expansion of the natural gas pipeline network. Carbon Capture, Use, and Storage • While carbon capture, use, and storage (CCUS) efforts are gaining attention, infrastructure must be built to transport captured CO2, and pipelines are the safest way to move it. • Because not all areas of the country have the appropriate geology for CO2 storage, it must be moved to regions that do. This will require building the necessary pipeline infrastructure in a wider range of locations. • Larger infrastructure with the capacity to handle greater CO2 volume from multiple sources will provide for more carbon capture for future use, and creating a CCUS market Senate Approves Infrastructure Legislation with Some Opportunity for Pipelines

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 8 Inside Washington Continued from page 7 will decrease the demand or supply risk, reduce the total cost, and drive technological innovation. Hydrogen • Hydrogen is increasingly considered an environmentally superior alternative to conventional fossil fuels for vehicles and power generation. • Delivering hydrogen to a variety of facilities such as power plants, industrial sites, and fuel distribution hubs will require an extensive hydrogen pipeline system. • Converting natural gas pipelines to carry pure hydrogen may be possible in the future and may offer economic advantages over building new pipelines, but the need for a safe and reliable pipeline network will remain. Most importantly, APCA underscored the point that all of the advantages offered by these three critical gases will be possible only through building the pipeline infrastructure required to move it. Status of Legislative Measures In March, the Storing CO2 and Lowering Emissions (SCALE) Act was introduced with the intent to help develop CCUS infrastructure to reduce CO2 emissions while creating jobs and economic opportunity. The measure would: • Establish research and development initiatives to support development of low- and zero-carbon fuels and building products and materials, • Provide low-interest grants and loans for CCUS efforts and funding for federal permitting of carbon injection wells, and • Establish a CO2 Infrastructure Finance and Innovation Act (CIFIA) program to finance shared CO2 transport infrastructure through flexible, low-interest loans for CO2 transport infrastructure projects. The current infrastructure package includes language that would authorize $3.5 billion over five years for financial support from the Department of Energy (DOE) for projects that help develop four regional hubs to capture CO2 from the atmosphere and transport, store, and put to industrial use. The measure would create the CIFIA provided in the SCALE Act to leverage federal funding to make loan guarantees and secured loans supporting large projects for infrastructure to transport CO2. It would also authorize $600 million per year in fiscal 2022 and 2023 and $300 million each year afterward through fiscal 2026. The measure would also direct the Interior Department to adopt rules to allow for leases of offshore areas to be used to inject captured carbon dioxide below the seafloor for longterm sequestration. Several recommendations have been made by a range of congressional committees and caucuses encouraged the drafting of legislation to facilitate the development of hydrogen transportation and require federal agencies to adjust their regulatory framework to support the construction of necessary infrastructure. Currently, jurisdiction currently resides within several federal entities, including the Surface Transportation Board, the Federal Energy Regulatory Commission, the Transportation Security Administration, and the Pipeline and Hazardous Materials Safety Administration. The Senate’s infrastructure bill would authorize $8 billion over five years to support hydrogen fuel production from different sources, use of hydrogen for electricity and industrial processes, and hydrogen fuel transportation. Under the measure, DOE would establish at least four regional clean hydrogen hubs that locate clean hydrogen producers, users, and transport infrastructure near one another. The measure would also authorize $1 billion over five years for a research, demonstration, and commercialization program aimed at reducing the cost of hydrogen produced from electrolysis to less than $2 per kilogram of hydrogen by 2026. To address the hot topic of energy cybersecurity, the bill would authorize the following annual funding through 2026: • $250 million for competitive grants, cooperative agreements, and technical assistance to small, municipal, and rural utilities to prevent and respond to cyberthreats; and • $250 million to develop cybersecurity protections for the energy sector to identify and mitigate cyber vulnerabilities and enhance our cybersecurity. So, while you must dig deep to find these provisions in the 2,700-page package, and while there are many policy proposals that should and have raised many eyebrows and a lot of scrutiny, there are provisions that support the need for a future for pipeline transportation and the infrastructure needed to make that happen. Now the job is to keep these provisions intact as the infrastructure debate continues. Most States Battling Over Natural Gas Future Because APCA is heavily engaged in what has become a virtual holy war at the state level over if and how state governments can interfere with consumer choice when it comes to available fuel sources, yet another update is in order. While

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 9 APCA remains concerned with the many states considering legislation to substantially reduce and even eliminate the role of natural gas, we’re also very encouraged by the increasing number of states that have enacted or proposed “fuel choice” laws that essentially ban the implementation of laws that would ban natural gas. APCA continues to work with an ad hoc coalition that is pushing back on harmful legislation that would mandate electrification through future building codes and/or other methods while supporting fuel choice measures. As you’ll see in the updated map at right, there are now many more states that have enacted or proposed fuel choice legislation than have advanced gas ban bills. Make no mistake, the fact that progress has been made at the state level has not led APCA, nor any member of this important coalition, to rest on their laurels. This important issue will continue for the foreseeable future, and APCA must keep an “all-hands-on-deck” approach to these state-level issues. The Fight Against Increased Insurance Requirements As the Senate was working on its version of the surface transportation bill that was included in the bipartisan infrastructure package, a broad, multi-industry coalition continued to Continued on page 10 Source: American Gas Association

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 10 discourage efforts by congressional Democrats to increase in minimum liability insurance requirements for motor carriers, including those in the construction industry, from $750,000 to $2 million. Besides being wholly unnecessary and doing nothing to improve highway safety, this increase would jeopardize countless blue-collar jobs and countless small and family-owned businesses. In separate letters to both the Senate Republican and Democratic leadership, this coalition made the point that increasing motor carriers’ minimum liability requirements “would affect all businesses transporting property, not just long-haul trucking operations. As illustrated by the diversity of our coalition, the impact would be felt in many sectors of the economy that have been working to help our nation recover from the COVID-19 pandemic, including the agriculture, construction, manufacturing, towing, and materials industries.” Additionally, past federal research has demonstrated that such a change is entirely unnecessary. A congressionally required study has shown that the vast majority of truck-involved crashes have relatively small cost consequences, and the existing minimum of $750,000 covers costs in more than 99 percent of crashes involving a commercial motor vehicle. The coalition was not afraid to call out the true advocates of this shortsighted policy. “Proposals to raise minimum liability coverage are nothing more than an opportunity for trial lawyers to receive higher payouts from settlements and decisions at the expense of American businesses,” the coalition letter stated. “If this policy were to become law, we are concerned it would encourage more and increasingly costly lawsuits against our members for crashes in which they are most often not responsible.” The coalition was encouraged that the Commerce, Science & Transportation Committee did not include this provision in the of the Senate’s highway bill, which passed with a strong bipartisan vote of 25-3, and suggested that the omission of this policy demonstrates there is not enough support for it to pass the Senate as part of any bipartisan bill. However, the increase was included in House legislation, so this fight is far from over. APCA Opposes Expansion of Environmental Permitting Requirements It’s no secret that APCA is engaged in a wide range of policy debates. If we’re not pushing back on unwarranted attacks on pipeline transportation or the use of natural gas or oil, we’re taking on Big Labor and its quest to eliminate merit shop entities from building critical energy infrastructure. At the same time, we continue to work with our allies in the business community to reign in overzealous efforts to kill pipeline and other infrastructure projects through a “death by permitting” approach. The “800-pound gorilla” in this situation is often the National Environmental Policy Act (NEPA) and the seemingly endless permitting requirements that come with it. APCA recently joined a set of comments to an interim final rule (IFR) issued by the Council on Environmental Quality’s (CEQ) that will delay the time agencies are allowed to update their NEPA procedures. The IFR, “Deadline for Agencies to Propose Updates to National Environmental Policy Act Procedures,” would delay the date by which agencies will be required to propose updates to their NEPA implementing procedures by two years. By moving forward with this action, the industry coalition suggested in its comments that CEQ is adding considerable uncertainty and delay to federal agency decision-making and private sector investment, and “will create confusion and uncertainty and ultimately lead to further delays in agency decision making, associated infrastructure construction, and economic development for the nation and communities that need it most.” It will likely take several years before agencies will be in a position to finalize their NEPA procedures to be consistent with any changes that CEQ might take, as provided by the IFR, and according to the coalition’s letter, “[m]ore than 80 agencies currently have NEPA implementing procedures demonstrating the breadth of potential agency decisions that may need updating to be consistent with forthcoming changes by CEQ.” While agencies await on CEQ for any updates, project sponsors face uncertainty related to procedural steps they will have to follow and the possible increased costs of delays in agency decision-making and the ever-possible exposure to litigation. “Timely, transparent NEPA processes are of significant importance to project sponsors, investors, employees, and contractors whose jobs and livelihoods are tied to projects subject to NEPA reviews,” the comments stated. “In the world economy that we live in today, where there is a high level of competition for the world’s investment, increasing uncertainty and delays in the federal permitting process will only serve to drive investments elsewhere. The nation needs these investments to remain competitive and to support longterm economic growth as well as elevate the quality of life for communities that most acutely need these investments.” 7 Inside Washington Continued from page 9

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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 13 HUMAN RESOURCES Military Personnel in a Civilian Workforce: 5 Frequently Asked USERRA Questions By Greg Guidry & Amy Glenos, Ogletree Deakins The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) is a federal law that protects the civilian employment of active and reserve component military personnel and veterans. USERRA is a straightforward law with a central objective: to not penalize service members for their service. While most pipeline employers have probably handled numerous leave requests related to pregnancy, disability, or illness, under FMLA, ADA, Title VII, and state leave laws, employers are perhaps less likely to encounter requests for USERRA leave. Less than one percent of the population serves in the United States military, with approximately 1.3 million active-duty personnel and 802,248 active reserve component members from all branches combined. Still, the number of military personnel in the civilian workforce is substantial enough that employers are likely at some point to receive a military leave request or USERRA-related question. Here are five USERRA-related questions employers are likely to face. 1. Is an employer required to accommodate leave for military duty when an employee does not have orders? Yes. Reserve component soldiers have routine drill periods known as inactive-duty training (IDT) in addition to 14 days (or more) of annual training (AT) per year, though the number of AT days is variable depending on the branch of service. Leave for IDT and AT is covered by USERRA. Although drill periods are typically reserved for the weekend, unit commanders may occasionally schedule three or fourday drills—for example, on a Thursday, Friday, Saturday, and Sunday. The military does not issue orders for routine drill periods, so a request for orders will find the employee (and employer) empty-handed. In lieu of orders, units typically provide drill schedules for each fiscal year for IDT periods. The employee’s drill schedule should also have a point of contact (POC) so that the employer may reach out to the unit with any questions. If the drill schedule does not identify a POC and the employer has reason to question the employee’s service obligation, the employer may consider asking the employee to provide information as to whom in the military reporting chain the employer can direct questions. Employers that have reasons to question an employee’s service obligations (for example, if the employee is unwilling to produce a drill schedule or to provide any additional information concerning the leave period) may be justified, under USERRA, in contacting the employee’s military chain of command. Conversely, employers that don’t have good cause to question the service obligation but nevertheless contact the employee’s commander may be at risk of a claim of harassment or discrimination under USERRA (especially if the employer reaches out repeatedly). The military will issue orders for a service member’s AT requirement. Often, the AT period is at a designated location, Continued on page 14 Greg Guidry Ogletree Deakins Nash Smoak & Stewart greg.guidry@ogletree.com (337) 769-6583 Amy Quick Glenos Ogletree Deakins Nash Smoak & Stewart amy.glenos@ogletree.com

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 14 Human Resources Continued from page 13 such as on a military base or installation, for a consecutive period. Some units do not conduct a consolidated unit AT. In this situation, the employer may be faced with sporadic requests for leave throughout the year in order for the service member to fulfill the AT obligations. This type of AT may even be conducted remotely on occasion from the service member’s home. These various scenarios may raise questions for the employer as to the legitimacy of the leave. If orders are issued—and they always are for AT days—the leave is legitimate. Finally, some orders are issued retroactively (after the training period is completed). USERRA does not require a service member to produce orders to his or her employer in advance of leave if doing so is precluded by military necessity, or otherwise impossible or unreasonable. The unavailability of orders on the front end of leave is one such example of “impossibility” that often plays out in reality and is not a basis for denying leave under USERRA. 2. Does an employee continue to accrue vacation leave while on military leave? No, unless the employer provides that benefit to other employees on comparable leaves of absence. Section 1002.150 of USERRA states that “[t]he non-seniority rights and benefits to which an employee is entitled during a period of service are those the employer provides to similarly situated employees by an employment contract, agreement, policy, practice, or plan in effect at the employee’s workplace.” 3. Is an employer required to accommodate leave for voluntary deployments? Yes. USERRA requires employers to accommodate even voluntary deployments. USERRA expressly defines “service in the uniformed services” as “the performance of duty on a voluntary or involuntary basis.” This is true regardless of the burden that the service may impose on the civilian employer and regardless of whether the deployment is “high speed” (such as special forces frontline operations) or “not so high speed” (for example, office work far away from the battlefield). USERRA does not consider the relative burden to the employer to be relevant when determining whether the employer may grant or deny leave. USERRA provides as follows: In any determination of a person’s entitlement to protection under this chapter, the timing, frequency, and duration of the person’s training or service, or the nature of such training or service (including voluntary service) in the uniformed services, shall not be a basis for denying protection of this chapter if the service does not exceed the limitations set forth in subsection (c) and the notice requirement established in subsection (a)(1) and the notification requirements established in subsection (e) are met. Those limitations include the cumulative five-year period and notice requirements. The U.S. Department of Labor’s regulations further amplify the service member’s right to [ITAL] volunteer [ITAL] for military service and state that “[t]he employee is not required to accommodate his or her employer’s interests or concerns regarding the timing, frequency, or duration of uniformed service.” Under USERRA and its enforcing regulations, the voluntary or involuntary nature of a leave is irrelevant, and the burden to the employer does not provide a justification to discharge or refuse to reemploy the service member. In sum, at this time, a so-called “USERRA abuse” defense is not readily available to employers. 4.May an employer permit an employee to continue working in a full- or part-time status while on military orders? Note: This scenario is perhaps on the rise due to the COVID-19 pandemic, as both civilian employers and the military are increasingly permitting telework. This may not be the recommended course of action. While there is no per se prohibition on outside employment for reserve component service members who are placed on active-duty orders, there are myriad legal, ethical, and practical concerns that may militate against permitting such an arrangement, particularly under USERRA. A primary purpose of USERRA is to protect service members who [ITAL] leave [ITAL] their civilian jobs to perform uniformed service. If an employee never leaves his or her civilian job, an employer’s USERRA obligations are unclear. Under the circumstances, it is possible that USERRA protections would be triggered if the employee were subject to discipline for job performance, and it is possible that the employee could subsequently claim that the discipline was due to the service obligation. The employer would likely have a defense that the employee was not entitled to USERRA protection in the first place, but nothing would prevent the employee from pursuing a claim alleging USERRA discrimination if confronted with an adverse employment action in the civilian job while on military orders. In addition to USERRA concerns, this scenario presents issues for the employee/service member related to potential violations of the Uniform Code of Military Justice or applicable state codes of military justice. When performing military duty, a service member is required to prioritize military duty

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 15 over other work. Although the U.S. Department of Defense’s Joint Ethics Regulation allows outside employment with the permission of the service member’s commander, this carveout is typically for active-duty soldiers who seek to take on moonlighting jobs for extra pay. A reserve component service member on full-time military orders does not get time off, in theory. Even if a service member has downtime during the duty day, that service member is still in a duty status. It is hard to imagine a scenario in which an employee could perform a full-time civilian job without creating conflicts. An example of a potential conflict might be if an employee suffered an injury (say, carpal tunnel) during the period of dual military and civilian employment. The employer would have to determine if the injury was caused on the job for workers’ compensation purposes. The military, meanwhile, would be tasked with determining whether the injury was service connected and sustained in the line of duty. Determining the precise origins of the injury in this scenario could be a near-impossible task for both the military and the civilian employer because the employee was working for both entities simultaneously. 5. Does USERRA cover temporary employees? Yes, but a temporary employee’s reemployment rights are conditional based on the intended length and scope of the temporary position. As a starting point, the regulations provide that an employee’s USERRA rights “are not diminished because the employee holds a temporary, part-time, probationary, or seasonal employment position.” This means that employers may not discriminate or retaliate against temporary employees because of their uniformed service. However, the [ITAL] reemployment [ITAL] protections under USERRA are not absolute. An employee does not have reemployment rights if the civilian employment was for a brief, nonrecurrent period, and there was no reasonable expectation that the employment would have continued indefinitely or for a significant period. Neither the statute nor the applicable regulations adequately define what constitutes a “significant period.” In addition, the regulations arguably are unclear as to whether the “reasonable expectation” of continued employment is a belief held by the employee or the employer. Finally, the denial of USERRA rights on the basis of temporary employment is an affirmative defense that the employer has the burden of proving. If there is any expectation at all (by the employee or employer) that the employment would have continued absent the military leave, the employee is likely entitled to reemployment upon conclusion of the military leave period. Key Takeaways Although uniformed service members represent a small segment of the total workforce, most employers will eventually encounter USERRA leave requests. According to the Congressional Research Service, 1,007,061 reserve component service members have been called to active duty in the last 20 years. Presumably, these calls to active duty have resulted in a great many USERRA leave requests, and understanding the basic requirements of USERRA may help employers prevent costly litigation. USERRA is still evolving as a federal law, and it was amended as recently as January 15, 2021, to include coverage for National Guard soldiers called to “state active duty” by their states’ governors. The legislation amending USERRA was passed in response to the COVID-19 pandemic. 7 Provider of Launchers and Receivers for all Pipe Diameters Our Rentals Include: • Pig Launcher Rentals (4”-48”) • Pig Receiver Rentals (4”-48”) • Valve Rentals 713-906-0271 candacetcrentals17@gmail.com tedbtcrentals@gmail.com www.tcrentalsinc.com P.O. Box 1688 • Tomball, TX 77377 c . . ll,

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 16 Transferring ownership of an engineering and construction (E&C) firm to a new owner, another entity, or a group of employees is a complicated process that requires thoughtful planning, preset goals, and an exit strategy that’s focused on a win-win outcome for everyone involved. And while every transition may not go as smoothly as planned, having these pieces of the puzzle in place before making this monumental move can position the company and its new owners for longterm success. Current owners and managers who ignore this advice could put their organizations in peril: About 75 percent of all businesses fail to survive past the first generation of owners. Those failure rates increase to 85 percent by the third generation and over 95 percent for the fourth generation (and beyond). [1] Avoiding this fate requires dedication, attention to detail, some forward thinking (read: don’t wait until the last minute to develop a succession plan), and commitment on the part of key stakeholders. Ownership transfer and management succession (OTMS) focuses on the primary steps that E&C companies should take when transitioning to new ownership. Always important, OTMS is taking center stage as industry leaders shake off the negative impacts of the COVID-19 pandemic and plan for brighter futures. For some, that will mean passing the torch to a new generation of leadership and/or ownership. Survey Says With the post-pandemic recovery already underway in the U.S., a period of uncertainty has altered the playing field for contractors, particularly those poised for a change in ownership before the pandemic, according to our latest research published in the “2021 FMI/CFMA Ownership Transfer and Management Succession Survey.” In collecting data from CFMA members and FMI clients around ownership transfer and succession management trends, the two groups learned that pre-COVID, nearly 50 percent of all companies were either in the middle of an ownership transfer plan or expecting to launch one within the next two years. Those plans changed when COVID-19 emerged, forcing more than half (52 percent) of companies to consider either delaying or protracting their intended ownership transfers. This wasn’t surprising in light of the economic and operational impact of the pandemic, but it will have major ramifications for the key factors required to successfully exit a business: cash flow and profitability, talent development and management succession, and visibility into future performance. How COVID-19 Impacted Succession Planning In mid-2020 FMI and CFMA worked together to gather data and assess the financial risks in the new economy and learn about the biggest impacts of the pandemic on OTMS. Our researchers also looked at how COVID-19 impacted business valuations and the broader mergers and acquisitions (M&A) market, the increased interest in employee stock ownership plans (ESOPs), and the biggest gaps in E&C succession planning. According to the survey, internal ownership transfers remain the predominant methodology in the construction industry, with over two-thirds of respondents saying that they intend to transfer equity to employees, family, or both. Properly structured internal transfers can be a great source of liquidity for owners and continuity for the business, but they require up to ten years longer to execute than an external sale. This is because internal sales often require new owners to buy equity over time; and if earnings are reduced or capital is needed to fund operations, the process can take even longer. For the survey, 75 percent of all respondents indicated that COVID-19 had a negative impact on their company’s earnings. This economic impact primarily affects those hoping to Ownership Transfer and Management Succession: Positioning Your Organization for Long-Term Success By Jake Appelman and Alex Miller Here are 10 questions all E&C firms should be asking themselves as they either reinvent existing ownership transfer and management succession plans or develop brand-new ones.

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 17 sell in the next five years. Prior to the pandemic, 43 percent of all respondents intended to have sold 100 percent of their equity within the next five years. Now, just 29 percent expect they will have sold 100 percent of their equity within five years. Now that the recent boom years are in the rearview mirror, owners who put off succession plans or didn’t take advantage of a stronger market to develop their talent pipeline are experiencing more of a crunch than those who anticipated transitions in the years ahead. For example, a significant share of respondents (35 percent) plan to exit their businesses in less than five years while 52 percent plan to exit their businesses in less than seven years. Given the squeeze on earnings, conventional wisdom would suggest putting off plans longer and focusing on the business; however, there are other strategic options to consider. Internal sales can progress in the current market, provided that the planning accounts for volatility over the next five to ten years. Alternatively, owners can consider an employee stock ownership plan (ESOP) or an external sale, given a robust merger and acquisition (M&A) market in the construction industry (as discussed in the next section). However, these alternatives do not create a substitute for leadership development and management succession. For all companies, whether the owner is looking at an ownership transition in the near future or not, it’s never too late to invest heavily in developing the next generation of leadership. Measuring the Impacts Though M&A activity in 2020 did not stack up to the deals seen in 2018 and 2019, this was mostly due to the lost second quarter, when the economy was shut down and buyers and sellers focused on their own businesses. In the second half of 2020, M&A activity rebounded and was equal to that of the first half of 2019; this is proof of a strong recovery carrying through to 2021. M&A activity in the construction industry is being driven by both increased supply of opportunities—given the large percentage of owners looking to exit their businesses—and increased buyer demand. Crucially, this buyer demand has resulted in valuations remaining very strong for quality assets, with strategic buyers looking to expand operations. Demand is also being driven by a substantial increase in private Celebrating 40 years of equipment solutions semicrawlers.com | 800-524-2591 500 Davenport Drive College Station, TX 77845 79 Firetower Road Louisville, MS 39339 Continued on page 18

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 18 equity interest in the construction industry. Consequently, valuations for quality firms and buyer interest in the construction industry are causing many contractors to accelerate their personal timelines for an exit. In assessing the increased interest in ESOPs as an exit alternative for E&C firms, FMI and CMFA found that while ESOPs still represent a small slice of ownership transfers, interest in them as an ownership transfer methodology has increased significantly over the past eight years. In 2013, 4 percent of companies were interested in ESOPs. By 2020, that number had risen to 10 percent. The reasons for using an ESOP to position long-term success are compelling. Where an external sale may not be an option, for instance, ESOPs provide a lot of the same benefits. They also offer additional potential tax savings, the ability to leverage employee ownership as a tool for recruiting and retention, greater flexibility in deal structure and timing, and the ability to maintain autonomy of the business. Also, companies with employee ownership structures have proven to be better for their employees and the bottom line, with 2.5 times the retirement savings and 5-12 percent higher incomes for employees by a factor of 2.5 against non-ESOPowned peers. Other advantages include increased productivity, sales growth, and resiliency during recessions for the company as a whole, according to the National Center for Employee Ownership. These effects extend to periods of contraction, with ESOP companies 25 percent more likely to stay in business in the last recession and four times less likely to lay off employee-owners. Finally, ESOPs are also a tax-friendly option for corporations and shareholders. Congress has incentivized the practice with an exemption from all federal taxes, and some state taxes, for 100 percent ESOP S corporations, and potential deferred or nullified capital gains taxes for shareholders on a company’s sale to an ESOP. Forged in Fire Leadership bench depth was a defining factor in organizations’ ability to pivot during the pandemic, with next-generation leaders being “forged in fire” as five-year plans were overhauled and implemented on the fly. In the midst of the volatility, a shortfall of qualified talent continued to impede the smooth transitioning of company ownership. Unsurprisingly, the importance of leadership development was reflected in the midyear survey, which found that 82 percent of owners saw a direct impact of their successors’ readiness to their businesses’ future growth and profitability. In addition, 47 percent of companies believed that leadership development was more important than they did pre-pandemic—a finding similar to that of the post-2008 global financial crisis. Fast-forward to 2021, and we’re again looking at a long recovery and uncertainty stretching over the horizon, but the stress test of 2020 is behind us. Companies with solid balance sheets and a steady pipeline of talent will be well resourced to pursue ownership transitions that position them for the post-pandemic landscape. Those unprepared for the events of 2020 can likewise take a fresh look at the projected value of their company and at the opportunities and risks in selling. 10 Questions to Ask Yourself Right Now Now is an ideal time to reevaluate transition plans, starting with a rigorous look at what will change forever, which market principles still hold, and how owners can adjust their plans. Start by asking yourself these 10 questions: 1. How have my transition goals shifted in the current market? 2. Who will lead the business moving forward? 3. Is our succession plan aligned with our vision as well as our strategic and operational goals? 4. How aligned are the current and next-generation owners and leaders in terms of ownership, growth, and vision for the company? 5. What is most important to current owners: legacy and business continuity, control of the business, and/or maximizing financial return? 6. Where are points of risk/overreliance on key leaders? 7. How are we preparing successors for future leadership roles? 8. How will the current disruptions (e.g., economic recession, COVID-19, etc.) impact our ownership transfer plan? 9. Do we have effective buy-sell agreements in place to protect the organization and all shareholders? 10. Have we built the business to provide multiple options for ownership transfer to ensure a path to liquidity for shareholders? From the answers to these questions, you’ll be able to 1) determine your current status on the OTMS spectrum, 2) identify the gaps that need to be filled, and 3) develop an OTMS plan that truly meets your company’s needs while concurrently preparing it for long-term success. Ownership Transfer and Management Succession Continued from page 17

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 19 Buyers Are on the Prowl The good news for E&C companies that are dusting off the OTMS plans that may have been back-burnered in 2020 is that buyers are on the prowl, looking for opportunities to diversify, add specialization, and/or take advantage of gaps in market supply after a seismic shakeup. For E&C firms, successfully transferring ownership has always been coupled with the need to effectively manage succession planning. More so now than in the past, companies that invest in developing future leaders and building their businesses with multiple paths to owner liquidity will be successful in the years ahead. 7 Jake Appelman leads FMI’s management succession practice, partnering with architecture, engineering, and construction firms to build enduring organizations through exceptional leadership. He has extensive experience guiding the succession process across a range of company sizes and structures, from closely held family firms to large, employee-owned firms. Jake’s specialty is working one-on-one with senior leaders to accelerate their development and prepare for succession. He can be reached at jake.appelman@fmicorp.com. Alex Miller focuses on mergers and acquisitions, growth strategy, and ownership transfer planning for engineering and construction firms. He is co-head of FMI’s Contractor and Construction Services investment banking team. He has written numerous articles on mergers and acquisitions trends in the E&C industry and speaks often to industry groups about overall trends, mergers and acquisitions, international activity in the U.S. construction market, and ownership transfer issues. He can be reached at alex.miller@fmicorp.com. FMI is a leading consulting and investment banking firm dedicated to serving companies working within the built environment. FMI’s professionals are industry insiders who understand your operating environment, challenges, and opportunities. FMI’s sector expertise and broad range of solutions help our clients discover value drivers, build resilient teams, streamline operations, grow with confidence, and sell with optimal results. To learn more, visit fmicorp.com. Notes 1. Brad Franc. “Why Business Succession Plans Fail and How to Beat the Odds.”YPO. April 24, 2019. HOT TAPS & LINE STOPS "TVT is a preferred supplier of on-site Hot Tap and Line Stop services. Our talented group of owners, management and field personnel draw from decades of experience and wisdom to keep critical systems online." TVT HOT TAPS New construction tie-ins Instal lation of bypass systems Qual ity control sample points Valve instal lation Retrofits and repair alterations LINE STOPS Valve replacement or repairs Pipe replacement or repairs Isolation of pressure vessels Repair pressure letdown stations Vacuum piping systems Decommissioning pipel ine (815) 666-8323 www.tvtstops.com 3400 Mound Road Joliet, IL 60432 OUR SERVICES ENSURING THE JOB IS DONE RIGHT THE FIRST TIME

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PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 21 NEWS BRIEFS Continued on page 22 Trade Groups File Lawsuit Against DOI’s Indefinite Federal Leasing Pause On August 16, twelve energy industry trade groups filed a lawsuit in the U.S. District Court for the Western District of Louisiana challenging the U.S. Department of the Interior’s (DOI’s) indefinite pause on oil and natural gas leasing on federal lands and waters. “With the indefinite pause on federal oil and gas leasing, the department failed to satisfy procedural requirements and ignored congressional mandates for holding lease sales,” API Senior Vice President and Chief Legal Officer Paul Afonso said. “The law is clear: the department must hold lease sales and provide a justification for significant policy changes. They have yet to meet these requirements in the eight months since instituting a federal leasing pause, which continues to create uncertainty for U.S. natural gas and oil producers. As our industry takes action to preserve our legal rights, we will continue working with the Biden administration on policies that support a lower-carbon future while providing access to the affordable, reliable energy our economy needs to recover.” The following organizations are co-plaintiffs in the lawsuit: American Exploration & Production Council, American Petroleum Institute, Independent Petroleum Association of America, International Association of Drilling Contractors, International Association of Geophysical Contractors, National Ocean Industries Association, Montana Petroleum Association, North Dakota Petroleum Council, Petroleum Alliance of Oklahoma, Southeast Oil and Gas Association, Utah Petroleum Association, and Western States Petroleum Association. Federal leasing laws, including the Mineral Leasing Act (MLA) and the Outer Continental Shelf Lands Act (OCLSA), prohibit an indefinite pause on lease sales onshore and offshore. The department’s move to altogether stop holding leases sales is inconsistent with Congress’ intent and circumvents congressional mandates through administrative action. Among other requirements, the MLA requires quarterly onshore lease sales, and the OCSLA directs the expeditious development of resources offshore. The indefinite leasing pause is inconsistent with both statutes. Under the Administrative Procedure Act, an executive agency is required to provide a record of support and explanation for a change in policy. An agency must also provide an opportunity for public comment when it implements new rules. DOI neglected to meet these requirements. 7 Pipeline Performance Report Shows Safety Improving While Mileage, Barrels Delivered Increase On May 13, the American Petroleum Institute (API) and the Association of Oil Pipelines (AOPL) released the 2019 Pipeline Safety Excellence Performance Report and 2020-2022 Strategic Plan. The report details how liquid pipeline incidents impacting people or the environment have decreased 36 percent over the last 5 years, while pipeline mileage increased nearly 10 percent and barrels delivered increased nearly 35 percent. “Pipelines are the safest and most environmentally friendly way of transporting the energy Americans rely on every day,” API Pipeline Manager David Murk said. “This year’s report highlights our industry’s strong commitment to safety and reliability, showing significant reductions in total incidents while we continue to reliably and efficiently deliver the en-

PIPELINE CONTRACTORS JOURNAL | 3rd Quarter 2021 22 News Briefs Continued from page 21 ergy that keeps working families, small businesses, and first responders moving.” “While pipeline operators are proud they are reducing the number of pipeline incidents, they are working hard to decrease them even further,” said Andy Black, AOPL President and CEO, referring to the pipeline safety improvement strategic plan accompanying the performance report. This year’s performance report highlights positive safety trends in key categories identified by federal and state regulators, public safety advocates, and industry: • Total liquid incidents impacting people or the environment decreased 36 percent over the last five years, while total pipeline incidents were down 17 percent. • Pipeline incidents impacting people or the environment caused by corrosion, cracking, or weld failure decreased 50 percent over the last five years. • Pipeline incidents impacting people or the environment caused by equipment failure were down 15 percent over the last five years. • Over the same timeframe, liquid pipeline mileage has increased nearly 10 percent, including a 20 percent increase in crude oil pipelines, while total barrels delivered increased 35 percent from 2014. The performance data presented by this report is government-collected data on pipeline incidents made publicly available by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA). Each year, API and AOPL download PHMSA incident data to analyze where pipeline operators are making progress and to focus upcoming industry-wide safety improvement efforts. Those findings guide the accompanying three-year strategic plan for pipeline safety improvement. The 2020-2022 Strategic Plan accompanying the Performance Report describes industry-wide safety improvement efforts over the next three years that will promote organizational excellence, harness technology and innovation, increase stakeholder awareness and engagement, and improve emergency response preparedness. The 2019 API-AOPL Pipeline Safety Excellence Performance Report and 2020-2022 Strategic Plan is available on the API and AOPL websites. 7 Luján, Barrasso Spearhead Bill to Harness Carbon Capture’s Full Potential U.S. Senators Ben Ray Luján (D-N.M.) and John Barrasso (R-Wyo.) led the introduction of bipartisan legislation to enhance the federal Section 45Q tax credit to make it more accessible for carbon capture, direct air capture, and carbon utilization projects of all sizes. The bill increases the 45Q credit value for carbon capture projects at industrial facilities and power plants to incentivize wider adoption. It also eliminates the annual CO2 capture thresholds in the 45Q program to enable more facilities and industries to participate and qualify for the credit. “America is the world’s leader of carbon capture technology, and we want to keep it that way,” Barrasso said. “In Wyoming and across America, carbon capture and other clean energy sources create jobs and grow our economy. The 45Q tax credit is already helping to spur innovation in the coal industry and create new technologies that transform carbon emissions into a useful product. Our bipartisan bill builds on this success by increasing the credit value and making it easier for projects of all sizes to take advantage of this important tax credit.” “The bipartisan CATCH Act will help the United States reach net-zero emissions while creating thousands of new, good-paying jobs. This bipartisan legislation will create a commercialization pathway for hard-to-decarbonize industrial facilities and spur the deployment of emissions-capturing technology at power plants, which will be critical to meet international climate goals,” Luján said. “By eliminating the threshold, this legislation will provide access to credit for new technologies, including the growing hydrogen industry in New Mexico. I’m proud to introduce this legislation to help lead on climate and build a clean energy economy.” The 2018 reform and expansion of the 45Q tax credit has led to the development of more than 40 publicly announced projects to capture and manage emissions from industrial facilities, power plants, and from ambient air through direct air capture. Recent analyses by the Rhodium Group show that deployment of carbon capture and direct air capture projects and associated CO2 transport infrastructure will generate tens to hundreds of thousands of good-paying jobs. By eliminating arbitrary thresholds,